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Washington, April 20 – The U.S.
and Brazil signed a Memorandum of Understanding (MOU) Tuesday which, in effect,
protects U.S. cotton program subsidies by paying cotton subsides to Brazil
through creating “a fund for technical assistance and capacity building related
to the cotton sector in Brazil.”
A USDA release on the MOU states that “the fund may also be used for activities
related to international cooperation in the cotton sector in countries in
sub-Saharan Africa, in Mercosur member and associate member members, in Haiti,
or any other developing country as the parties may agree upon. The MOU
also includes procedures to ensure transparency and auditing of the expenditures
made from the fund.”
This MOU is part of the path forward for the Cotton dispute that the United States and Brazil reached earlier this
month. With the conclusion of the MOU, Brazil has announced that
countermeasures will not be imposed in the Cotton dispute for at least
60 days. The fund is scheduled to continue until the next Farm Bill or a
mutually agreed solution to the Cotton dispute is reached. The MOU
also provides that the United States
also may end the fund if Brazil
imposes countermeasures under WTO (World Trade Organization) rules.
The USDA statement adds that “This process builds upon our strong
relationship with Brazil,
and demonstrates how our two countries can work together to address challenges. During
the next 60 days, the United States
and Brazil
will continue their work by negotiating a framework for reaching a mutually
agreed solution to resolve the Cotton dispute.”
USDA also provided these background points:
·
“In 2005 and again in 2008, the World Trade
Organization (WTO) found that certain U.S. agricultural subsidies are
inconsistent with WTO commitments: (1) payments to cotton producers under the
marketing loan and countercyclical programs; and (2) export credit guarantees
under the GSM-102 Program, a USDA program used to provide guarantees for credit
extended by private U.S. banks to approved foreign banks for purchases of U.S.
agricultural products by foreign buyers.
·
“On August 31, 2009, WTO arbitrators issued
arbitration awards in this dispute. These awards provided the level of
countermeasures that Brazil
could impose against U.S.
trade. The annual amount of countermeasures has two parts: 1) a
fixed amount of $147.3 million for the cotton payments and 2) an amount for the
GSM-102 program that varies based upon program usage. Using the data that we
have given Brazil
(in accordance with the arbitrators' award), the current total of authorized
countermeasures is more than $800 million.
·
“The arbitrators also provided that Brazil could
impose cross-sectoral countermeasures (i.e. countermeasures in sectors outside
of trade in goods, specifically intellectual property and services). It
may impose cross-sectoral countermeasures to the extent that it applies total
countermeasures in excess of a threshold. The threshold varies annually, but is
currently approximately $560 million. Therefore, of the approximately
$820 million in countermeasures Brazil
could impose now, about $260 million of that could be cross-sectoral.
·
“On March 8, 2010 Brazil announced a final list of
products that would face higher tariffs beginning on April 7, 2010. Goods on
the list include autos, pharmaceuticals, medical equipment, electronics,
textiles, wheat, fruit and nuts, and cotton. Brazil
had not made a final decision on which U.S. intellectual property rights
might be affected by cross-sectoral countermeasures, but it had begun a process
to make this determination.
·
“On April 1, Deputy USTR Miriam Sapiro and USDA
Undersecretary for Farm and Foreign Agricultural Services Jim Miller met with
Ambassador Antonio Patriota, Secretary General of Brazil's Ministry of External
Relations to discuss possible resolution of the dispute. As a result of
that dialogue, the Government of Brazil agreed not to impose any countermeasures
on U.S.
trade on April 7. In exchange, the United
States agreed to work with Brazil to establish a fund of
approximately $147.3 million per year on a pro rata basis to provide technical
assistance and capacity building. The MOU signed today implements this
commitment.
·
“The United States also agreed to make
some near term modifications to the operation of the GSM-102 Export Credit
Guarantee Program, and to engage with the Government of Brazil in technical
discussions regarding further operation of the program. On April 6, USDA
announced that it was cancelling unutilized balances from the GSM-102 program
announced fiscal year 2010 to date, and that these balances would be
re-announced under new fee rates. New fee rates were announced by USDA
April 19 and the unutilized balances were re-announced today.
·
“The United States
also agreed to publish a proposed rule by April 16, 2010, to recognize the
State of Santa Catarina
as free of foot-and-mouth disease, rinderpest, classical swine fever, African swine
fever, and swine vesicular disease, based on World Organization for Animal
Health Guidelines. This proposed rule was published on April 16, and
includes a 60-day public comment period. The United
States also agreed to complete a risk evaluation that is
currently underway and to identify appropriate risk mitigation measures to
determine whether fresh beef can be imported from certain other regions of Brazil while preventing the introduction of
foot-and-mouth disease in the United
States.
·
“Following implementation of these initial
steps, the United States
and the Government of Brazil agreed to continue engagement on these issues,
with a view to agreeing on a process by June that will allow us to reach a
mutually agreed solution to the Cotton dispute.”
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