US AND BRAZIL AGREE TO SUSPEND RETALIATION IN WTO COTTON DISPUTE

On 5 July, the US and Brazil reached an agreement establishing a procedure according to which Brazil will not seek to impose retaliatory duties on US imports to compensate for US cotton subsidies that were found to be illegal by the WTO (see BRIDGES Weekly, 6 July 2005). On 30 June and 5 July, the US had announced steps to comply with a WTO ruling in the recent cotton dispute. Brazil had nevertheless issued a statement on 5 July saying it would ask for the right to impose retaliatory measures at a 15 July meeting of the WTO Dispute Settlement Body (DSB), a step required in order for Brazil to maintain its right to retaliate under WTO rules.

According to the terms of the procedural agreement (WT/DS267/22) circulated to WTO Members on 8 July, Brazil will ask for the right to retaliate on 15 July DSB special session meeting. The US will object to the level of retaliation announced by Brazil, after which they will both request and accept that the matter be referred to arbitration. The parties will then, at the earliest possible time, call for the arbitrators to suspend their work. According to the settlement, Brazil remains entitled to request the establishment of a new WTO panel at any time after 15 July in order to determine whether the steps taken by the US to comply with the original WTO ruling are sufficient.

ICTSD reporting; "Statement of USTR Spokesperson Richard Mills on Procedural Agreement with Brazil Suspending Further Retaliation Proceedings in WTO Cotton Dispute," USTR PRESS RELEASE.

TEXTILES AND CLOTHING REPORT TABLED AT LDC MTG

A new WTO Secretariat report entitled "Options for Least Developed Countries (LDCs) to improve their competitiveness in the textiles and clothing business" was the focus of discussions at an 8 July meeting of the WTO Sub-Committee on LDCs. Drawing from the study, Members examined factors preventing LDCs from benefiting from non-reciprocal trade preference schemes, including restrictive rules of origin as well as poor coverage. Lesotho, in particular, noted the need for 'full-package' preference schemes, such as those they received from the US under the African Growth and Opportunities Act (AGOA), which included training of officials, technical assistance and other aid to enable LDCs to qualify for the trade preferences.

The report also suggested that LDC exports could be increased by reducing developing-country import tariffs on textile and clothing products, either through non-reciprocal preferences or through regional trade agreements. India and China expressed some reservations about liberalising their textiles and clothing sectors at the WTO. India instead pointed to other initiatives to enhance south-south trade.

Members concluded that LDCs needed targeted supply-side technical assistance to ratchet up their competitiveness. The report suggested that LDCs could make proposals for such technical assistance as it relates to adjustment in the textiles sector under the Integrated Framework (see BRIDGES Weekly, 4 May 2005).

The report was commissioned by the LDC Sub-Committee earlier this year in response to fears that the end of quotas in global textiles and clothing trade would hurt LDC employment and development prospects (see BRIDGES Weekly, 26 January 2005). Members agreed to continue discussions on the 167-page report at the Committee's next meeting on 29 September.

The report can be accessed at http://docsonline.wto.org/DDFDocuments/t/wt/comtd/ldcw37.doc.

ICTSD reporting.