cotton Copyright Scott Olson, Getty Images

Cotton Battle Concludes Between US and Brazil

In addition to other conditions, the United States will pay $300 million to the Brazilian Cotton Institute to settle the trade battle.

WASHINGTON - The United States and Brazil closed a 12-year-old fight over U.S. cotton subsidies Wednesday, with the U.S. paying $300 million to the Brazilian Cotton Institute to settle the trade battle.

U.S. Trade Representative Michael Froman said Brazil had 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 U.S. policies remain in place.

The U.S., meanwhile, must hold to the conditions under its current farm support policies, which Brazil, the world's fourth-largest exporter, took aim at first in 2002 due to U.S. 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.

Today's agreement brings to a close a matter which put hundreds of millions of dollars in U.S. exports at risk.

— U.S. Trade Representative Michael Froman

The WTO ruled in Brazil's favor in 2005 and again in 2008 in the case, allowing the country to impose countermeasures against U.S. trade.

That had raised worries about U.S. market access and intellectual property protection in Brazil, as well as the United States' 28% share of global cotton trade.

What led to the deal announced Wednesday was an interim agreement in 2010 for Brazil not to take retaliatory action, and then the passage of a new farm bill by the U.S. Congress in February this year that tightened U.S. cotton support programs and export guarantee programs.

"Today's agreement brings to a close a matter which put hundreds of millions of dollars in U.S. exports at risk," Froman said in a statement.

"The United States and Brazil look forward to building on this significant progress in our bilateral economic relationship."

Copyright Agence France-Presse, 2014

TAGS: The Economy
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