Brazil to Retaliate for Subsidies in U.S. Farm Bill?

There’s been a new development in the ongoing saga about the Brazil-U.S. trade dispute over cotton subsidies, and it doesn’t look like it will make relations between the two cotton powerhouses any smoother. Roberto Azevedo, Brazil’s representative to the World Trade Organization, says the new Farm Bill approved by the U.S. House of Representatives not only fails to address the cotton subsidies that led to the dispute in the first place, it actually makes them bigger.

The current Farm Bill is in effect until Sept. 30, and if the version approved by the U.S. House is put into effect on Oct. 1, it’s like Brazil will retaliate with sanctions against American imports. In 2010, the two nations reached an agreement that Brazil would not act on $830 million of tariffs approved by the WTO on the condition that the United States make payments of $147.3 million per year. Those funds went to the newly created Brazil Cotton Institute (IBA), which uses them to advance the Brazilian cotton industry.

If the subsidies aren’t addressed in the new Farm Bill, Azevedo said Brazil could “reintroduce these economic sanctions approved by the WTO and which would come into force because of the U.S. failure to meet its obligations.” He characterized the situation as “uneasy” and added that “”Brazil does not want to retaliate due to the United States cotton subsidies, but may be forced to do so.”