Brazil to knock at WTO's door for analyzing US Farm Bill

20 Feb '14

3 min read

The Government of Brazil would ask the World Trade Organization (WTO) to set up a panel for analyzing the new US Farm Bill and to determine whether the bill is in accordance with the WTO’s 2009 decision, which considered agricultural subsidies being against the rules of international trade, reports Agencia Brasil.

The information was revealed by Luiz Alberto Figueiredo, Brazil’s Minister of Foreign Affairs, after participating in a meeting of Foreign Trade Chamber (Camex), an organization of the Brazilian Ministry of Development, Industry and Foreign Trade.

Mr. Figueiredo said that Brazil is not going to immediately take any retaliatory measure against the US suspension of paying monthly installments to the Brazilian Cotton Institute (IBA).

He added that the issue of trade retaliatory measures is always open, but the Government would continue to negotiate with the US, as the primary interest is in solving the issue in a manner that serves Brazil’s national interest.

In 2010, Brazil had challenged US cotton subsidies at the World Trade Organization (WTO) and won authorization to receive US$ 831 million per year, with US$ 591 million in products and about US$ 240 million in intellectual property.

Through a memorandum of understanding (MoU), the US Government agreed to make an annual payment of US$ 147.3 million, in monthly installments to the IBA, until the Farm Bill was passed, which would eliminate the long-standing subsidies that caused the dispute.

After the expiry of the last farm bill on September 30, 2013, and the US Government stopped paying its monthly installments to the IBA.

Soon after, Camex formed a working group and opened a public consultation to decide on retaliatory measures to be taken against the US.

Earlier this month, the US has passed a new Farm Bill that eliminates agricultural subsides, but creates an insurance program for crops, called the Stacked Income Protection Plan (Stax), which covers 70 percent to 90 percent of losses of farmers. Moreover, there is also a provision for the US Government to subsidize 80 percent of the spending on Stax.

Earlier this week, the Brazilian Association of Cotton Producers (ABRAPA) said that according to the market estimates and the first analysis made by advisors of ABRAPA and technicians of the Government of Brazil, the new Farm Bill and insurance programs offered by it tend to cause even greater distortions in prices and cotton production than in the past, and hence, it may be even more harmful to the Brazilian interests than the earlier one.

Fibre2fashion News Desk - India

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