WTO Ruling Deals Blow to Rich-Nation Farm Aid, Orders US to Cut Cotton Subsidies
The World Trade Organization (WTO) has dealt a significant blow to rich-nation farm aid, ruling that the European Union's sugar exports are illegal and ordering the United States to reduce its cotton subsidies. The rulings come as part of efforts by developing and food-exporting nations to push wealthy governments to reduce their spending on farmers. The WTO's 147 member countries have agreed to eliminate agricultural export aid, dismantle import tariffs, and cut domestic farm subsidies as part of a global trade agreement reached in Geneva last month.
Key Takeaways:
- The WTO ruled that up to half of European Union sugar exports are illegal due to production subsidies that distort world market prices.
- The organization confirmed that $3 billion in US cotton subsidies violate its rules, deeming payments to 35,000 American cotton farmers unfair because they exceed agreed-upon caps.
- The US plans to appeal the decision, but if upheld, it would force the country to change its farm-payment legislation and could prompt similar cases from other developing countries.
- The loss may force some US cotton farmers to plant other crops, affecting the industry, which produced $5.6 billion of cotton in 2003.
- Brazil scored two victories in its fight against rich-nation farm aid, having filed joint complaints with Australia and Thailand against the EU's sugar exports.
Statistics:
- Up to 50% of EU sugar exports are considered illegal.
- $3 billion in US cotton subsidies were deemed in violation of WTO rules.
- 35,000 American cotton farmers received unfair payments due to exceeded caps.
- The US cotton industry produced $5.6 billion worth of cotton in 2003.
- The WTO has 147 member countries, which agreed to eliminate agricultural export aid, dismantle import tariffs, and cut domestic farm subsidies.
Sources:
- The new York Times
- European Union
- World Trade Organization
- Jun. 2004 report
- WTO's 2003 statistics on US cotton production