Reports: USDA to Stop Cotton Settlement Payments to Brazil
August 13, 2013 According to an AP article filed last week by Mary Clare Jalonick, USDA says it will stop paying its $147 million annual settlement to Brazil. The annual payment was awarded to Brazil by the World Trade Organization following a long-running trade dispute over cotton subsidies. Portions of the AP story appear below:
The United States will cease paying a $147 million annual settlement to Brazil that is part of a long-running trade dispute over cotton subsidies, Agriculture Secretary Tom Vilsack said Wednesday.
The United States agreed to pay the money to Brazil in 2010, just before the South American country was set to raise tariffs on hundreds of millions of dollars in American goods, including autos, pharmaceuticals and electronics. Stopping the payments could prompt Brazil to threaten retaliation again.
Vilsack said in an interview from Brazil that he doesn’t have the authority to continue payments when the budget year begins Oct. 1 because Congress hasn’t yet passed a farm bill or a budget. Current farm law expires Sept. 30.
The World Trade Organization said in 2009 that Brazil could raise the tariffs on American goods because the United States had failed to get rid of subsidies the WTO said are illegal. A farm bill pending in Congress would attempt to bring those cotton subsidies into compliance, but it is now stalled amid disputes between the House and Senate.
Vilsack said he met with Brazilian Minister of Agriculture Antonio Andrade and Eduardo dos Santos, the No. 2 diplomat at the foreign ministry. They said they would be watching the farm bill progress in the United States “very closely,” Vilsack said, but did not give a deadline for action to avoid retaliation.
“They reminded us fairly pointedly that their patience is not limitless and their options are few,” Vilsack said.
Shortly after news broke of Vilsack’s statements last week, Reuters reported that the Brazilian government won’t rule out direct retaliation in response to the change in policy from the U.S.
“We are going to study our options and one option that cannot be excluded is cross-retaliation,” said Brazil’s foreign minister, Antonio Patriota in Rio de Janeiro, where he met with Canada’s foreign minister John Baird. “We are facing an interesting situation that will require a decision by Brazil,” he said.
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