King Cotton, Developing Countries and the 'Peace Clause': The WTO's US Cotton Subsidies Decision

Although the World Trade Organization (WTO) is a powerful vehiclefor promoting economic development, the Uruguay Round has beenperceived by developing country WTO members as an unequal bargain.Especially with respect to agriculture, the Uruguay Round yieldedonly limited concessions. In September 2003, Doha Round effortsstalled at Cancún when developing countries coalescedto oppose a proposal that insufficiently liberalized trade inagriculture. In March 2005, the Dispute Settlement Body adopteda panel decision upholding Brazil’s legal challenge ofUS subsidies to cotton producers. The US Cotton Subsidies decisionrepresents a dramatic victory for Brazil and other developingcountry WTO members. The timing of the decision, coincidingwith ongoing Doha Round agriculture negotiations, ensures thatit will influence any outcome of the Round. This article examinesthe US Cotton Subsidies decision, describes the subsidy programsat issue in the dispute, reviews applicable WTO rules, and outlinesthe major findings of the panel and Appellate Body. The articleconcludes that Brazil’s victory in US Cotton Subsidiesmay represent a broader shift within the WTO away from a systemdominated by the US and EC toward a system that increasinglyis influenced by emerging market economies.