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by Lynn Snyder

Over the past two years, Brazil has brought legal proceedings against the United States, challenging several types of U.S. farm support measures.

Should the United States lose its appeal of a recent World Trade Organization panel decision, farm programs could change, according to Ohio Farm Bureau Vice President for Agricultural Ecology Constance Jackson.

In 2002, the Brazilian government requested meetings with the United States regarding aspects of the U.S. cotton program. Brazil argued U.S. domestic support programs caused an increase in U.S. world market share and that U.S. decoupled income support payments suppressed or depressed world cotton prices.

In February 2003, Brazil requested a panel be formed to hear the dispute. The panel was formed and in a September ruling sided with the United States and in some cases, sided with Brazil.

The panel sided with the United States regarding decoupled income support payments. However, the panel sided with Brazil in its claims that the United States violated the "Peace Clause," meaning that commodities that do not qualify for export subsidies actually received them, and that total trade distorting subsidies exceeded our capped limit. Jackson said the United States disagrees.

The panel also found that other U.S. domestic support programs, such as marketing loan, counter-cyclical and market loss assistance, were found to cause significant suppression of cotton prices in the world market from 1999 to 2002.

Jackson said Brazil brought a case against cotton because it felt cotton offered the best argument for its claims against U.S. farm programs. "What they’re trying to do is attack our basic farm income support programs, and they’ll use whatever crop is advantageous to their position. For several political and pricing reasons, cotton was their best chance to win," she said.

In a news release, U.S. Trade Representative Robert Zoellick said, "We strongly disagree with some aspects of the panel report, which we will be appealing…Moreover, some aspects of the panel’s report belong in negotiation and not litigation, namely in the Doha Development Agenda negotiations," he said.

The WTO panel’s ruling is not final until the appeals panel makes its ruling. American Farm Bureau has sent a letter to Zoellick thanking the USTR office for its efforts to protect the interests of U.S. producers and indicating the organization’s support of an appeal.

Jackson said the fact the panel disagreed with Brazil’s case regarding decoupled payments is "great news and helps our argument."

If the United States loses the appeal, Jackson said the result could change farm programs as they are now. "The bigger impact of this, and the short-term impact as we look at the next farm bill, is there will be pressure internally to restructure [farm programs]," she said. Budget reconciliation in 2005 will open parts of the farm bill, she said, and discussions are starting now for the 2006 Farm Bill.