Brazil Eyes Marketing Loan Program In Further Cotton Case Compliance

Larger conservation title has potential to take challenge pressure off current domestic support programs.

Secretary of Agriculture Mike Johanns fears if negotiators don't get the current Doha Round of WTO negotiations finished, the U.S. would then be susceptible to challenges in the courts that could potentially invalidate USDA's marketing loan program.

"That threat by some of the nations involved in the WTO negotiations has started already," points out Johanns. "Brazil has already won a WTO case against the U.S., on the cotton subsidy issue for cotton exports. As a result USDA has eliminated that program."

He notes that "Now, Brazil has started to make noise that our elimination of the cotton export subsidy program isn't enough. They claim the U.S. hasn't gone far enough to comply with that WTO ruling."

Johanns says Brazilian officials have indicated to him that what they are now concerned about is the USDA marketing loan program which many farmers use. "That's a very common program," Johanns notes. "That program is not only used for cotton, but also for corn and soybeans too. The marketing loan is a key part of our overall USDA program for agriculture."

He adds, "Farmers need to stay tuned to this situation. We are going to do everything we can to successfully resist this new pressure from Brazil and others in the WTO. I know this new push is where Brazil really has its sights set. Brazilian trade officials want to go after our marketing loan programs."

Johanns says he's absolutely confident in saying that conservation is going to be a major part of the next farm bill. It was a significant part of the 2002 bill, and USDA has seen many success stories with Conservation Security Program and Environmental Quality Incentives Program.

He adds, "I will forever believe in the investment in agriculture from the federal level. It makes sense to have farm programs. But how we do that, how we make that investment, makes all the difference. The green payment approach to farm programs is trade-compliant with WTO.

"So we are able to support the American farmer and we don't have to worry about WTO dropping the hammer on our programs," says Johanns. "Those green-payment programs fit in the so-called 'green box' of the WTO. We could provide those payments without limit and not have to worry about being challenged by the WTO."

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