At the WTO Cotton Sub-Committee meeting held on 27 March, the US expressed opposition to a proposal by Benin, Burkina Faso, Chad, and Mali that would require trade-distorting subsidies for cotton to be cut more deeply and quickly than those for other commodities in the agriculture negotiations (see BRIDGES Weekly, 8 March 2006). The so-called 'cotton four' outlined a formula for supplemental reductions to cotton subsidies over and above that required by the general tariff reduction formula in order to ensure that would be cut steeply even if the overall reduction were quite modest. The size of the supplemental cut would decrease as the ambition of the general cut increased.

Several other delegations, including Brazil, Colombia, Cuba and the EU, expressed support for the proposal. The EU further called for the scope of the proposal to be broadened beyond domestic support to encompass export competition and market access. On market access, the EU called on developed countries, as well as developing countries in a position to do so, to extend duty- and quota- free access to cotton products from all developing and least-developed countries (LDCs).

The US, however, stuck to its longstanding position that cotton subsidies should be addressed only after members had agreed on the details of cuts in farm subsidies in the agriculture talks, arguing that the proposal would distract Members from their pursuit of an overall agreement. Defending the proposal, Benin countered that it could serve as a basis for finding an acceptable solution to the problem of cotton subsidies. The US also called on developing countries join the duty-free, quota-free offer to LDCs.

The next meeting of the Sub-Committee has been tentatively scheduled for 24 April.

ICTSD reporting.

DISPUTES: EU, US INITIATE DISPUTE AGAINST CHINA; US MISSES GAMBLING RULING DEADLINE

On 30 March, the EU and the US took the first step in launching a WTO dispute against China, filing separate "requests for consultations" about China's treatment of certain automobile part imports, which they allege is trade restrictive. Both identified three Chinese laws, arguing that they effectively treated imported automobile parts differently from similar or "like" domestic ones for taxation and related purposes, in contravention of WTO rules on non-discrimination and trade-related investment measures.

The complainants also charged that China was violating WTO subsidy rules by levying lower tariffs on imported auto parts if the final assembled vehicle contained a specified amount of locally-produced material, thus effectively providing support to domestic auto part production.

Chinese government officials have expressed regret about the decision of the EU and the US to fight this case at the WTO but have indicated that they are studying the consultation requests seriously.

This complaint would be the second formal one against China since it joined the WTO in 2001. In March 2004, the US filed a complaint against China on semiconductors which was settled during consultations.

In other dispute settlement news, on 3 April the deadline for the US to bring its laws into conformity with a WTO ruling on the gambling dispute brought by Antigua and Barbuda expired without any indication of compliance from the US (see BRIDGES Weekly, 1 March 2006 and BRIDGES Weekly, 24 November 2005). In April 2005 the WTO Appellate Body upheld a panel decision to the effect that certain US federal laws on the supply of cross-border gambling services amounted to a failure to offer services and service suppliers from Antigua treatment "no less favourable" than that set out in its WTO commitments (see BRIDGES Weekly, 13 April 2005).

ICTSD reporting; "Public citizen: Deadline for U.S. Compliance with WTO Gambling Ruling Comes and Goes with No U.S. Action," ALLAMERICANPATRIOTS.COM, 4 April 2006; "China regrets WTO challenge," WORLD PEACE HERALD, 31 March 2006; "Deadline Looming for U.S. in W.T.O. Fight with Antigua," CASINO CITY TIMES.COM, 12 March 2006.