Brazil temporarily refrains from retaliation over US cotton subsidies
Foreign Minister Luiz Alberto Figueiredo announced Wednesday (Feb. 19) that at this moment the country is not going to retaliate against the United States over the cotton dispute.
In 2009, the WTO considered the US government subsidies to cotton farmers unfair to international competition and gave Brazil the right to retaliate by imposing import tariffs on up to $829 million in US goods.
The US responded by proposing an agreement instead, whereby it started making annual payments of $147.3 million to the Brazilian Cotton Institute (IBA). Last year, however, it ceased making the payments claiming that the automatic budget cuts of the US government would render it unable to honor the payments.
Brazil had been expecting the new US Farm Bill enacted in early February to ease the controversy by eliminating farming subsidies. However, the new provisions have maintained part of the subsidies and gone further to create a program to insure crops, the Stacked Income Protection Plan (Stax). The scheme covers 70% to 90% of farmers' losses, and the US government can subsidize up to 80% of policy costs.
Now Brazil wants to hear from the World Trade Organization (WTO) on whether the new US Farm Bill hurts the WTO ruling which held cotton subsidies as unfair. To this end, it is going to open an implementation panel to request the WTO to review the new bill in light of the dispute. The preliminary analysis by the Brazilian government is that it still contains elements that are distorting to international cotton trade.
“We will keep negotiating with the United States. The issue of trade retaliation is always up for discussion. What we are really looking forward to is settling this issue to the country's best interests,” Figueiredo said.
Translated by Mayra Borges
Fonte: Brazil temporarily refrains from retaliation over US cotton subsidies
