European Court annuls cotton subsidy reform

The European Court of Justice yesterday ruled that the cotton subsidy reform negotiated in 2004 should be annulled because it did not ensure that cotton cultivation would remain profitable. However, the court did not mandate a return to the previous regime of subsidizing production by volume but recommended instead that a new regime be negotiated. «The effects of the annulment are suspended until the adoption, within a reasonable time, of a new scheme,» it said. The court maintained that the European Commission had made a flawed cost analysis, ignoring fixed labor costs in its calculations, and that it had made no advanced impact study of the reform’s consequences. Greece and Spain are the only cotton growers in the EU, with Greece producing 80 percent of total output, or 1.55 million tons annually.