[A2k] Wall Street Journal on Brazil/US cotton case at WTO, the sequester and possible cross-retaliation on "drugs, films and music"

Thiru Balasubramaniam thiru at keionline.org
Thu Aug 8 01:38:55 PDT 2013


<SNIP>

In its 2004 ruling, the WTO said Brazil could raise tariffs on cotton and
also permitted the country to "cross-retaliate" and target other U.S.
products, for example, by lifting patent protection for certain products
made in the U.S., including drugs, films and music.

"I think it's a wake-up call to the House and Congress—they need to get the
farm bill done," Mr. Vilsack said.

--


http://online.wsj.com/article/SB10001424127887323838204578654452439798928.html

   - LATIN AMERICA
NEWS<http://online.wsj.com/public/search?article-doc-type=%7BLatin+America+News%7D&HEADER_TEXT=latin+america+news>
   - Updated August 7, 2013, 6:21 p.m. ET

U.S. to Stop Brazil Farm Payments

*Sequester Will Stop Assistance Related to Cotton Dispute*

   - By WILLIAM MAULDIN

WASHINGTON—Secretary of Agriculture Tom Vilsack said the U.S. will have to
stop monthly payments to Brazil related to a cotton dispute at the World
Trade Organization because of the automatic spending cuts known as the
sequester, a move that risks retaliation from Brazil.

The U.S. pays about $150 million a year to the Brazilian cotton industry to
avoid being punished under a WTO ruling over cotton. Brazil and the WTO say
some U.S. cotton subsidies are unfair under the rules of the global trade
group.

Mr. Vilsack said Wednesday in a telephone interview from Brazil that unless
Congress adjusts the sequester cuts or passes a farm bill canceling cotton
subsidies barred by the WTO, Washington will pay only half of its
approximately $12 million monthly cotton payment in September and nothing
after that. The payments in the next fiscal year, which begins in October,
were already at risk because they didn't appear in the administration's
budget.

"I have neither the authority nor the money to make any payment in October
or thereafter," he said.

A Republican congressional aide said the Obama administration does in fact
have the authority to continue making the cotton payments it negotiated
with Brazil, which weren't authorized by Congress.

"Brazil is studying a course of action," said a spokesman for the foreign
ministry. "All possibilities are open, including bilateral negotiations
with the U.S. government and multilateral talks via the World Trade
Organization."

Informed of the U.S. plans, Brazilian officials indicated during Mr.
Vilsack's trip that their "patience was not limitless" and that their only
option would be for "retaliatory measures" that could go beyond trade in
agricultural products, he said.

"I would strongly recommend the Brazilian government to call the United
States to fulfill their requirements of the agreement," said Haroldo Cunha,
president of the Brazilian Cotton Institute, an industry group, which he
says is funded by the monthly payments from the U.S. "In my opinion, it's
above the U.S. internal policy, it's an international agreement."

Brazil has been complaining for a decade about U.S. subsidies for cotton
farmers. In 2004, the WTO ruled that the U.S. grants several types of
prohibited subsidies to cotton growers and said the U.S. must change the
programs or face retaliatory measures from Brazil.

In 2010, Brazil and the U.S. agreed that the U.S. could pay about $150
million a year for technical assistance to Brazilian farmers until the end
of 2012, when Congress would have to pass a new law to end the prohibited
subsidies. Under the agreement, the U.S. could temporarily continue the
payments in the absence of new legislation, and has been until now.

Congress hasn't passed a new farm bill, and because of the sequester the
U.S. will be unable to keep making the payments, Mr. Vilsack said.

In its 2004 ruling, the WTO said Brazil could raise tariffs on cotton and
also permitted the country to "cross-retaliate" and target other U.S.
products, for example, by lifting patent protection for certain products
made in the U.S., including drugs, films and music.

"I think it's a wake-up call to the House and Congress—they need to get the
farm bill done," Mr. Vilsack said.

Besides the cotton fight, Mr. Vilsack said he discussed concerns about
wheat, U.S. beef producers' access to Brazilian markets, and Brazil's
testing regime for U.S. pork. He was joined on the trip by Sen. Debbie
Stabenow (D., Mich.), chairwoman of the Senate Agriculture Committee, and
Sen. Roy Blunt (R., Mo.), the committee's ranking Republican member.

—Jeffrey T. Lewis and Leslie Josephs contributed to this article.

*Write to *William Mauldin at william.mauldin at dowjones.com

*A version of this article appeared August 8, 2013, on page A7 in the U.S.
edition of The Wall Street Journal, with the headline: U.S. to Stop Brazil
Farm Payments.*



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