Brazil ends cotton case, giving up its rights to countermeasures against U.S. trade.
The U.S. and Brazilian governments on Wednesday reached an agreement to settle the longstanding cotton dispute in the World Trade Organization.
In the agreement, Brazil will end the cotton case, giving up its rights to countermeasures against U.S. trade or any further proceedings in this dispute. Brazil also agreed not to bring new WTO actions against U.S. cotton support programs while the current U.S. Farm Bill is in force or against agricultural export credit guarantees under the GSM-102 program.
“Through this negotiated solution, the United States and Brazil can finally put this dispute behind us,” said Agriculture Secretary Tom Vilsack in a statement. “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.”
The decade-old cotton dispute was brought by Brazil against the United States at the WTO. In 2005 and 2008, the WTO found certain U.S. agriculture programs (domestic support to cotton under the marketing loan and counter-cyclical payment programs, and export credit guarantees under the GSM-102 program) were inconsistent with the United States’ WTO commitments. In August 2009, WTO arbitrators provided the level of countermeasures that Brazil could impose against U.S. trade.
In June 2010, the United States and Brazil signed a Framework Agreement to avert the imposition of countermeasures by Brazil against the United States that, at the time, would have affected about $800 million in U.S. trade. The United States also made monthly payments to the Brazil Cotton Institute for technical assistance and capacity building activities for the sector under a related memorandum of understanding.
During four years of discussions under the framework, Brazil and the United States worked on various aspects to settle their dispute, including changes to the operation of the GSM-102 program and domestic cotton support programs. The framework expired on Feb. 7, when the 2014 Farm Bill was enacted. The Farm Bill included significant changes to U.S. cotton domestic support programs, along with changes to the GSM-102 program.
Pro-trade groups supported the move by the United States and Brazil to settle the cotton dispute.
“We are encouraged to see that the U.S.-Brazil agreement contains adjustments to the U.S. cotton program to make it more WTO compliant in the long term, rather than just a short-term fix,” said Chuck Dittrich, vice president for regional trade initiatives for the National Foreign Trade Council, in a statement.
“While this issue has been resolved, the NFTC urges the administration and Congress to work together to ensure all U.S. agricultural policies are in line with the rules-based global trading system, which the United States supports through the WTO,” he added.
U.S., Brazil settle cotton trade dispute
