US–Brazil cotton dispute may return to the WTO
09 August 2011
In mid June 2011 the US House of Representatives voted to end payments to the Brazil Cotton Institute. These payments, totalling US$147.3 million per annum, form part of the agreement which temporary suspended the US–Brazilian cotton dispute, thereby averting the imposition of WTO-authorised countermeasures which would have targeted US$ 830 million in US exports to Brazil. Democrat Representatives argued that ‘supporting Brazil’s cotton industry with taxpayers’ dollars is wasteful and unnecessary.’ However, the amendment still has to pass the Senate. If it should pass the Senate, this will leave the US open to retaliatory sanctions from Brazil, with Brazil’s foreign minister arguing that ‘the eventual suspension of payments to the cotton fund would constitute a break of a bilateral agreement.’
Editorial comment
It is unclear what the breakdown of the US–Brazil deal will mean for the stalled WTO negotiations. Larger issues than those in the cotton sector are likely to determine whether the WTO negotiations progress. The immediate impact on ACP aspirations for addressing cotton-sector issues is likely to be limited, although it should be noted that legislative efforts to block payments to the Brazil Cotton Institute form part of larger legislative efforts to bring about reform of the US agricultural subsidy programme.
