WASHINGTON, March 3 - The United States suffered a final defeat Thursday in its dispute with Brazil over cotton subsidies at the World Trade Organization.

The organization's appellate body upheld a ruling last year by trade judges who said American subsidies to cotton farmers broke international trade rules by depressing world prices and harming cotton farmers in Brazil and elsewhere.

The decision on Thursday could force the United States to lower the subsidies it pays farmers to grow cotton and, eventually, other crops.

Representative Clay Shaw, the Florida Republican who leads the trade subcommittee of the House Ways and Means Committee, said: "If we want to keep exporting American cotton, we're going to have to abide by the W.T.O. ruling. It certainly gives you cover to make some of the corrections needed."