United States and Brazil Reach Agreement to End WTO Cotton Dispute

Tom Vilsack_USDA

Tom Vilsack, official USDA photo portrait by Bob Nichols

Agriculture Secretary Tom Vilsack and U.S. Trade Representative Michael Froman announced that the United States and Brazil have reached agreement to settle the longstanding cotton dispute in the World Trade Organization (WTO). Under the terms of the agreement, Brazil will terminate the cotton case, giving up its rights to countermeasures against U.S. trade or any further proceedings in this dispute. Brazil has also agreed not to bring new WTO actions against U.S. cotton support programs while the current U.S. Farm Bill is in force or against agricultural export credit guarantees under the GSM-102 program as long as the program is operated consistent with the agreed terms.

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“Through this negotiated solution, the United States and Brazil can finally put this dispute behind us,” said Secretary Vilsack. “Without this agreement, American businesses, including agricultural businesses and producers, could have faced countermeasures in the way of increased tariffs totaling hundreds of millions of dollars every year. This removes that threat and ensures American cotton farmers will have effective risk management tools.”

Over the last several months, the United States and Brazil have held intensified discussions to resolve the dispute. The two governments reached the agreement that provides for formal termination of the case at the WTO Dispute Settlement Body within 21 days. Brazil also relinquishes all rights to countermeasures against U.S. trade. Other terms and conditions are contained in a memorandum of understanding that includes new rules governing the fees and tenor for guarantees under the GSM-102 Program, a final transfer of funds to the Brazil Cotton Institute, and limitations on new disputes against U.S. cotton domestic support programs and the GSM-102 program.

The 2014 MOU provides for additional support for the technical assistance and capacity building activities begun under the 2010 memorandum of understanding. The United States will make a one-time final contribution of $300 million to the Brazil Cotton Institute, or IBA. The 2014 MOU also provides for additional uses for the funds, such as research in conjunction with U.S. institutions.

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More information can be found on the 2014 Memorandum of Understanding Related to the Cotton Dispute.

 

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