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Brazilian trade retaliation threat prompts NCC response

Brazilian trade retaliation threat prompts NCC response

U.S. farm bill still not out of conference, headed for vote. Brazil cotton delegation makes unfavorable comments while visiting D.C. NCC responds.

Alarming comments by a Brazilian cotton grower delegation visiting Washington, D.C., have prompted the National Cotton Council to respond. Backed by a favorable World Trade Organization ruling and the threat of cross-retaliation, several Brazilians were quoted in a Reuters report saying the new farm bill is unlikely to address their concerns.

Further, another official said the situation had placed Brazil, “in the position where there are no options left but retaliation.” Such retaliation could mean $830 million in sanctions placed on all sorts of U.S.-made products.

The issue has its origin in a dispute between the nations over U.S. cotton subsidies that was filed with the WTO in 2002. Two years later, the WTO found the U.S. cotton subsidies were illegal.

The situation was finally resolved through a 2010 deal between the nations. That accord calls for Brazil cotton interests to receive $150 million in annual payments from the United States.

However, due to the sequester and lack of a new farm bill, the monthly payments to the Brazilians ceased last fall. Now, increasingly agitated Brazilians say a final decision on whether to retaliate against the United States will come in late February.

The Jan. 15 NCC statement says the organization is, “deeply disappointed and disturbed by statements to the press made by representatives of the Brazilian cotton industry. If reports are accurate, a Brazilian cotton delegation visiting Washington has misrepresented the carefully negotiated agreement between U.S. and Brazilian grower organizations and wrongly portrayed the reformed cotton provisions in the farm legislation now being considered by Congress.”

During the trade deal negotiations, says the NCC statement, “Brazilian growers received a detailed explanation of the insurance program, requested further modifications to cotton provisions (the insurance product had already been modified based on comments by Brazilian government officials), and spent considerable time discussing ways the U.S. and Brazilian grower organizations could cooperate. As a result of the discussions, U.S. growers asked Congress to make additional modifications to the cotton provisions and to broaden the scope of projects that could be conducted using the nearly $500 million in funds transferred to the Brazilian Cotton Institute (BCI) under the U.S.-Brazil Framework Agreement.

“In comments to the press, the Brazilian growers imply the acceptability of program reforms was contingent on the continued transfer of funds to the BCI. Throughout the negotiations, U.S. growers cautioned the Brazilian growers that the transfer of funds was increasingly controversial and in jeopardy.

“Certainly, U. S. growers were disappointed that (Obama) Administration officials announced in August that the transfers would be terminated October 1, essentially abrogating the Framework Agreement under which Brazil has agreed to postpone retaliation while the new farm bill is developed by Congress. U.S. growers appreciate the patience of the Brazilian government in delaying retaliation while work on the new farm bill is completed.”

However appreciative the NCC is of the Brazilians’ patience, their willingness to retaliate is, “deeply disappointing to U.S. growers who have delivered significant policy reform, supported further modifications to the cotton provisions, supported the request to expand authority to use the nearly $500 million already transferred to the BCI, and supported maintaining the Framework Agreement. Although their comments were couched in politically correct terms like ‘single undertaking,’ it is clear the Brazilian growers simply want more money in addition to the policy reforms. It is also clear that they are willing to misrepresent the insurance program to achieve their objective.”

Prior to the Brazilian cotton delegation arriving in D.C., Mark Lange, CEO of the National Cotton Council, addressed the situation on The Hill blog, where he encouraged more dialogue and cooperation between the nations.

Meanwhile, as Congress prepares to turn off the lights and head home for a week-long break, the farm bill conference is reportedly hung up on the issues of dairy policy and farm payment limits. Conferees still say a vote on the new legislation could come in late January.

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