The Brazilian government is contemplating taking retaliatory action against the US in a row over cotton subsidies, according to the Estado newswire.

Brazil had made an agreement with the US not to retaliate if the latter's cotton subsidy programme was not reformed, but now it is threatening to suspend that deal out of frustration at a lack of progress.

Clodoaldo Hugueney, Brazil's WTO ambassador, told Estado that the country's position on cotton had always been subject to change. "The problem is that until now we have not seen any measures taken to truly reform the subsidy programme, not for domestic support and not for export subsidies," said Hugueney.

Brazil is currently waiting for the US Congress to ban what the WTO has ruled are "trade-distorting" cotton subsidies, and considers current US offers to abandon the Step 2 export subsidy programme insufficient. Step 2 is due to be eliminated at the end of this month.

Brazil also believes various domestic support programmes should be removed - but as yet there are no US plans to do so.