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On March 3, the United States lost an appeal against a World Trade Organization decision that domestic subsidies to American cotton farmers — amounting to some $2.7 billion per year — violate international trade rules. The WTO’s original finding, the first to target American agriculture, determined that U.S. cotton subsidies exceed the payment caps established by the Agreement on Agriculture that emerged from the Uruguay Round of multilateral trade talks preceeding the launch of the WTO in 1995. Agricultural production is hugely important to developing economies, and reform of the heavily protected and subsidized agricultural sectors in the United States and Europe lie at the heart of developing-country demands at the WTO.  Filed at a time when trade talks had stalled (and taken together with a parallel suit against EU sugar subsidies) Brazil’s cotton case changed the terms of debate and challenged the developed world to live up to its commitments and obligations in a rules-based global trading system.  In the wake of the WTO Appellate Body’s final ruling against the United States, GMF's Trade & Development program hosted Scott Anderson, lead lawyer for the Brazilians, and Aluisio de Lima-Campos of the Brazilian Embassy in Washington, DC, for a luncheon discussion on the origins of the case and its implications for the United States, Brazil, and international trade. At the March 9 event held in cooperation with the Environmental Working Group, de Lima-Campos discussed the background to Brazil’s litigation and explained how trade-distorting agricultural subsidies produce spillover effects that negatively impact social, health, and other sectors in developing countries.  He also highlighted the importance of the cotton issue as the primary catalyst for both the formation of the G20 Group of developing countries and the breakdown of WTO Ministerial talks in Cancún, Mexico, in 2003. Andersen, for his part, highlighted the findings of the appellate decision and the next steps for implementation in the United States, and considered the impact of the ruling on global trade negotiations.  The Appellate Body, he said, confirmed the WTO panel’s original ruling that several U.S. programs — among them marketing loans, counter-cyclical payments, and Step 2 payments — cause prejudice against Brazilian cotton production by depressing world cotton prices.  In light of this decision, Andersen said, developing countries may be prompted to bring forth suits against other crops as “the path has been plowed” for the next case. Finally, Andersen predicted that the ruling would stiffen the backs of G20 negotiators in the Doha Round of trade talks in Geneva.