The World Trade Organization has upheld a landmark ruling issued in April that found U.S. cotton subsidies had artificially lowered international prices and hurt Brazilian cotton farmers.
The decision could encourage developing countries to file cases against rich nations for subsidizing other crops.
"This is a huge victory for poor people all round the world," said Adriano Campolina Soares, regional director for the Americas at ActionAid. "Brazil has successfully challenged the subsidy scandal. Hopefully, this ruling will open the floodgates for similar cases that could stop rich countries subsidizing their farmers at the expense of farmers in some of the world's poorest countries."
"Brazil isn't only giving a contribution to our own producers, but also helping other countries that otherwise wouldn't have a chance to fight in the WTO," Brazilian President Luiz Inacio Lula da Silva said of the lawsuit filed by his country.
TheWTO ruling supported Brazil's claim that the U.S. had retained its position as the second-largest cotton grower and the largest exporter by paying $12.5 billion in subsidies to its cotton farmers between August 1999 and July 2003. Brazil argued that between 2001 and 2002 alone, the U.S. funneled nearly $4 billion in subsidies to its cotton producers for a crop worth $3 billion, enabling growers to undercut competitors on the world market and costing Brazilian farmers $600 million in lost sales.
No changes in U.S. policy are on the immediate horizon because Washington plans to appeal the decision in a process that could take years. The United States has said its payments to farmers are within the legal limits and that many are not subsidies as defined by WTO.
The report was hailed as a victory not just for cotton farmers in Brazil but for those in West Africa, where more than 9 million cotton producers farm 12-acre plots, earning less than $1 a day. Mali, Burkina Faso, Chad and Benin have all said U.S. subsidies hurt their farmers.
In 2002,the World Bank found that ending all forms of cotton subsidies would increase cotton prices by an average of 12.7 percent over a decade, with the largest gains accruing to Africa. The WTO made its decision in the Brazil-U.S. case in April but delayed releasing details until now because of a confidentiality clause.