The political economy of dispute resolution at the WTO: Doha and the cotton case
Methods/Data: This study examines the multiple impacts that Brazil’s landmark 2002-2009 challenge to U.S. upland cotton and export credit guarantee subsidies has had on national and world agricultural policy, WTO jurisprudence, and the Doha Trade Round negotiations. The nature and effects of the political and economic asymmetries of the WTO Member states are examined throughout the study. It is noted how the Cotton decisions have enhanced the negotiating position of developing countries while continuing to highlight significant imbalances within the juridical and legislative functions of the WTO system. Additionally, the study examines the ethical considerations underlying and surrounding the dispute.
Results: The WTO Cotton decisions[1] provide strong evidence about the deleterious effects, both in terms of ethics and consistency with WTO agreements, of developed countries domestic agricultural policies on developing nations. The results of the case established as fact the worldwide price-suppressing effects on world cotton prices from the approximately $3 billion in annual U.S. cotton subsidies.
In addition, it is a compelling case study highlighting the inter-connectedness of the WTO jurisprudence and negotiations. It illustrates the fact that the WTO offers the only realistic potential for developing countries to secure relief from trade-distorting domestic subsidies and additional substantive forms of support through measures such as export credit guarantees. The various Panel, Appellate Body and Arbitrator’s decisions generated by the dispute have established important roadmaps for future dispute settlement challenges as well as provided the basis for real reform in ongoing and future multilateral WTO trade negotiations. Further, the Panel and Appellate Body findings of massive price suppression negatively impacting smaller and weaker WTO Members provides a powerful ethical basis for long-term reform of trade-distorting agricultural subsidies.
In this light, the study concludes that Brazil’s successful Cotton challenge enhanced the negotiating position and leverage of both Brazil and the C-4 African countries of Chad, Benin, Burkina Faso, and Mali. It also finds that the Cotton decisions were a leading factor in creating a coherent opposition by developing countries in the Doha negotiations, led by Brazil, to United States and EU attempts to maintain trade-distorting agricultural subsidies.
[1] WTO Cotton dispute refers to five sets of decisions from 2004-2009, entitled United States Subsidies on Upland Cotton.