Brazil Warns of Reprisals over U.S. Cotton Subsidies

July 21, 2012
Tariffs could reach $830 million Brazil concerned over current farm bill talks Brazil is the world's third biggest cotton exporter.

Brazil warned Friday it would slap WTO-sanctioned reprisals on the United States if Washington fails to comply with a ruling demanding it end cotton export subsidies.

An inter-ministerial group is looking into how to "reintroduce these economic sanctions approved by the WTO and which would come into force because of the U.S. failure to meet its obligations," said Roberto Carvalho de Azevedo, Brazil's representative at the World Trade Organization.

The WTO has authorized Brazil to levy $830 million worth of tariffs on U.S. imports to offset the impact of the U.S. cotton subsidies, which it determined unfairly undercut Brazilian cotton farmers.

In 2010, Brazil agreed to not apply the reprisals after the two countries reached a preliminary agreement on the issue.

The understanding established a framework for "a progressive process that aims to substantially reduce the negative effects" of the U.S. subsidies.

The two countries agreed to wait for a new U..S law on agriculture due to come in effect this year to see what modifications would be made to the U.S. subsidy system.

Brazil had twice put off applying the penalties pending the negotiations with U.S. officials.

New Farm Law Raising Alarm

But Brasilia grew concerned over a new farm law under discussion in the U.S. Congress that would maintain the cotton subsidies.

"It is possible that a new U.S. farm law will emerge on Sept. 30 and that Brazil will not be happy with it," Carvalho de Azevedo said after a new round of talks with U.S. officials.

Brazil is the world's third biggest cotton exporter behind the United States and was the fifth biggest producer with $2 million tons last year, according to the Brazilian cotton producers' association.

Copyright Agence France-Presse, 2012

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