Financial Times (London, England)

July 2, 2005 Saturday
London Edition 1

SECTION: WORLD NEWS; Pg. 7

LENGTH: 209 words

HEADLINE: US bows to pressure over cotton support

BYLINE: By ALAN BEATTIE

BODY:


The US yesterday promised to change a farm export subsidy scheme to comply with a World Trade Organisation ruling against its cotton support, but did not address another programme which pays US producers to use American cotton.

The pledge, which came just ahead of a WTO July 1 deadline to comply with the ruling, followed a successful legal challenge by Brazil in one of the landmark cases in the organisation's history.

The US said it would eliminate an export credit guarantee programme used by cotton farmers, worth over Dollars 4bn (Pounds 2.25bn) a year.

But it did not reveal plans for the so-called "Step 2" programme which compensates American cotton millers and exporters for using more expensive US cotton. The US Department of Agriculture said a decision would be taken soon. Mike Johanns, the agriculture secretary, said: "The administration continues to evaluate other steps that could be taken to comply with the WTO."

Both the export credit and Step 2 payments were criticised in the case brought by Brazil to the WTO, which argued that the subsidies lowered the world price of cotton and hurt Brazilian farmers. The case was backed by west African nations where the subsidies are estimated to cut cotton farmers' incomes by Dollars 250m a year.

LOAD-DATE: July 1, 2005