By KEVIN WALKER
WASHINGTON, D.C. — U.S. Reps. Ron Kind (D-Wis.) and Earl Blumenauer (D-Ore.) have reintroduced legislation that would eliminate the so-called Brazil cotton payout, a payment to the Brazil cotton industry that serves to enable continued government subsidies to U.S. cotton growers.
The legislation, H.R. 1644, would end the yearly payout, which Kind describes as a “foolish subsidy.” According to a statement last month from Kind and Blumenauer, in 2008, Brazil successfully argued before the World Trade Organization (WTO) that subsidies to U.S. cotton growers violated WTO agreements.
But rather than end the subsidies, Congress and the President opted to begin paying the Brazilian cotton industry $147.3 million a year, the amount determined as the losses Brazilians incur because of U.S. cotton subsidies.
“I don’t think the average congressman knows about these outrageous cotton subsidies,” Kind said. He added that Brazil is calling for an end to the payments as well and described the Brazil cotton payout as a kind of bribe. “They don’t like these payments either,” he stated.
According to the Brazil Trade Action Coalition (BTAC) – a U.S. company sponsored group that is trying to reform the current system of subsidies – the situation goes back to at least 2006, when Brazil originally charged that the U.S. cotton program violated WTO rules; and the WTO accepted its claims, including under appeals that were made to a WTO appellate body, on two occasions.
In 2009, Brazil was granted trade retaliation rights against the United States, which led to the current regime of cotton payouts. According to BTAC, Brazil was granted $829.3 million in trade retaliation, the second largest amount ever authorized by the WTO.
On March 5, 2010 the government of Brazil published a list of U.S. goods that could be targeted for retaliatory tariffs, including 102 products.
These could be slapped with a tariff ranging from 14 percent to 100 percent. Manufactured goods are included in the list, as well as agricultural goods, including dairy, fruit and grains. Although BTAC is unhappy with the current situation, it wants a remedy within the context of a new farm bill. It “strongly opposes any standalone bill or amendment that would violate the 2010 temporary agreement and put U.S. workers and companies at risk of retaliation. These sanctions could result in the loss of thousands of American jobs,” stated a BTAC letter to congress that was penned last March.
Kind and Blumenauer’s bill is one such standalone bill. According to their statement from April 19, H.R. 1644 would stop the Brazil cotton payouts and put pressure on the House and Senate agriculture committees to change the system. But it wouldn’t make the U.S. cotton subsidy situation WTO compliant as such. It is merely designed to spur Congress into more action.
Last week, Kind sounded at least somewhat optimistic about the prospects for a 2013 farm bill.
“We need a farm bill,” he said. “Farmers need to know what to do over the next five years. There’s talk about the (House) ag committee bringing the farm bill up in May, but it’s really up to the Republican leadership to bring this up.”
He added that the major disagreements over the farm bill are within the Republican party, especially regarding the Supplemental Nutrition Assistance Program (SNAP), sometimes called food stamps. “Some Republicans basically want to scrap the nutrition title,” he said.