U.S. Politicians Struggle with Subsidies, Payments to Brazil

A Wall Street Journal article published on April 25 outlines one of the hotter debates in the U.S. agro-political arena: subsidies that the United States pays to its cotton farmers and ongoing payments to Brazil in the aftermath of their World Trade Organization (WTO) dispute.

Since June 2010, U.S. taxpayers have sent $12.275 million each month to Brazil–which, when combined with prior one-time payments of $30 million and $4.3 million, bring the total to $157 million and counting. As part of the WTO agreement, Brazil is responsible for ensuring that the money be spent only to the South American nation’s cotton industry.

According to the article, the USDA defends the payments by saying they are the only thing that prevents Brazil from imposing billions of dollars in trade countermeasures against the United States, particularly in the area of intellectual property.
Leaders from both U.S. political parties are under mounting pressure to cut costs from the budget, given the country’s grim economic outlook. One of the most prominent lawmakers, House Agricultural Committee Chairman Frank Lucas (R-Oklahoma), says he accepts the fact that the United States will eventually need to comply with the WTO ruling and stop subsidy payments, but concedes that it will be challenging to find a solution that is “politically palatable.”