Brazil warns action if US continues cotton subsidies

21 Jul '12

2 min read

The Government of Brazil would levy tariffs on goods imported from the US, if the North American country fails to comply with a World Trade Organization (WTO) ruling that demands the US to end cotton export subsidies.

The Latin American country is the fifth largest cotton producer and the third biggest cotton exporter in the world, behind the US, and hence its cotton exports are affected due to the US Government’s policy of subsidizing cotton exports.

Roberto Carvalho de Azevedo, Brazil's representative at the WTO, said an inter-ministerial group is already discussing on the ways to apply economic sanctions approved by the WTO in case the US fails to meet its obligations as per the WTO ruling.

In its ruling, the WTO had concluded that the subsidies extended by the US Government on cotton exports adversely impacted Brazilian cotton farmers. It authorized Brazil to impose US$ 830 million worth of tariffs on goods imported from the US.

However, the two countries reached an understanding in 2010 over the issue. The US said it would modify the subsidy system under a new US law on agriculture, which would be implemented this year. Brazil agreed to postpone its levying of tariffs until the new law comes into effect.

Meanwhile, the US Congress has passed a new farm law that is to be implemented from September 30 this year. The law supports continuation of subsidies on cotton exports.

Fibre2fashion News Desk - India

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