Agreement Ends Longstanding Cotton Dispute Between Brazil and US

RAUL JUSTE LORES

10th, oct, 2014 

Brazil has signed an agreement with the United States, putting an end to a dispute regarding subsidies for cotton producers, which had dragged on for twelve years.

The disagreement, which went to the World Trade Organization (WTO), concerned subsidies that American producers received.

In 2009, the WTO allowed Brazilian countermeasures against American trade to the tune of US$830 million - a value which has since shrunk, owing to changes in the methodology used for the calculation.

The Brazilian foreign minister, Luiz Alberto Figueiredo, and the minister of agriculture, Neri Geller, met an American trade representative in Washington, Michael Froman, to sign the new agreement. It stipulates the payment of US$300 million to the Brazilian Cotton Institute this month.

The document also restricts credit guarantees for American exports to 18 months, even for products such as corn and soya. For Figueiredo, this is the greatest triumph of the agreement. In the past, the American government managed to extend these guarantees for up to 36 months.

The Americans had already paid US$530 million to Brazil, but according to Geller, this money could only be spent on publicity and promotion. Now, Brazilian producers will be able to use the resources to invest in logistics (transport and storage) and research.

For Geller, the agreement will render Brazilian products more competitive, especially in Asian markets such as South Korea. Brazil is the world's third largest cotton exporter, behind only the US and India. In 2013, sales were worth more than US$1.2 billion.

In 2010, a temporary agreement was signed, determining the payment of US$147 million by the US, in instalments, to a support fund for Brazilian producers. However, since October 2013, thanks to American budget cuts, the instalments had not been paid.

The right to retaliation won at the WTO allowed Brazil to impose tariffs on American products such as electronics and aeroplanes, and to act on pharmaceutical patents - a sensitive issue for the Americans.

When asked if Brazilian-American relations had begun to improve following the spying crisis last year, Figueiredo said that the agreement is "a step towards the improvement of our commercial relations." However, he reiterated that the spying allegations were "extremely serious".

fonte: Folha de SP