Closing of Cotton Case Good for Agriculture

Paying off Brazil to end challenges of U.S. farm bill programs important beyond just cotton programs.

The announcement this week that Brazil and the United States negotiated a settlement in a decade long-running trade dispute offers some significant wins for agriculture.

Win 1) During the life of this farm bill, Brail has promised it will not challenge any U.S. farm programs in the WTO world court.

Win 2) The one-time final $300 million payout to the Brazil Cotton Institute ends the previously $150 million the U.S. was sending to Brazil for the last four years.

Win 3) Ends the ongoing threat of Brazil retaliating against U.S. goods up to $800 million per year, including many agricultural products that they had threatened to do.

Win 4) It preserves the GSM export credit guarantee program. Agricultural groups stated that the program can continued to be used during times when the capital markets become constrained, as they were in 2008, and when purely private sources of export financing become far more limited. Although the deal places new disciplines on the GSM-102 program, groups are confident it can still help ensure the operation of smooth agricultural export markets.

National Cotton Council Chairman Wally Darneille reiterated that the U.S. cotton industry has undertaken extensive efforts to resolve this case. He said the NCC offered comprehensive reform of cotton policy as part of the new farm law.

"The new U.S. farm bill includes several necessary changes to cotton policy and the GSM export credit program," Darneille said. "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."

But some bad press…

With the announcement of the deal also stoked the fire of wasteful spending and critics of farm spending.

Rep. Ron Kind, D-Wis., a long-time critic of U.S. farm programs said, “This outrageous waste of taxpayer dollars continues. Our annual payoffs to Brazilian cotton farmers should have been eliminated long ago, but we’re sending them a $300 million payment instead. I pushed to resolve this mess when Congress was debating the last Farm Bill, but Congress didn’t act and now we are left with a bad deal that’s paid for by American taxpayers. We need to get our house in order and reform our subsidies programs in their entirety. Sending a huge payoff to Brazil is not the answer.”

Rep. Rosa DeLauro, D-Conn., reiterated the farm bill’s misdirection on nutrition funding and farm supports. “The United States never should have been in a situation where we have to pay off Brazil while vulnerable families suffer. 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. Taking food out of hungry people’s mouths here at home while we subsidize Big Agribusinesses makes no sense.”

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