US, Brazil reach agreement to end US export subsidies for cotton

(Fibre2Fashion News, Ahmedabad, 2 October 2014) The United States and Brazil have agreed to settle their long-standing cotton dispute over U.S. agricultural export subsidies under the US Farm Bill and the USDA GSM-102 programme. As per the agreement, Brazil will relinquish all rights to countermeasures against US trade. In turn, the US will make a one-time final contribution of US$ 300 million to the Brazil Cotton Institute, or IBA. Both countries also agreed to formally terminate the cotton case at the WTO Dispute Settlement Body within 21 days. "€œBrazil has also agreed not to bring new WTO actions against US cotton support programs while the current US Farm Bill is in force or against agricultural export credit guarantees under the GSM-102 program as long as the program is operated consistent with the agreed terms,"€ the US Department of Agriculture (USDA) said in a statement. [The United States currently pays around $20 billion per year to farmers in direct subsidies as "farm income stabilization" via U.S. farm bills and US$3.1 billion via the USDA GSM-102 programme.]

[Note: Article 23 of the OECD managed Arrangement on Official Export Credits states that "The Participants shall charge premium, in addition to interest charges, to cover the risk of non-repayment of export credits. The premium rates charged by the Participants shall be risk-based, shall converge and shall not be inadequate to cover long-term operating costs and losses." In 2005 a UK government study determined that their export credits received some £150 million or US$271 million per year in subsidies. Article I(j) of the WTO Agreement on Subsidies, which the Arrangement was intended to enforce on ECAs, has similar wording on subsidies.]