29 April 2004

WTO rules American cotton subsidy illegal

Brazil has won a landmark victory at the World Trade Organisation that could spell the beginning of the end of rich countries' subsidy payments to their farmers.

The WTO, based in Geneva, has ruled that US$1.5bn (AU$2.5bn) of annual subsidies given by the United States government to its 25,000 cotton farmers are mostly illegal.

The provisional ruling is confidential, but trade sources said pubic confirmation would be available as soon as next month and could start a domino effect whereby much of the %uFFFD300bn in subsidies lavished on the rich world's farmers might tumble.

'This could be the first domino,' one said.

The ruling is the first time a developing country has won such a decision from the WTO when arguing against one of the big trade powers.

The European Union is also under pressure from countries such as Brazil, Australia and Thailand over the massive subsidies it makes available to sugar beet growers.

The agricultural subsidies attracted by farms in the richer nations have been one of the main sticking points in the latest round of world trade talks, known as the Doha round, which collapsed spectacularly in Mexico last year.

In ways, this could be the most important international event this year. The massive agricultural subsidies paid by much of the developed world (Australia, for once, is a notable exception) are perhaps the single greatest contributor to world poverty.

The mess in Iraq will pass in time. Even if the US re-elects the Boy Emperor he will only have 4 more years. But some of these agricultural subsidies and protections are generations old.

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