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U.S./Brazil cotton deal ‘first step’

Only hours before Brazil was to retaliate against the United States for government payments to U.S. cotton farmers, a preliminary deal between the two countries has at least stalled the trade-related action.

Allowed to retaliate by the World Trade Organization, Brazil — which brought the case against U.S. cotton in 2002 — was expected to raise tariffs on a bevy of American products besides cotton. Included in Brazil’s announced targets were U.S. electronics, cars and pharmaceuticals.

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The announcement of the deal was met with smiles and relief by U.S. trade and agriculture officials.

“The agreement announced today is a positive development in this very long dispute and signals a path forward for the United States and Brazil,” said Eddie Smith, National Cotton Council (NCC) chairman. “The agreement provides a roadmap for the two countries to come to a long-term solution regarding this trade dispute without resorting to harmful retaliation. The U.S. cotton industry is committed to work with the U.S. and Brazilian governments over the course of their discussions on this issue.

“The two critical aspects of the agreement are that it avoids the immediately harmful economic effects of trade retaliation and it puts the serious discussion concerning changes in the U.S. cotton program before Congress in the 2012 farm bill, which is where that discussion belongs.”

The Senate Agriculture Committee released a statement — endorsed by Arkansas Sen. Blanche Lincoln, committee chairman, and ranking member Georgia Sen. Saxby Chambliss — that said the development “is appropriate on the part of both governments to take steps to avoid the imposition of retaliatory tariffs and other countermeasures. Failure to do so would make it far more difficult to reach a negotiated resolution in this long-running dispute.

“We are encouraged that both sides have agreed upon a framework for dialogue and a process to further discussion. Ultimately, Congress and the Senate and House Agriculture Committees in particular are responsible for crafting changes to these programs and we look forward working with (U.S. Trade Representative Ron) Kirk and (USDA) Secretary Vilsack as both sides explore modifications for consideration during the 2012 farm bill process.”

Shortly after the deal was announced, Delta Farm Press spoke with the Gary Adams, NCC vice president of economic and policy analysis. Among his comments:

Can you provide more information on the proposed deal? Anything beyond what the USDA’s press release said this morning?

“We really don’t know. In the background of the USDA release, they talk about three areas (to be explored).

“One is some changes — near-term modifications — to the export credit guarantee program. But we haven’t seen any details on that and I gather we won’t for a few days.

Second, “there are sanitary and phytosanitary issues regarding some Brazilian pork and beef. A rule process will address that.

“Third, there’s discussion of establishing a $147.3 million annual fund. That would be funded by the United States but set up and managed by Brazil. Some type of transparency/auditing process will be a part of that to show where the monies will (go and) be used.”

Any indication if that fund will be used for the Brazilian cotton industry or something else?

“There are claims (the fund) will provide ‘technical assistance’ and ‘capacity building.’ While it isn’t said explicitly, I think that means (those) will be directed towards the Brazilian cotton industry…

“Maybe some of that ‘capacity building’ will benefit other industries, as well. That isn’t clear. Perhaps it could be used for things like infrastructure improvement.”

Do you know anything more about the timeline that has been set to have an agreement in place? There have been claims that the United States must adopt measures before April 22.

“I’ve seen that in reference to a Brazilian spokesman. They said this was a first delay and would last until April 22.

“It appears the United States needs to get some things done between now and April 22. If that deadline is met a 60-day window for further negotiations will be established.

“I’m not sure at what point monies will actually be put into the fund (and) if that has to be done by April 22.

“The only other date I’ve seen is that the United States has committed to publish a proposed rule by April 16 for some of the phytosanitary issues regarding Brazilian pork and beef.”

What else do our readers need to know about?

“They should realize this is kind of a first step in the negotiation process. Further steps will be needed in the coming weeks.

“They should also realize (issues arising from) this will continue right through the 2012 farm bill debate. … There’s still a lot of work left to be done.”


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