He stated that while the U.S. did not alter all aspects of its cotton program after the first Panel decision, “the measure of this type of proceeding is not whether the U.S. changed all of its programs, but whether the changes it did make were enough to ensure the program was not causing significant price suppression in world markets. Clearly, with U.S. production down and the rest of the world producing at a record pace, the U.S. program is not causing anyone injury.”
Gillon said that when the Compliance Panel report is made public, he hoped it would explain the discrepancy between the apparent decision and the current world cotton market.
“In order for the U.S. to be able to take rational policy steps to adjust to WTO decisions, it must have a clear description of what it is doing wrong,” he said. “So far, while maintaining that the U.S. is causing significant price suppression, no WTO Panel has told us what 'significant' means."
"This Panel had strong evidence before it tending to show that the U.S. program (even before parts of it were eliminated) could have had no more than a two or three percent impact on world prices. If the Panel did not discredit that evidence, we may have a decision by the WTO that a two or three percent movement in prices is 'significant,' which seems to fly in the face of common sense.”
Gillon described to meeting attendees Brazilian cotton programs that apparently operate as an export subsidy.
“The PEPRO program operated by Brazil essentially insures that domestic guaranteed prices for cotton in Brazil will not unduly harm the competitiveness of Brazilian cotton, either in domestic or international markets,” he said.
He also stated that a variable levy system restricting imports into China acts as a price support program for Chinese cotton producers – a system that has been equivalent to at least $5.7 billion in subsidized support for 2005 and 2006.
“That program continues to provide support to Chinese cotton producers in 2007,” he added.
National Cotton Council of America
marketing@alchempro.com
