Brazil has won a landmark victory at the World Trade Organisation (WTO) that could spell the beginning of the end of rich countries’ subsidy payments to their farmers.
The WTO, based in Geneva, has ruled that most of the $1,5-billion of annual subsidies given by the United States government to its 25 000 cotton farmers are illegal.
The provisional ruling is confidential, but trade sources said public confirmation would be available as early as May and could start a domino effect where a host of the £300-billion in subsidies lavished on the rich world’s farmers could tumble.
This is the first time a developing country has won such a ruling at the WTO when arguing against one of the big trade powers.
The European Union is also under pressure from countries such as Brazil, Australia and Thailand, over the massive subsidies it makes available to sugar beet growers.
The agricultural subsidies attracted by farms in the richer nations have been among the main sticking points in the latest round of world trade talks, known as the Doha round, which collapsed in Mexico last year.
The US is poised to appeal, but few appeals against WTO rulings, which the US urges other countries to respect, have succeeded.
A spokesperson for the US trade representative, Robert Zoellick, said the US considered all its foreign programmes to be fully consistent with WTO obligations and the issue should be dealt with at a multilateral level through the broad WTO trade talks.
But campaigners were not convinced. Matt Griffith, a trade policy analyst at charity Cafod, said: ”That Brazil brought this case is a sign of desperation that so little has been done to tackle rich country subsidies. It sets a valuable precedent in an attempt to call the US and other lavish subsidisers to book.”
Oxfam’s Celine Charveriat agreed: ”This would be a huge victory, not just for Brazil but particularly for 10-million poor African farmers whose livelihoods have been crippled by unfair competition.” — Â