USDA yesterday reported Brazil had reached a decision regarding the ongoing WTO cotton dispute which would avert the imposition of countermeasures of more than $800 million this year.
This includes more than $560 million in countermeasures against U.S. exports which were scheduled to go into effect Monday, as well as possible countermeasures on intellectual property rights that could have taken effect later.
The findings in the cotton dispute concern U.S. cotton support under the marketing loan and countercyclical payment programs, and the GSM-102 Export Credit Guarantee Program.
In line with these findings, the framework on the latest agreement has two major elements.
First, it would provide, as a basis for a discussion toward reaching a mutually agreed solution to the dispute, a limit on trade-distorting cotton subsidies.
Second, the framework would provide benchmarks for changes to certain elements of the current GSM-102 program.
The United States and Brazil would meet quarterly to discuss the successor legislation to the 2008 farm bill as it relates to trade-distorting cotton subsidies and the operation of GSM-102.
The framework, reported USDA, would not serve as a permanent solution to the cotton dispute, but it would provide specific interim steps and a process for continued discussions to reach a solution to the dispute.
The National Cotton Council expressed appreciation for the efforts of the Obama administration to conclude a framework agreement with Brazil in the WTO dispute involving the export credit guarantee programs and certain provisions of the cotton program.
“The framework agreement between the U.S. and Brazil reflects a significant effort by the Administration to forestall the imposition of damaging retaliatory trade action by Brazil while preserving the normal policy process in the United States,” said Eddie Smith, chairman of the National Cotton Council. “It was a difficult agreement to negotiate, and we commend the Administration for its determination to find common ground with Brazil.”
“It is not our intent to distort world cotton prices,” Smith said, “and, in fact, our program is not suppressing world prices. We will work with Congress and the administration on the 2012 farm bill in order to develop cotton policy that will continue to provide the safety net needed by U.S. farmers while helping assure our trading partners that U.S. cotton programs do not cause unfair trade distortions in the world cotton market.”