U.S. and Brazil Agree to End WTO Cotton Dispute

The United States and Brazil have reached agreement to settle their decade-long cotton dispute in the World Trade Organization (WTO), announced Agriculture Secretary Tom Vilsack and U.S. Trade Representative Michael Froman.

The United States will make a one-time final contribution of $300 million to the Brazil Cotton Institute, and Brazil will terminate the cotton case and give up its rights to countermeasures against U.S. trade or any further proceedings in the dispute. Brazil also agreed not to bring new WTO actions against U.S. cotton support programs while the current U.S. Farm Bill is in force or against agricultural export credit guarantees under the GSM-102 program.

“Without this agreement, American businesses, including agricultural businesses and producers, could have faced countermeasures in the way of increased tariffs totaling hundreds of millions of dollars every year,” said Secretary Vilsack. “This removes that threat and ensures American cotton farmers will have effective risk-management tools.”

Brazil brought the dispute on the issue of unfair cotton subsidies against the United States, the world’s second-largest cotton producer and the largest exporter, at the WTO in 2002. The WTO ruled that some U.S. agriculture programs were inconsistent with the country’s WTO commitments. In 2009, WTO arbitrators established countermeasures that Brazil could impose against U.S. trade.

In 2010, the U.S. and Brazil signed an agreement to avert measures by Brazil that would have affected approximately $800 million of U.S. trade, including intellectual property rights. The United States made monthly payments to the Brazil Cotton Institute for technical assistance and capacity building activities for the sector. Meanwhile, the 2014 Farm Bill included significant changes to U.S. cotton domestic support programs, along with changes to the GSM-102 program.S