Posted October 2, 2014
On Wednesday, The U.S. and Brazil ended a decade-long dispute over subsidies paid to cotton growers, according to a Reuters article by Paulo Whitaker available here. ABC News also published an article here, The Hill here, and Feedstuffs here.
As part of the agreement, the U.S. will pay $300 million to the Brazil Cotton Institute and Brazil will not take any further trade measures against the United States.
“Today’s agreement brings to a close a matter which put hundreds of millions of dollars in U.S. exports at risk,” said U.S. Trade Representative Michael Froman.
The agreement resolves a fight between the two countries since 2002 when “Brazil brought a case against the United States charging that the subsidies Washington paid American cotton farmers were a violation of global trade rules.” The World Trade Organization (WTO) ruled in Brazil’s favor and the U.S. was forced to make annual payments, according to ABC News.
The agreement also allows the Obama administration to implement the farm bill. A new insurance measure intended for cotton growers was created to comply with the WTO ruling that previous cotton support payments violated WTO rules against subsidies.
A House Democrat expressed concerns about the agreement, according to The Hill.
Rep. Rosa DeLauro (D-Conn.) said the United States, “never should have been in a situation where we have to pay off Brazil while vulnerable families suffer.”
“Our farm subsidies need serious reform and the last farm bill simply extends the status quo. The best way to resolve this issue is to remove our market-distorting cotton payments,” said Rep. DeLauro.
Secretary Vilsack also made a statement, according to Feedstuffs.
“Through this negotiated solution, the United States and Brazil can finally put this dispute behind us. Without this agreement, American businesses, including agricultural businesses and producers, could have faced countermeasures in the way of increased tariffs totaling hundreds of millions of dollars every year. This removes that threat and ensures American cotton farmers will have effective risk management tools.”
For more information on international law and organizations, please visit the National Agricultural Law Center’s website here.