The U.S. pays $147 million a year to Brazilian cotton farmers …as a means of avoiding broad trade retaliations due to government subsidies made to U.S. cotton growers…and is currently considering a new farm bill that would add to these U.S. subsidies.
Brazil threatened heavy duties on such huge U.S. export items as CAT machinery …not good for our economy …and much more, with WTO approval.
In efforts that are apt to concern more than a few lawmakers in Washington, Brazil sent letters directly to the agricultural committees of both the U.S. Senate and House of Representatives, reminding them that current revised proposals for the new farm bill actually increase subsidies and thus would break World Trade Organization rules.
In October 2011, Roberto Azevedo, Brazil’s ambassador to the U.S., came to D.C. and met with the chairwoman of the Senate Agriculture Committee, Debbie Stabenow, and with the chairman of the House Agriculture Committee, Frank Lucas. Azevedo expressed Brazil’s serious concerns. Also discussed was how the new bill, properly drafted, could finally settle Brazil’s claim over cotton subsidies.
Obviously, Brazil is willing to challenge the U.S. in Geneva at the WTO. It will if the new legislation increases subsidies to U.S cotton growers, that distort the cotton international pricing market again.
Brazil, successfully, did just the same thing in the case of cotton subsidies 7 years ago, that resulted in the U.S. negotiating to pay Brazilian cotton farmers that $147 million a year…taxpayer money.
Communicating directly with a foreign legislature, as Brazil has, is unusual, and the action was taken after analysis of three farm bill proposals: one from the National Cotton Council (NCC), …one from the American Farm Bureau Federation and …one by four senators, …all of which increased market distortions… per ambassador Azevedo’s comments.
Among the issues raised was that government-subsidized crop insurance, which could be considered market distorting under WTO rules. Also none of the proposals significantly altered the GSM-102 export credit guarantee program, which the WTO has also condemned.
The GSM-102 program is the U.S government’s underwriting (guarantee) of credit extended by private U.S. banks (or occasionally the U.S. exporter) to approved foreign banks. It’s the U.S. subsidizing the money owed to farmer’s banks for cotton exports.
As a cotton grower and subsidy recipient, why be cautious about your export income if the payment is also guaranteed by the farm bill? After all, it’s just taxpayer money!
You didn’t hear about this in October last year because the Iraq withdrawal, Occupy, and Arab Spring dominated the news. Managing other issues as important but not as sexy are what make who you vote for and how you pay attention to what they are doing is important.
Casualmere® would rather see you buying tons of bamboo products, better prices, better ecology, better earth, better feel.
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