Saying it was disappointed with the compliance panel’s findings, a spokesman for the office of the US Trade Representative said it continues to "believe that support payments and export credit guarantees under our programs are fully consistent with our WTO obligations," and is considering a final appeal of the decision.<\/p>\n
The National Cotton Council’s legal expert, Bill Gillon, said: "The only way for the panel to have reached the conclusion that the US cotton program is presently causing serious prejudice to Brazil is for the panel to have ignored the facts in the world cotton market and based its decision on a subjective opinion that the United States simply did not change its programs enough." The US had eliminated Step 2, a major component of the three-step competitiveness program and substantially revised its export credit guarantee program.<\/p>\n
Council Chairman John Pucheu said that with US cotton acreage at its lowest since 1989, the WTO panel failed to fully evaluate recent world cotton market trends demonstrating that the US is not adversely affecting world prices. "U.S. cotton acreage fell by 29% in 2007 and is expected to continue to decline in 2008," Pucheu said. "US exports fell significantly in 2006 and have declined overall as a percent of world exports."<\/p>\n
Meanwhile, acreage is up in many major-producing countries around the world, and payments under the US cotton marketing loan for 2006 are down more than 40% from 2004 — and are expected to be zero in 2007.<\/p>\n
"The international cotton market is strong, demand is exceeding production, world prices are up, and exports in countries such as India and Brazil are dramatically rising," Pucheu continued. "Cotton production outside the US mushroomed to 100 million bales in 2006 and is hovering near record levels for 2007. India is harvesting an all-time record crop and has dramatically increased their exports." Brazil’s most recently harvested cotton crop was 49% over last year’s production; the country actually sold government cotton stocks in 2007 to attempt to depress cotton prices, said the NCC.<\/p>\n
Additionally, recent US farm bills passed in the House and Senate contain reductions in the US cotton program. The NCC predicted that US expenditures in cotton or cotton base acres — even without any further changes in any future farm bill — are expected to decline considerably for 2007, 2008, and 2009.<\/p>\n
Pointing out several areas where the compliance panel’s view of the global cotton market differs from most, the NCC said:<\/p>\n
— Almost 85% of world cotton production and more than 95% of the world’s textile mill use is outside the US; yet, in spite of declining acreage, declining levels of support, declining US mill use, declining US exports, and increasing production and exports from other major cotton producers, the WTO concludes that US cotton exports have significant price impacts.<\/p>\n
— The elimination of the Step 2 program was required, according to the original WTO panel, because that subsidy contributed to price suppression in the world cotton market; now, the compliance panel said that the elimination of Step 2 does not affect the price suppressing effects of the remaining parts of the US cotton program.<\/p>\n
— Economic figures repeatedly cited in the analysis are prepared by Brazil’s paid economist and are held as independent proof that the US cotton program impacts international prices. The compliance panel — as well as previous panels, according to the NCC — have questioned Brazil’s biased economic work and agree that the Brazil model was without foundation in economic circles and still needed "to earn the confidence of the panel."<\/p>\n
— Just like all previous panels, the compliance panel declined to make any finding as to the magnitude of the alleged US program impacts, even though part of the panel’s purpose was to determine whether the US cotton program had a "significant" price suppressing effect on the world market. The credible economic analysis before the panel found international price impacts between 2% and 3%; said Gillon, "It is not a responsible conclusion to find that any possible impact of US agricultural programs must be a ‘significant’ impact." Pucheu said: "Current US production and export levels, as well as US spending levels, all seem directly contrary to a finding of current serious prejudice against the US cotton program." He also stated that he "hope[s] the US Trade Representative will promptly appeal this ruling, as it seems unsupportable to the U.S. cotton industry."<\/p>\n
Gillon — mentioning that he found it difficult to understand how Brazil or any panel could justify US $3 billion in injury to its cotton sector, as well as how the compliance panel could have found in favor of Brazil — said that US Trade Representative could file an appeal as early as January or February. "It will be an expedited appeal and should be final within 90 days. We expect that after the appeal decision, Brazil would announce retaliation and the United States would invoke its right to an arbitration panel, starting early May. The arbitration panel would calculate the amount of injury to Brazil and is to be completed within 60 days. It’s likely, therefore, that the final, final part of this case will be completed in mid-summer 2008."<\/p>\n","protected":false},"excerpt":{"rendered":"
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