Brasília – Brazil will request the establishment of a panel at the World Trade Organization (WTO) to determine whether the new United States Farm Bill is in keeping with the WTO’s 2009 ruling, according to which the country’s agricultural subsidies infringe international trade regulations. The announcement has been made this Wednesday (19th) by the Brazilian minister of External Relations, Luiz Alberto Figueiredo, who attended a meeting of the Foreign Trade Chamber (Camex), an organization of the Brazilian Ministry of Development, Industry and Foreign Trade.
Figueiredo also said that for the time being, Brazil will not retaliate against the US for having stopped compensation payments to the Brazilian Cotton Institute (IBA), since October 2013. “We will keep negotiating with the United States. The issue of commercial retaliation will always be on the table. We are interested, first and foremost, in solving the issue in an optimal manner to our national interests,” said the minister.
The Camex has established a workgroup and filed a public consultation last year in order to decide on the retaliation against the US. The ruling on eventual trade penalties on the US is due by March this year. In 2009, the WTO granted Brazil the right to retaliate against the US up to a maximum of US$ 829 million for its cotton subsidies. The US proposed a settlement to prevent retaliation, and started making annual US$ 147.3 million payments to the IBA. Last year, however, the country stopped making the payments, based on claims that the automatic Budget cuts have rendered the payments impractical.
The Brazilian government was expecting the new US Farm Bill to relieve tension by cutting down on agricultural subsidies. However, the bill passed by the Senate early this month provides for the continuation of direct payments to farmers, and establishes a crop insurance plan, the Stacked Income Protection Plan (Stax). The system covers 70% to 90% of farmers’ losses, and the American government may subsidize 80% of spending on the program. Some specialists believe the new Farm Bill may be even more harmful to Brazilian interests than the former one.
*Translated by Gabriel Pomerancblum
