(Recasts with Brazil saying will seek sanctions)
By Laura MacInnis
GENEVA, June 20 (Reuters) - Brazil said on Friday it would seek as much as $4 billion in sanctions on U.S. imports after the World Trade Organisation (WTO) adopted a final ruling in a long-running dispute over Washington's cotton subsidies.
Roberto Avezedo, Brazil's chief trade negotiator, said his country would restart arbitration within months or even weeks to allow it to impose retaliatory measures on U.S. goods.
"We will. The only decision is when," he told journalists in Geneva. "We are holding internal consultations because the process will involve a number of legal points that have no precedence at the WTO."
Brazil argues that U.S. subsidies to cotton farmers unfairly boost American production and depress world prices, squeezing developing country farmers out of the market. The issue has also pitted Washington against African cotton producers in talks over the WTO's Doha round aimed at cutting worldwide farm subsidies.
The United States challenged Brazil's request in 2005 for sanctions in connection with the cotton dispute, sending the matter to arbitration which was later suspended to assess whether Washington had removed the offending measures.
There is no deadline for Brazil to request the resumption of arbitration. Once it has restarted, the WTO arbitrator would have 60 days to rule on how much Brazil can seek in compensation, and in what form.
"Once you activate it the clock starts ticking. We want to make sure we have everything ready," Avezedo said, specifying the request would occur in "months, for sure. Weeks -- I don't know how many".
Brazil has previously made clear it would not impose sanctions on U.S. agricultural goods but would instead seek to "cross-retaliate" in other sectors, for instance by lifting copyright protections on U.S. films or computer games.
If granted, it would be the third time the WTO has authorised one of its 152 members to cross-retaliate, after Ecuador in 2000 in a banana dispute with the European Union, and Antigua in 2007 in an online gambling dispute with the United States.
In its submission to a special session of the Dispute Settlement Body on Friday, the United States said the WTO findings in the cotton dispute were based on outdated evidence.
"The (WTO) compliance panel and appellate body reports deal with market conditions from two to three years ago. Since then, U.S. cotton acreage has fallen precipitously, and continues to decline," it said.
"Despite the allegedly marked-insulating effects of U.S. payments, U.S. cotton acreage has declined by more than 38.5 percent in the last two years," it added. Price-linked subsidies to farmers have also fallen as cotton prices have risen. (Editing by Catherine Evans)
