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Congress ends cotton subsidy

WASHINGTON, Feb. 2 (UPI) -- Congress withdrew support for a U.S. cotton subsidy program Wednesday, ending export and import subsidies and normalizing world cotton prices.

The U.S. House of Representatives approved legislation that would repeal a support program for cotton formally known as "Step 2" as part of its Deficit Reduction Omnibus Reconciliation Act. Before the end of 2005, the Senate passed identical legislation. The bill will now go to President Bush who is expected to sign it into law.

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The administration said repeal of the program would help to address top U.S. trade priorities by eliminating both export subsidies and import substitution subsidies deemed illegal by the World Trade Organization and help in stabilizing world cotton prices.

"It implements findings in the WTO dispute brought by Brazil, and it fulfills commitments made at the recent Hong Kong ministerial to eliminate export subsidies for cotton by 2006," said Rob Portman, U.S. Trade Representative, in a statement. "These are important objectives, and I commend the Congress for working with the administration to address these critical issues."

Non-governmental agency Oxfam International said Congress' decision to repeal the subsidy program was positive, but was critical of the slashing of conservation programs.

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"Eliminating Step 2 is a solid step forward for the U.S. Congress, but more is needed to fully comply with international commitments and deliver a more equitable and sustainable farm program," said Raymond C. Offenheiser, president of Oxfam America. "The reality is that Congress took a pass on the opportunity to reform commodity subsidies through budget reconciliation process and slashed conservation programs instead."

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