Brazil Shelves Trade Measures Against the United States
Brazil has decided to postpone millions of dollars in increased tariffs on U.S. goods in retaliation for U.S. cotton subsidies.
The decision was made after the United States met certain demands by the South American country, including sending $147 million a year to assist cotton growers in Brazil.
The retaliatory action will be shelved until at least 2012, when a new U.S. Farm Bill, which outlines cotton subsidies, is passed by Congress.
The U.S. Trade Representative announced on June 17 that Brazilian ministers reached a decision that is to be signed by the U.S. government. It averts at least $800 million in trade sanctions this year against U.S. goods—including cotton, cotton fabrics, and men’s and women’s pants—exported to Brazil. In addition, Brazil and the United States will meet quarterly to discuss successor legislation to the 2008 Farm Bill as it relates to cotton subsidies.
“This framework agreement provides a way forward as we work with Congress toward a new Farm Bill in 2012,” said Secretary of Agriculture Tom Vilsack in a statement. “Although it is not a permanent solution, I am pleased that it allows us to maintain our programs while considering adjustments and avoiding the immediate imposition of countermeasures against U.S. exports as a result of the WTO [World Trade Organization] cotton decision.”
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, 2009, a WTO panel declared that Brazil could impose trade sanctions on U.S. products to retaliate for the cotton subsidies.—Deborah Belgum
