Brazil Delays U.S. Cotton Duties
Brazil said it would delay until April 22 import duties on hundreds of U.S. goods while it works out its battle with the Obama administration over U.S. cotton subsidies.
Starting April 7, Brazil was scheduled to slap hefty import duties on U.S. products that ranged from cotton, cotton fabrics, and men’s and women’s pants to food, sunglasses and cell phones.
The United States and Brazil are working on several steps that could cancel the trade retaliation.
These steps include changing the credit-guarantee program for U.S. cotton exports and laying out a framework for an assistance fund worth $147 million a year for Brazil’s cotton industry. The assistance fund would remain in effect until passage of the next U.S. farm bill or a mutually agreed solution to the cotton dispute is reached, whichever is sooner.
Brazil also wants the United States to declare the state of Santa Catarina free of foot-and-mouth disease and classical swine fever to open up more markets for Brazil’s meat exports.
If these steps are implemented, then Brazil will delay its retaliation measures for another 60 days while the two sides work together to find a permanent solution to the cotton-subsidy problem.
The trade war between Brazil and the United States, both major cotton producers, erupted in 2002 and turned into a long, drawn-out case heard before the World Trade Organization, with Brazil objecting to the United States’ $3 billion a year in subsidies to cotton farmers. The subsidies help push down world cotton prices, hurting farmers in South America, Africa and other parts of the world.
On Aug. 31, a WTO panel declared that Brazil could impose trade sanctions on U.S. products to retaliate for the cotton subsidies. Those trade sanctions can reach as much as $829 million a year based on fiscal year 2008, but they could be higher if 2009 figures are used.—Deborah Belgum
