Trade Disputes

! " # $ % & & & ' U .S ., B r a z i l s e t t l e l o n g s t a n d i n g c o t t o n c a s e By F arm Press S ta ff The United States and Brazil have set tled their decade-old cotton dispute in the World Trade Organization.

U nder the new agreement, Brazil will term inate the cotton case, giving up its rights to counter-measures against U.S.

trade or any further proceedings in the dispute and will bring no new W TO ac tions against U.S. cotton support p ro grams while the current U.S. farm bill is in force.

W ill n o t bring dispute Brazil also will not bring dispute against agricultural export credit guaran tees u n der the GSM-102 program as long as the program is operated consistent with the agreed terms.

“Through this negotiated solution, the United States and Brazil can finally put this dispute behind us,” said Agriculture Secretary Tom Vilsack. “W ithout this agreement, American businesses, includ ing agricultural businesses and pro d u c ers, could have faced countermeasures in the way of increased tariffs totaling h u n dreds o f millions of dollars every year.

This removes that threat and ensures American cotton farmers will have effec tive risk management tools.” National Cotton Council Chairman Wally Darneille said the U.S. cotton in dustry has undertaken extensive efforts to resolve this case. He said the NCC of fered comprehensive reform of cotton policy as p a rt o f the new farm law.

New farm b ill helped “The new U.S. farm bill includes sev eral necessary changes to cotton policy and the GSM export credit program,” Darneille said.

“W hen compared to previous p ro grams, cotton policy is more market- oriented with the prim ary safety net con veyed through insurance products that m ust be purchased by the producer. ...

With the conclusion of the case, the U.S.

cotton industry can bring a renewed fo cus to the challenges that lay in front of us.” “(The) agreement brings to a close a m atter which p u t hundreds of millions of dollars in U.S. exports at risk. The United States and Brazil look forward to building on this significant progress in o ur bilater al economic relationship,” said U.S. Trade Representative Michael Froman.

History Ten years ago, Brazil disputed U.S.

cotton policy to the WTO. In 2005 and again in 2008, the W TO found some U.S.

agriculture programs — like the dom es tic support to cotton u n der the m arket ing loan and countercyclical payment programs, and export credit guarantees u n der the GSM-102 program — were in consistent with the United States’ WTO commitments. In August 2009, W TO arbitrators provided the level o f coun termeasures that Brazil could impose against U.S. trade.

In June 2010, the United States and Brazil signed a Framework Agreement to avert the imposition of countermeasures by Brazil against the United States thatat the time would have affected approxi mately $800 million o f U.S. trade, includ ing U.S. intellectual property rights.

Specific steps The Framework provided specific in terim steps and a process for quarterly discussions on the programs at issue. The United States also made monthly payments to the Brazil Cotton Institute for technical assistance and capacity building activities for the sector u n der a related M em orandum o f Understanding.

The 2014 U.S. Farm Bill included sig nificant changes to U.S. cotton domestic support programs, along with changes to the G S M -102 program, which led to the conclusion o f the dispute.

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