Posted:  August 8, 2013

Secretary of Agriculture, Tom Vilsack, announced that without a new farm bill, the United States will stop temporary settlement payments to Brazil from the 2009 World Trade Organization (WTO) Cotton Dispute.  According to Agri-Pulse, Vilsack told Brazilian officials that the annual $147.3 million in payments would be reduced in September and ended in October if Congress fails to pass a new farm bill that resolves the long-term dispute.  The current farm bill expires on September 30.  A Bloomberg article covering this issue is available here.

In 2009, the WTO sanctioned $829 million in retaliatory measures after it found U.S. cotton subsidy programs and its export guarantee program illegal.  The WTO found that cotton subsidies, specifically, the marketing assistance loan program, counter-cyclical payment program, and the GSM-102 Export Credit Guarantee Program were too high and therefore distorted trade and world prices.  In June of 2010, the U.S. and Brazil reached an agreement to stop the $829 million in retaliatory measures for $147 million per year in damages while subsidy reform was addressed in the 2012 farm bill.  For a general overview of the “Framework agreement” reached in 2010, a past blog post on the subject is available here.  For more information on the WTO Cotton Dispute and the “Framework agreement,” a report from the Congressional Research Service is available here.   
Efforts to pass the legislation have stalled in the U.S. Congress and, according to Bloomberg, Vilsack stated that federal budget cuts may also keep the U.S. from making the payments.  Vilsack has been in Brazil since August 2, traveling with Senator and Chairwoman of the Senate Agriculture Committee, Debbie Stabenow (D-MI) and Senator Roy Blunt (R-MO).
According to AgWeek, Vilsack has been “pressuring Congress to finish the farm legislation, which would set policy for farm programs” and the Supplemental Nutrition Assistance Program (SNAP).  Both the “House and Senate versions of the bill would restructure cotton payments in an effort to please the WTO, including eliminating cash payments known as direct payments and creating a new cotton program that works more like crop insurance.”  Progress on the farm bill has stalled as the Republican majority House and the Democrat-led Senate disagree on cuts to SNAP.
For more information on farm bills, please visit the National Agricultural Law Center’s Farm Bills page.  Another excellent resource for daily updates on the farm bill is Farmpolicy.com, available here.
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