WASHINGTON, Aug 3 (AFP): The US government said yesterday it had repealed an illegal cotton subsidy programme that had drawn the threat of billions of dollars in sanctions from Brazil.
The formal repeal of the so-called "Step 2" programme of support for US cotton growers took effect Tuesday, after it was abolished in a new trade act signed by President George W Bush in February.
Its annulment came after the World Trade Organisation (WTO), acting on a complaint by Brazil, ruled in March 2005 that Step 2 violated trade rules because it gave US exporters an unfair advantage on the global market.
"This action demonstrates the strong US commitment to abiding by its WTO obligations and reflects US support for the rules-based trading system," US Trade Representative Susan Schwab said in a statement.
"I appreciate that the administration and Congress could work together to address this issue," she said.
Brazil later reached a deal with Washington, giving the United States time to adapt its legislation, but still could ask for WTO authorisation to impose four billion dollars in retaliatory duties.
Following the collapse of WTO talks late last month, West African countries that are heavily reliant on the crop for their export earnings warned they may launch their own legal challenge over the US cotton subsidies.
According to US government figures, the subsidies excluding federal insurance guarantees for farmers stood at 3.1 billion dollars for the 2005 crop year. That was down from 3.7 billion for 2004.
Meanwhile, message from Brasilia says: The Group of Twenty (G20) of developing countries opposed to agricultural subsidies is to hold a meeting in September to strategise on unblocking failed global free trade talks, Brazilian Foreign Minister Celso Amorim said yesterday.
Amorim made the announcement while speaking to a senate committee.
Brazil is organising "a high level" meeting with trade ministers and their representatives for September 9 and 10 in Rio de Janeiro, diplomatic sources said.
Brazil believes that the Doha Round of trade talks can still be salvaged.
The Doha Round was supposed to dismantle worldwide barriers in agricultural and industrial trade and use commerce to give developing countries a boost.
WTO chief Pascal Lamy suspended the round last week when wealthy nations failed to compromise on tariffs and subsidies, especially in agriculture, at last ditch talks in Geneva.
The G20 is currently headed by Brazil, and also includes Argentina, Bolivia, Chile, China, Cuba, Egypt, the Philippines, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, South Africa, Thailand, Tanzania, Uruguay, Venezuela and Zimbabwe.