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Last Updated: Thursday, 3 March, 2005, 21:19 GMT
US loses cotton fight with Brazil
Cotton pickers in West Africa
Brazil said the US policy hurt other cotton-producing nations
The United States has lost the final round of a high-profile dispute with Brazil over US cotton subsidies.

A World Trade Organisation (WTO) appeals body on Thursday upheld an earlier ruling ordering the US to stop the payments to its farmers.

The organisation had found in its initial September ruling that the subsidies violated global trade rules.

Brazil said the US practice depressed world prices and hurt cotton producers both in Brazil and other countries.

Cotton growers in West Africa say that they have been especially hard hit by subsidies for US cotton farmers.

The US will now have to bring its cotton subsidies, which wrongly include export credits for producers, in line with global trade rules.

Trade talks

In a statement, the WTO's Appellate Body, its top court, said the US policy was "inconsistent" with the global agreement on cotton, and that it should be brought "into conformity with its obligations".

The US had claimed in its appeal that the WTO judges had wrongly calculated the amount of subsidies that could be counted as trade-distorting under the organisation's definition.

The WTO's ruling comes as trade ministers from 30 states are meeting in Kenya to continue talks to try to reform global farm trade, a central part of the WTO's Doha round of free trade negotiations.

Although the US has lost its appeal, it remains to be seen how long it will take Washington to end its illegal subsidies.

The US has said that any change would need to be included in any overall Doha agreement.

'Distorts trade'

No Doha declaration is expected at least until December, when trade ministers from around the world meet in Hong Kong.

India's chief WTO negotiator Gopal Pillai welcomed the organisation's decision against the US's cotton policy.

"The cotton subsidies which the US gives to its farmers distort trade in the market.

"Both subsistence farmers in Africa and Asia are not able to get a good price for their cotton."


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