Brazilian cotton growers pessimistic on US subsidy issue

21 Jan '14

2 min read

Brazilian cotton growers who recently visited Washington expressed their disappointment on US Congress’ delay in passing the Farm Bill in time to comply with the international standards on cotton subsidies in order to avoid trade sanctions on US exports to Brazil, reports Reuters.

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.

However, 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 Brazilian Cotton Institute (IBA), until the Farm Bill was passed, which would eliminate the long-standing subsidies that caused the dispute.

The Farm Bill is more than a year overdue and Brazilian cotton producers expressed their dissatisfaction after visits to Washington last week where they were not reassured that the legislation, which could pass this month, would be complying with the WTO rules against trade-distorting subsidies.

Gilson Pinesso, president of the Brazilian Cotton Growers Association (ABRAPA), said that during the visits to the US Congress, the delegation of cotton producers did not witness any effort undertaken to make the new Farm Bill comply with the standards.

There are no options left but retaliation, said Welber Oliveira Barral, former Brazilian secretary of development, industry and trade, who also was part of the delegation that visited Washington.

In December 2013, Brazil’s Council of Ministers of the Foreign Trade Chamber (CAMEX), decided to restart in January 2014, the process of public consultations on intellectual property in retaliation against the US, under the cotton dispute.

CAMEX also decided on the continuity of the technical group, established to identify, evaluate and formulate proposals for the implementation of authorized countermeasures, until February 28, 2014, with the aim of taking a decision about the adoption of retaliatory measures.

The last farm bill expired on September 30, 2013, and the US Government has also stopped paying its monthly installments to the IBA since September 2013.

Fibre2fashion News Desk - India

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