Just as farmers and food industry professionals were getting used to the new Farm Bill, passed late last month, the World Trade Organization this week ruled in favor of Brazil in its five-year-old, multi-billion-dollar trade dispute with the U.S. cotton industry. A three-judge panel ruled U.S. subsidies unfairly helped American cotton farmers undersell foreign competitors from 2003 to 2006, and the U.S. government has failed to comply with the resultant decision levied against it by the trade organization in 2006. The current ruling could result in billions of dollars in punitive trade sanctions against the U.S. at a time when the country's currency and economy are already faltering.

Some analysts say the WTO was waiting to see if reforms it had recommended made it into the farm bill before ruling. Some say the farm bill could now possibly be revised to address the organizations recommendations to further reduce funding to marketing efforts for the cotton industry and counter-cyclical payments to cotton farmers. Sean Spicer, spokesman for the office of the U.S. Trade Representative, told Brownfield Ag News the ruling is unreasonable, given its foundation in 2002 market conditions versus current conditions.

"One of the concerns that we have right now with the ruling is that cotton prices since the period that was looked at by the WTO have risen substantially and are expected to remain high," Spicer said.

In 2007, a similar complaint was brought by Canada against U.S. farm programs for corn, and some analysts say the cotton ruling could make U.S. farm programs more vulnerable to foreign disputes.

The U.S. cotton industry caught further international flak earlier this year when the U.K. banned its government-funded ads for "greenwashing." The ads called cotton "soft, sensual and sustainable," and the British ad authority shot back with, "Cotton is a pesticide- and insecticide-intensive crop that can seriously deplete groundwater supplies."

Meanwhile, the U.S. organic cotton industry continues to grow, despite stiff competition from lower-cost foreign imports. A new report from Packaged Facts says the global "sustainable" apparel market, of which organic cotton comprises 70 percent, will likely cash out at $4.18 billion by the end of 2008, up 35 percent from $3.05 billion in 2007. Subsidies for organic agriculture, because they are geared towards protecting the environment rather than farmers' incomes, are generally not subject to challenge under WTO rules.