WASHINGTON (Commodity Online) : In a significant ruling on Thursday, World Trade Organization formally authorized Brazil to impose $147 million in trade sanctions in its long-fought case against U.S. cotton subsidies.

The WTO formally authorized Brazil to move forward with the sanctions at its meeting in Geneva on Thursday.



Brazil said last week that it was readying a list of 222 export items that it would plan to impose higher trade duties on, including acetaminophen, textiles and barcode readers.

However, US National Cotton Council sought to put the best face on the ruling and noted that the amount was far less than the $2.7 billion Brazil has sought, although additional trade sanctions for non cotton export credit guarantees are possible.

The NCC joined 34 other agricultural organizations in September in urging the U.S. trade representative's office to seek another panel to review U.S compliance with earlier rulings in light of changes to U.S. farm policy.

The case against American cotton subsidies began in September 2002 and was later joined by third-party countries, including Chad and Benin in Africa.

The dispute over U.S. upland cotton trade centered on the Step 2 program, an export subsidy program, and other American "price-contingent subsidies" that the WTO found significantly suppressed world cotton prices and harmed Third World farmers. US Congress abolished Step 2 in 2006.

In August, a WTO arbitration panel in Geneva ruled that Brazil could retaliate against U.S. trade in response to past failures by the U.S. to stop trade-distorting practices involving cotton.

U.S. cotton production in 2008 was more than 45 percent below the 2005 level, while combined production in Brazil, China and India increased more than 20 percent since 2005.

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