US Illegally Paid $1.5bn to Farmers

The United States illegally subsidised its cotton farmers to the tune of $1.5bn (£790m), the World Trade Organisation ruled yesterday.

The WTO's appeals court backed the trade body's decision last year to uphold Brazil's complaint that the subsidies, paid to 25,000 cotton farmers, breached world trade rules and depressed global cotton prices.

America had appealed against the ruling, claiming it was too harsh. Brazil had complained that it was not harsh enough.

The ruling has been seen by campaigners as a significant victory in efforts to scrap $300bn of subsidies lavished on farmers in the developed world. It is a key part of the Doha round of talks to reform world trade rules.

The decision was expected since the appeals body rarely overturns a WTO decision.

The US has said that any reform to its cotton regime will have to be wrapped into the Doha talks if it is to have any chance of approval by Congress.