Measures in Response to U.S. Payment Halt to Cotton Agreements
By JEFFREY T. LEWIS
SÃO PAULO—Brazil’s Trade Ministry took a step Wednesday toward implementing measures in response to the U.S. halting payments to Brazilian cotton agreements.
The ministry said it would start, in January, a series of public consultations, which it described as ‘a preparatory act for an eventual retaliation.’
A work group at the trade ministry is preparing a list of possible measures to implement, and will complete its preparations by Feb. 28, the ministry said.
The payment of $147 million per year was part of an agreement between the two countries after Brazil won a complaint it had filled with the World Trade Organization. The WTO ruled that Brazil had the right to retaliate against the U.S. because of unfair subsidies to American cotton growers, and, since 2010, the U.S. government has been making monthly payments to the Brazilian Cotton Institute, or IBA.
The monthly payment of $12.3 million was cut by close to 60% in September because of the U.S. sequester, which forced the government to cut spending across the board. The payments stopped altogether starting in October because the U.S. Congress failed to pass a farm bill that would fund the payments, said IBA President Haroldo Cunha.
The IBA uses the money to fund research, pest control and education projects for Brazilian cotton farmers. The current projects are being funded by money already paid, but the halt to payments will affect the IBA’s planning for future projects, said Mr. Cunha, who added he reluctantly supports possible Brazilian trade measures.
‘We don’t think retaliation is the best way to get the U.S. to resume payments, but it’s the only way we have right now to react,’ he said.
Mr. Cunha added that he hopes any measures will get the U.S. government’s attention and spur a return to talks on the matter.
The office of the U.S. Trade Representative had no immediate comment.
