U.S. cotton payments to Brazil may end due to lack of farm bill, Vilsack says

By Derrick Cain

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Aug. 7, 2013 - Top U.S. agriculture officials put their Brazilian counterparts on “advance notice” that the United States may have to soon end the annual $147.3 million in payments that have been staving off retaliatory measures as part of the ongoing cotton dispute, USDA Secretary Tom Vilsack said today.

In meetings in Brazil, Vilsack said he told them the payments would be reduced in September and ended in October if Congress fails to approve a new farm bill that addresses and resolves the long-term dispute.

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“Absent a farm bill, we won't be able to make payments,” Vilsack said. “They obviously indicated that their patience with the United States is not limitless.”

He said Brazil expects the matter to be resolved expeditiously, and failure to do so could lead to significant retaliatory measures not only against U.S. agriculture products, but other U.S. exports as well.

“I'm sure other industries in the United States are not going to appreciate the fact that they're going to get dinged because Congress didn't complete their work,” Vilsack said.

In 2009, the World Trade Organization (WTO) authorized Brazil to impose trade retaliation against U.S. goods and intellectual property rights in connection to the U.S.-Brazil cotton case. In order to comply with the WTO rulings and avoid retaliation by Brazil, the United States was directed to bring its cotton-related safety net and export promotion programs in compliance with WTO rules.

Under WTO rules, Brazil can retaliate against the United States because of the latter's failure to comply with finding of the WTO challenge of U.S. agriculture subsidies and export incentives. Brazil developed a goods retaliation list in 2010, raising tariffs on more than 100 U.S. products, including agricultural goods, automobiles and chemicals.

Nonetheless, Brazil delayed retaliation after the two countries agreed on a bilateral framework that required the United States to pay Brazil $147.3 annually to help Brazilian cotton producers.

Other issues were discussed in the meetings as well, Vilsack said, including ongoing U.S. concerns over Brazil's quota on U.S. wheat, risk labeling for beef and cattle, and testing regimes for U.S. pork.

Further, he said both sides agreed to work together to create more export opportunities in the biofuel and bioproduct manufacturing sectors. Vilsack said export markets could potentially expand in Central America, India and the European Union.

The meetings involved Vilsack, Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., Sen. Roy Blunt, R-Mo., Brazilian Agriculture Minister Antonio Andrade, and Acting Brazilian Foreign Affairs Minister Antonio Patriota.

Chris Gallegos, spokesman for Senate Agriculture Committee ranking member Thad Cochran, R-Miss., said the Brazil cotton situation is another reason why a new farm bill needs to be passed by Congress as soon as possible.

“Cotton growers in the United States and Brazil have worked to address problems identified by the WTO, and the cotton program in the Senate's farm bill deals with those concerns,” Gallegos said. “We need to act to avoid retaliatory actions and unnecessary pain to an important American industry.”

The U.S. delegation arrived in Brazil Aug. 2 and will return today. They traveled to Sao Paulo, Brasilia and Rio de Janeiro.

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