Brazil told the World Trade Organization (WTO) on Monday that it would set US$829.3 million worth of annual sanctions on US goods for the United States' failure to eliminate illegal subsidies to American cotton growers.

The South American country didn't say when it would start punishing US products in retaliation, but that an August ruling by the WTO means it can focus US$268 million worth of penalties on American trademarks, patents and commercial services. The rest will be on American goods.

The United States took note of the Brazilian statement at a closed-doors session of the WTO's dispute body without disputing the figures, according to documents.

Brazil thanked Washington for providing accurate data on its cotton support programmes, which have been ruled illegal in a number of landmark WTO decisions over the last five years.

The WTO in August authorised Brazil to punish the US for continuing to hand out billions in illegal cotton subsidies, creating a formula that would let Latin America's largest nation to set sanctions according to how much the US support programmes are worth each year.

Sensitive sector

The award was the second largest in the 14-year-old trade body's history, but it only let Brazil retaliate in the sensitive sector of intellectual property rights if US payments exceeded a minimum threshold.

Brazil says the US has been able to retain its place as the world's second-largest cotton producer by paying out some US$3 billion to American farmers each year.

China is the largest exporter of cotton, while Brazil is fifth.

In response to the legal defeats, the US Congress has scrapped some export credits and in 2006 repealed the 'Step-2' cotton-marketing programme that made payments to exporters and domestic mill users as compensation for buying higher-priced American cotton.

But last year it approved a new farm bill worth nearly US$300 billion that left a number of other contentious cotton programmes intact.

The WTO's condemnation of the US cotton programmes has been seen as a victory for Brazil and for West African countries that claimed to have been harmed by the subsidies. Three decisions since have confirmed that US payments unfairly help US producers undersell foreign competitors and depress world market prices, dealing a double blow to cotton growers in Brazil and elsewhere.

- AP