US to Shell Out $300 Million to Brazil to Resolve Cotton Dispute
The U.S. will pay $300 million upfront to the Brazilian Cotton Institute in order to boost technical assistance and capacity building in the country, ranging from pest control to market information services, as part of a deal to stamp out the threat of Brazilian retaliation over a long-running cotton dispute. The Memorandum of Understanding (here), signed on Oct. 1, staves off a Brazilian challenge over the U.S. subsidies and export credits through Sept. 30, 2018.
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Brazil recently threatened to retaliate after a previous MoU expired, following the enactment of the 2014 Farm Bill (see 14100119). "The new U.S. farm bill includes several necessary changes to cotton policy and the GSM export credit program," said National Cotton Council Chairman Wally Darneille in a statement (here). "When compared to previous programs, cotton policy is more market-oriented with the primary safety net conveyed through insurance products that must be purchased by the producer."
Other business advocates, such as the U.S. Chamber of Commerce and National Foreign Trade Council, praised the agreement, but some trade critics said the most recent Farm Bill perpetuates shortcomings in U.S. agricultural policy. “The United States never should have been in a situation where we have to pay off Brazil while vulnerable families suffer,” said Rosa DeLauro, D-Conn., in a statement (here). “Our farm subsidies need serious reform and the last Farm Bill simply extends the status quo. The best way to resolve this issue is to remove our market-distorting cotton payments.”