GENEVA, Sept 1: The United States on Friday blocked a request by Brazil for the World Trade Organisation to investigate US compliance with a ruling that condemned illegal subsidies to American cotton growers.Brazil asked the WTO to set up a panel of experts to look at the case, arguing that Washington was still failing to comply with international trade rules despite the recent elimination of a federal cotton subsidy ruled illegal in 2005.

The United States rejected the criticism and said it has sufficiently overhauled its cotton regime to bring it in line with its WTO obligations.

Countries have the right to block the first request for a panel, but Washington would be powerless from preventing its establishment should Brazil make a second request, trade officials said. The next meeting of the WTO’s dispute settlement body is on September 28.

“With respect to some of the ... recommendations and rulings, the United States has adopted no implementation measures at all,” Brazil said. “The implementation measures it has adopted fall far short of compliance.”

The US, which last month repealed the so-called Step-2 cotton-marketing programme that made payments to exporters and domestic mill users as compensation for buying higher-priced American cotton, said it regretted that Brazil was seeking litigation.

The US does not immediately make public its statements to the WTO’s dispute body, whose sessions are held behind closed doors.

Brazil alleges that the US has retained its place as the world’s second-largest cotton grower because Washington paid $12.5 billion in subsidies to American farmers between August 1999 and July 2003. The US is the world’s second-largest exporter of cotton after China. Brazil is fifth.

If the WTO finds that Washington has failed to remove all subsidies previously ruled illegal, Brazil could then ask for permission to set retaliatory sanctions against US goods.

Washington’s support for American cotton producers “ensures artificially high production and export levels” and hurts Brazilian and African producers, Brazil’s Foreign Ministry said in a statement last month, announcing its intention to restart the case.

Brazil reserved the right in July 2005 to impose sanctions of up to $3 billion on the United States, but said in October it would only seek $1 billion in compensation -- targeting US goods, as well as trademarks, patents and commercial services, under provisions in the global commerce body’s intellectual property and services agreements.

But the South American country later granted the United States more time to come into compliance with the WTO's ruling, which said many US cotton programmes included illegal export subsidies or domestic payments that were higher than the body’s rules allow.—AP