The United States and Brazil have closed a 12-year-old fight over US cotton subsidieswith the US paying 300 million dollars to the Brazilian Cotton Institute to settle the trade battle.Brazil has agreed to end its World Trade Organization case against the world’s largest cotton exporter and to not lodge any new actions as long as current US policies remain in place.
The US, meanwhile, must hold to the conditions under its current farm support policies, which Brazil, the world’s fourthlargest exporter, took aim at first in 2002 due to US subsidies ruled in violation of WTO rules.
That includes keeping limitations on how Washington’s export guarantees are provided to cotton exporters, so as not to give them unfair advantage in the global marketplace.
Thisagreement brings to a close a matter which put hundreds of millions of dollars in US exports at risk.
The WTO ruled in Brazil’s favor in 2005 and again in 2008 in the case, allowing the country to impose countermeasures against US trade.That had raised worries about US market access and intellectual property protection in Brazil, as well as the United States’ 28 percent share of the global cotton trade.
What led to the deal was an interim agreement in 2010 for Brazil not to take retaliatory action and then the passage of a new farm bill by the US Congress in February this year that tightened US cotton support programs and export guarantee programs.
