Lawmakers, farm and industry groups applaud agreement on cotton dispute

By Sara Wyant

© Copyright Agri-Pulse Communications, Inc.

Washington, April 7 – Facing the potential for a major trade fight with Brazil, farm and industry groups applauded U.S. negotiators for avoiding millions of dollars in retaliation that could have been imposed this week as a result of the World Trade Organization (WTO) cotton case.

United States Trade Representative Ron Kirk and Secretary of Agriculture Tom Vilsack announced Tuesday that the United States and Brazil have agreed on a path toward a negotiated settlement with Brazil by agreeing to establish a fund of approximately $147.3 million per year on a pro rata basis to provide technical assistance and capacity building. The fund would continue until passage of the next Farm Bill or a mutually agreed solution to the Cotton dispute is reached, whichever is sooner.

The United States also agreed to make some near-term modifications to the operation of the GSM-102 Export Credit Guarantee Program, and to engage with the Government of Brazil in technical discussions regarding further operation of the program. Yesterday, USDA announced that, effective April 9, 2010, the agency is canceling all unutilized balances of the GSM-102 Export Credit Program announcements issued for Fiscal Year (FY) 2010. If any unused allocations remain under these announcements, USDA will issue new program announcements making the allocations available under new guarantee fee rates. Prior to these announcements, USDA will also issue a Notice to Participants detailing the new guarantee fee rates that will apply

The United States also agreed to publish a proposed rule by April 16, 2010, to recognize the State of Santa Catarina as free of foot-and-mouth disease, rinderpest, classical swine fever, African swine fever, and swine vesicular disease, based on World Organization for Animal Health Guidelines and to complete a risk evaluation that is currently underway and identify appropriate risk mitigation measures to determine whether fresh beef can be imported from Brazil while preventing the introduction of foot-and-mouth disease in the United States.

Following implementation of these initial steps, the United States and the Government of Brazil agreed to continue engagement on these issues, with a view to agreeing on a process by June.

National Cotton Council Chairman Eddie Smith stated that the U.S. cotton industry viewed the agreement between the United States and Brazil regarding the ongoing World Trade Organization dispute as a meaningful way forward for the two countries.

“The agreement announced today is a positive development in this very long dispute and signals a path forward for the United States and Brazil,” Smith said. “The agreement provides a roadmap for the two countries to come to a long-term solution regarding this trade dispute without resorting to harmful retaliation. The U.S. cotton industry is committed to work with the U.S. and Brazilian governments over the course of their discussions on this issue.

“The two critical aspects of the agreement are that it avoids the immediately harmful economic effects of trade retaliation and it puts the serious discussion concerning changes in the U.S. cotton program before Congress in the 2012 farm bill, which is where that discussion belongs,” added Smith.

The U.S. wheat industry described the willingness to negotiate an “encouraging” sign. Brazil recently won the right to impose countermeasures against U.S. trade and planned to increase U.S. wheat tariffs to 30 percent from 10 percent today as part of its response. Yesterday’s agreement ensures that U.S. producers will remain competitive in one of the world’s largest wheat markets.

“We are pleased that we have avoided retaliation and that the dialogue has begun,” explained Rebecca Bratter, Director of Policy for U.S. Wheat Associates, Inc.

Jim Greenwood, President and CEO of the Biotechnology Industry Organization (BIO) issued the following statement in support of the Administration’s efforts:

“On behalf of BIO and its members, we applaud the Obama Administration for the progress they have made in their discussions with Brazil. Thanks to our U.S. negotiating team, we have been spared the imposition of retaliatory measures on a number of products including pharmaceuticals and agricultural seeds.

“We will continue to monitor these discussions within the Administration and in Congress until a long-term solution to this dispute is crafted.  We trust that further discussions will result in an agreement that will be mutually-agreeable to both countries, respectful of our Farm Bill process and amenable to American farmers, workers and consumers.”

R-CALF USA, a non-profit organization representing U.S. cattle producers, responded to the proposed agreement by circulating a sign-on letter to consumer organizations, farm and cattle organizations, and other groups to urge USDA to abandon plans to potentially import fresh beef from Brazil before Brazil has demonstrated that it is free of foot-and-mouth disease (FMD).

In the letter to USDA, R-CALF comments that “It appears that this concession to relax U.S. FMD restrictions is a quid-pro-quo response to Brazil’s willingness to make certain concessions regarding U.S. cotton exports, and we are deeply concerned that this action signifies that your Administration is following the footsteps of the previous Administration that had continually allowed trade-related objectives to decisively trump food safety and animal health safety. We urge you to reconsider your proposed action…The United States recently avoided, by sheer luck, a heightened risk of exposure to FMD that resulted from the previous Administration’s misguided and premature effort to accomplish for Uruguay what you are now proposing to accomplish for Brazil – a relaxation of FMD import restrictions to allow a region within Brazil to export higher-risk products to the United States despite that country’s overall failure to eradicate FMD.”

“We were fortunate to have some champions in Congress that effectively thwarted – or at least delayed – plans for the U.S. to be unnecessarily exposed to FMD through USDA’s January 2007 proposal to regionalize Argentina, although USDA still has not formally withdrawn that action,” said R-CALF USA CEO Bill Bullard. “It is our request – respectfully, but in the strongest sense possible – that USDA immediately abandon its proposal to relax FMD import restrictions regarding Brazil.”

The letter also states: “…It remains our collective hope that your Administration will take immediate, decisive steps to reverse the ongoing, systematic relaxation of essential import restrictions to protect the health and safety of the people of the United States and the health and safety of U.S. livestock from the importation and spread of animal diseases. Unfortunately, the inappropriate and ineffective rules, regulations and policies put in place by your predecessors not only remain in effect today, but they appear to be continually guiding your current actions.”

“We are encouraging any and all groups and/or individuals who are opposed to putting the U.S. live cattle industry at risk to sign on to this letter and make your voice heard,” Bullard concluded. “USDA should be protecting our citizens and livestock here, in the United States of America. Instead, it seems the agency has now become the United Nations Department of Agriculture because it continually prioritizes the will of the WTO (World Trade Organization) and the OIE (World Organization of Animal Health) above the needs of U.S. farmers and ranchers.”

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