Due to the confidential nature of the interim Panel ruling, the National Cotton Council has not seen the reported WTO decision. Initial press reports indicate that the Panel largely sided with Brazil. If the Panel ruled for Brazil on its serious prejudice claims, though, we believe that it would be contrary to the facts in the world cotton market.
U.S. actions already taken to comply with the first WTO Panel ruling have had a significant impact on U.S. cotton and U.S. cotton producers. Since the U.S. eliminated cotton's Step 2 program, U.S. cotton acreage is down 28% for 2007, U.S. exports have declined significantly and U.S. production is predicted to be only around 17 million bales in 2007, the lowest since 2002.
It cannot be credibly argued that any payments under domestic support programs are causing any country serious prejudice in 2007 – the first year of their operation without the Step 2 program.
It is incomprehensible that a WTO panel could make a finding of serious prejudice against the U.S. when the international cotton market is strong, offtake will exceed production, world prices are up and acreage is up almost everywhere in the world except the U.S. cotton production outside the U.S. mushroomed and is estimated to be a record high of 97.1 million bales.
India is expected to harvest an all-time record crop and has supplanted the U.S. as the world's largest exporter to China; world prices are up; and payments under the marketing loan program have decreased to zero. In the face of these facts, the U.S. cotton industry is left to puzzle the basis of such a decision.
marketing@alchempro.com
