The World Trade Organisation upheld the findings of its interim report released in July saying that subsidies paid to US cotton farmers are illegal. The US is expected to appeal, but if it is upheld, the US could face billions of dollars in trade sanctions for failing to scrap illegal subsidies. The ruling is a victory for Brazil’s cotton industry, which spearheaded the complaint, and for West African states. Brazil and others complain that the payments harm their producers and depress world prices.
There is increasing legal opinion that US subsidies are illegal, and significant economic opinion that the subsidies are harmful. They are a key complaint of developing countries in the current Doha trade round. Elimination of the subsidies would liberate trade discussions, help developing economies, which are more reliant on agriculture and help US and other rich subsidisers allocate resources more effectively. Subsidies should go.
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