Remember The Brazilian WTO Cotton Case? It's Finally Over
About a decade ago, the phrase "Brazilian WTO cotton case" was an earthquake shaking under a lot of global ag trade talks. The long-running dispute about U.S. cotton subsidies and Brazilian officials' allegations that they unfairly distorted the global cotton market in the U.S.'s favor fueled a lot of talks about the World Trade Organization and future trade agreements and brought along the potential for tariffs and other disruptions to the world ag marketplace.
But now, it's all done. Officials announced recently that Brazil has "agreed not to bring new WTO actions against U.S. cotton support programs while the current U.S. farm bill is in force," according to a USDA report.
"Through this negotiated solution, the United States and Brazil can finally put this dispute behind us," Ag Secretary Tom Vilsack says in a USDA report. "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. This removes that threat and ensures American cotton farmers will have effective risk management tools."
Adds U.S. Trade Representative Michael Froman: "I am pleased that the United States and Brazil have found a permanent resolution to the Cotton dispute. Today's 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 bilateral economic relationship."
The WTO cotton case with Brazil has been going on for almost a decade; in 2005, U.S. farm program payments were found "inconsistent with the United States' WTO commitments." A few years later, officials allowed Brazil the chance to impose financial "countermeasures" against the U.S. for its cotton subsidies. In 2010, that process -- one officials say would have had an $800 million effect on U.S. ag trade -- was paused. Then, when the farm bill was enacted earlier this year, it ultimately put the U.S. cotton program into compliance with the WTO rules Brazilian officials had originally alleged the program violated.
"Over the last several months, the United States and Brazil have held intensified discussions to resolve the dispute," according to a USDA report. "The two governments have reached an agreement that provides for formal termination of the Cotton case at the WTO Dispute Settlement Body within 21 days. Brazil will also relinquish all rights to countermeasures against U.S. trade."