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U.S. backs cotton growers in trade dispute

July 28, 2007|From Reuters

WASHINGTON — The U.S. pledged Friday to protect its cotton producers as a trade court ruling gave strength to Brazil's contention that U.S. farm supports continue to violate world trade rules.

A U.S. trade official said the World Trade Organization compliance panel found that certain cotton subsidies and export credit guarantees, despite changes Congress made last year after an earlier WTO ruling, still violated trade rules.

"Brazil claims once again to have largely defeated the United States.... They have been emboldened by a declaration that they have a right to retaliate," Agriculture Secretary Mike Johanns said.

The panel's interim decision, which could look different from a later, final ruling, is a blow to the U.S. argument that it had already reformed cotton supports sufficiently -- and also to an industry that relies heavily on government assistance.

Johanns said Washington was working "very, very hard" to protect subsidies U.S. cotton producers currently receive, even as those supports come under greater scrutiny from trading partners, some of whom believe they depress prices around the world and deepen poverty for vulnerable farmers.

The case has drawn attention to poor cotton-growing countries such as Benin, Chad, Mali and Burkina Faso, which are pushing for subsidy reform in the Doha round of world trade talks.

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