Trade Disputes

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D e t a i l s a n n o u n c e d

U .S ., B ra z il s e t t le lo n g s ta n d in g c o tto n case By Farm Press S taff

The United States and Brazil have set­tled their decade-old cotton dispute in the World Trade Organization.

Under the new agreement, Brazil will terminate the cotton case, giving up its rights to counter-measures against U.S. trade or any further proceedings in the dispute and will bring no new WTO ac­ tions against U.S. cotton support pro­ grams while the current U.S. farm bill is in force.

Will not bring dispute Brazil also will not bring dispute

against agricultural export credit guaran­ tees under the GSM-102 program as long as the program is operated consistent with the agreed terms.

“Through this negotiated solution, the United States and Brazil can finally put this dispute behind us,” said Agriculture Secretary Tom Vilsack. “Without this agreement, American businesses, includ­ ing agricultural businesses and produc­ ers, could have faced countermeasures in the way of increased tariffs totaling hun­ dreds of millions of dollars every year. This removes that threat and ensures American cotton farmers will have effec­ tive risk management tools.”

National Cotton Council Chairman Wally Darneille said the U.S. cotton in­ dustry has undertaken extensive efforts to resolve this case. He said the NCC of­ fered comprehensive reform of cotton policy as part of the new farm law.

New farm bill helped “The new U.S. farm bill includes sev­

eral necessary changes to cotton policy and the GSM export credit program,” Darneille said.

“When compared to previous pro­ grams, cotton policy is more market- oriented with the primary safety net con­ veyed through insurance products that must be purchased by the producer. ... With the conclusion of the case, the U.S. cotton industry can bring a renewed fo­ cus to the challenges that lay in front of us.”

“(The) agreement brings to a close a matter which put hundreds of millions of dollars in U.S. exports at risk. The United States and Brazil look forward to building on this significant progress in our bilater­ al economic relationship,” said U.S. Trade Representative Michael Froman.

History Ten years ago, Brazil disputed U.S.

cotton policy to the WTO. In 2005 and again in 2008, the WTO found some U.S. agriculture programs — like the domes­ tic support to cotton under the market­ ing loan and countercyclical payment programs, and export credit guarantees under the GSM-102 program — were in­

consistent with the United States’ WTO commitments. In August 2009, WTO arbitrators provided the level of coun­ termeasures 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 approxi­ mately $800 million of U.S. trade, includ­ ing U.S. intellectual property rights.

Specific steps The Framework provided specific in­

terim steps and a process for quarterly discussions on the programs at issue. The United States also made monthly pay­

ments to the Brazil Cotton Institute for technical assistance and capacity building activities for the sector under a related Memorandum of Understanding.

The 2014 U.S. Farm Bill included sig­ nificant changes to U.S. cotton domestic support programs, along with changes to the GSM -102 program, which led to the conclusion of the dispute.

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