A World Trade Organization (WTO) compliance panel ruled in October that the United States has failed to abide by an earlier WTO ruling requiring it to eliminate illegal cotton subsidies.

This latest development in the long-running dispute over U.S. cotton subsidies originated when Brazil complained to the WTO that the United States had not obeyed a 2004 ruling by a WTO panel declaring certain of its subsidies to cotton illegal.

In its 15 October ruling, which so far has only been released to the parties, the compliance panel found that the U.S. had failed to sufficiently reform its cotton subsidies in line with the recommendations of the 2004 WTO panel report.

The U.S. Senate Agriculture Committee chairman Tom Harkin has said that the ruling will not affect the U.S. cotton program contained in the farm bill being written in the Senate, according to press reports.

Agriculture Department Undersecretary Mark Keenum has said that Washington would likely appeal the ruling.
 
If the ruling stands, the WTO could authorize Brazil to retaliate in the form of higher tariffs on U.S. imports to Brazil, which could run into the billions of dollars.

For complete documents in the ongoing cotton dispute visit the WTO's website at: 
http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htm2007-