The Brazilian Dispute: The Gift that Keeps On Giving

In his address at the Business Session of the American Cotton Shippers Association’s (ACSA) 86th Annual Convention held in Charleston, SC, in mid-May, National Cotton Council President and CEO Mark Lange said facetiously that the WTO Brazil case is “the gift that keeps on giving.” In other words, it just won’t go away.
On April 21, U.S. and Brazilian trade officials signed a Memorandum of Understanding in the seemingly endless dispute between the two countries. The United States would establish a fund of $147.3 million per-year for technical assistance and capacity building to Brazil’s cotton sector in an effort to resolve an 8-year dispute over American cotton subsidies.
A day later, Brazil announced that countermeasures would not be imposed for at least 60 days, which would extend until June 21.
“U.S. and Brazilian officials met in (Washington) DC, the week of May 10, and again in Geneva the week of May 17,” said Lange.
But while negotiations continue in an attempt to arrive at a means for long-term suspension of retaliation, the ball is securely in the court of the United States, despite the fact that Brazil must take action on the countermeasures by the end of the extension on June 21. Yet if Brazil chooses, it can stand by idly, twiddling its thumbs, doing nothing ― initiation of retaliation is automatic. Inaction by either side would, by default, be blamed on the U.S. Which may or may not matter at this point ― the U.S. is perceived as the bad guy already.
If retaliation does kick in, U.S. cotton could be caught in the squeeze. “Where we will run into problems,” said Lange, “will be if the Brazilians impose tariffs on cars and intellectual property. We will be told to get this settled.”
Payment Limitations, Eligibility
In his address before ACSA’s National Affairs Committee, Lange said payment limitations and conservation programs would suffer unfairly, and possibly illegally, if the President Obama’s Fiscal Year 2011 budget proposals are implemented. The 2008 Farm Bill would have to be reopened to meet the President’s wishes to:
• Reduce payment limits by 25%
• Reduce the average gross income limit to $250,000
• Terminate storage credits
• Reduce Monetary Award Program (MAP) funding by 20%
Lange said that even the possibility of reopening the bill is simply not what Congress intended, or should allow, when the 5-year bill was passed. The Committee urged Congress and President Obama to continue the cotton program provisions through the life of the bill.
“If the payment limitation rules that have been promulgated by USDA are inconsistent with legislation … then I anticipate that there will be a possibility that the National Cotton Council would pursue a lawsuit,” Lange said.
“… All of the things that the President has proposed will require reopening up the farm bill.”

Disaster Assistance
Lange said that there has been legislation added to an “extender” of the current jobs bill, sponsored by Senators Thad Cochran (R-MS), Roger Wicker (R-MS) and Blanche Lincoln (D-AR), along with Congressmen Marion Berry (D-AR) and Travis Childers (D-MS), that would make some disaster relief available.
“They took some of the (funds) that were going to be used in the healthcare bill, but were eliminated to save cost, to pay for the extender bill,” he explained.
Lange said the Senate and House bills differ, but an attempt would be made to work through the two bills to avoid having them go to reconciliation.
The legislation calls for $1.4 billion in direct assistance, 90% of direct payment to the producers in disaster-designated counties, and $42 million for raw cottonseed assistance.
“We think this extender bill will be passed,” Lange said.

Domestic Priorities
“(Other items we’re working on are) funding for boll weevil and pink bollworm eradication,” Lange said. “And you’re aware that almost every year we’re told that we may have to do without funding for the gin labs, and we’re working to restore that funding.”
USDA gin labs are located in Stoneville, MS; Lubbock, TX, and Las Cruces, NM.
Lange said that Integrated Pest Management program centers would also continue to be supported.