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Brazil accepts $300mn from US to end cotton dispute
October 2, 2014, 8:09 am

The WTO handed down a ruling in 2009 in Brazil's favor [Xinhua]

The WTO handed down a ruling in 2009 in Brazil’s favor [Xinhua]

The United States and Brazil reached an agreement Wednesday to end a decade-long cotton dispute between two countries.

Brazil sued America in the World Trade Organization (WTO) on cotton subsidies in 2002. The WTO handed down a ruling in 2009 in Brazil’s favor, allowing Brazil to take retaliation measures on imports of US goods. To avert Brazil’s countermeasures, which would affect approximately $800 million worth of US trade, the United States agreed in 2010 to pay about $150 million a year to Brazil.

Under the terms of Wednesday’s agreement, the United States will make a one-time final contribution of $300 million to Brazil, while Brazil will terminate the cotton case, giving up its rights to countermeasures against US trade or any further proceedings in this dispute.

Brazil 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 which are operated consistent with the agreed terms.

“Through this negotiated solution, the United States and Brazil can finally put this dispute behind us,” said US Agriculture Secretary Thomas Vilsack.

US Trade Representative Michael Froman also spoke highly of the deal struck in the day.

“Today’s agreement brings to a close a matter which put hundreds of millions of dollars in U.S. exports at risk,” said Froman. “The United States and Brazil look forward to building on this significant progress in our bilateral economic relationship. ”

Earlier last week, Brazilian President Dilma Rousseff said improvement of Brazil’s economy is related to US growth prospects.

“We must see how the crisis is going to evolve. If the U.S. evolves well, I believe Brazil can enter a new phase, with less need for stimulus,” the President said in a televised interview.

Brazil will then be able to change its economic policy from a prudent stance that focuses on securing jobs and investment to a more proactive one, she said.

The Brazilian economy is expected to slow to 0.3 per cent growth this year.

Latin America’s largest economy attracted $64.045 billion in foreign direct investment in 2013.

 

Source: Agencies

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