WTO OKs $295 million in Brazilian sanctions on US - Cotton Subsidies

American goods will face around $295 million in annual sanctions as a result of the United States' failure to eliminate illegal subsidies to U.S. cotton growers, the World Trade Organization ruled Monday. Monday's ruling was the fifth major decision since the Brazilian government brought the case to the WTO in 2002, alleging that the U.S. was able to retain its place as the world's second-largest cotton producer by paying out some $3 billion to American farmers each year. China is the largest exporter of cotton, while Brazil is fifth. The WTO's condemnation of the U.S. in September 2004 was seen as a victory for Brazil and for West African countries that claimed to have been harmed by the subsidies. Three decisions since have confirmed that U.S. support programs unfairly help U.S. producers undersell foreign competitors and depress world market prices, dealing a double blow to cotton growers in Brazil and elsewhere. In response to the legal defeats, the U.S. Congress has scrapped some export credits and in 2006 repealed the "Step-2" cotton-marketing program that made payments to exporters and domestic mill users as compensation for buying higher-priced American cotton. But last year it approved a new farm bill worth nearly $300 billion that left a number of other contentious cotton programs intact...AP