BRAZIL: To ask WTO to assess US cotton concerns
Brazil is planning to ask the World Trade Organization (WTO) to determine if a new US farm bill adequately addresses its concerns on cotton subsidies.
The Agricultural Act of 2014 plans to end subsidies called direct payments, which have been the subject of a long-running dispute with Brazil, which successfully challenged US cotton subsidies at the World Trade Organization (WTO).
However, the bill instead offers a new $16m a year, five-year 'Pima Agriculture Cotton Trust Fund' that is "intended to reduce the injury to domestic manufacturers resulting from tariffs on cotton fabric that are higher than tariffs on certain apparel articles made of cotton fabric."
A notice from Brazil's Foreign Trade Chamber (Camex) said preliminary analysis by the Brazilian government suggests that "elements that distort the international cotton trade" remain in the new US law.
The WTO ruled in 2009 that the US cotton subsidies were illegal, paving the way for Brazil to impose US$830m in retaliatory tariffs on US goods.
But it delayed the move, partly as a result of a $147.3m annual payment from the US to Brazilian farmers, which ended in September, but also on the expectation that the new farm law would eliminate the long-standing subsidies.
Brazil now plans to ask the World Trade Organization (WTO) to assess whether the new US farm bill meets the recommendations adopted by the dispute settlement body.
However, the National Cotton Council says the farm bill makes several changes to cotton policy and was developed specifically to bring the US into compliance with the WTO decision.
NCC chairman Wally Darneille said: "These changes are significant, and we believe the matter is resolved.
"We are encouraged by statements by Brazilian officials which indicate a preference to resolve the case through continued discussions rather than retaliation. We encourage US officials to continue to engage with their Brazilian counterparts to reach a resolution to the case."
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