Brazil Considers to Retaliate If U.S. Compensation in the Cotton Sector is Suspended

08/09/2013 - 09h23

The United States will stop paying US$147 million annually to Brazil, starting in October, if the new agricultural subsidies law is not approved until September 30.

The U.S. Agriculture Secretary Tom Vilsack made a statement on Wednesday, while visiting Brasilia. The payment is a pending dispute between Brazil and the U.S. in the WTO (World Trade Organization). In 2009, Brazil won the right to retaliate against the country at nearly US$830 million for subsidies given by the government to cotton producers.

In 2010, an agreement was signed and included a temporary U.S. payment for US$147 million in a fund to support Brazilian producers. The expectation was that the new U.S. Farm Bill would have passed in Congress in 2012, which has not yet happened.

If the U.S. in fact fails to pay what was agreed in 2010, the postponed retaliations that Brazil is entitled by the WTO could be activated that would mean higher tariffs on products such as electronics and aircraft produced in the U.S., or suspension of pharmaceutical patents or copyrights.
The Brazilian Foreign Minister Antonio Patriota said on Thursday (8) that the Brazilian government does not exclude the possibility of retaliating.

The U.S. Agriculture Secretary said he has no authority to continue payments starting October 1 because Congress did not vote on the subsidies law or the new budget.

Translated by SIMONE PALMA

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