Brazil prepares to retaliate against U.S. cotton subsidies

Photo of cotton plants from the USDA image libraryThe U.S. Farm Bill that was finally enacted into law last week did little to change farm subsidy policies, despite unprecedented political pressure from a variety of activist groups and individual citizens. But where small groups failed, an international agency and foreign government might have more success.

Several years ago, Brazil filed a complaint with the World Trade Organization (WTO) claiming that U.S. cotton programs violated international trade agreements. Brazil's argument was that the crop subsidies amounted to unfair trade advantages and drove down international prices. In 2004, the WTO ruled in Brazil's favor. More recently, the U.S. lost its appeal, and so now Brazil can propose retaliatory trade sanctions on products from the U.S.

The straightforward approach would be to impose duties on agricultural products imported from the U.S.  But Brazil is trying something different: going after movies, music, medicines and more. An article from Bloomberg summarizes the approach:

Brazil has threatened to retaliate against the U.S. by suspending market access concessions for U.S. providers of services in the business, financial, construction, tourism, transportation, communications and distribution industries. It also said it may strike back by shelving intellectual property rights in the areas of copyright, trademarks and patents.

If Brazil is truly concerned about changing U.S. agriculture programs (for all I know, they could be doing this for totally different strategic reasons), aiming at intellectual property and services could be a highly effective strategy. Instead of having a single industry (Big Ag) complaining to Congress about Brazil's retaliation, the lobbying squads from the drug industry, movie companies, and music business would be unleashed to pressure Congress from many directions. The mention of patents make me wonder if Brazil will propose to stop enforcing patents related to pesticides or transgenic cotton, corn, or soybeans.

On the other hand, perhaps this won't have any effect on U.S. farm policy. At the Brownfield Network, Peter Shinn spoke to Dr. Brad Lubben, University of Nebraska Extension Public Policy Specialist, who said that

...a successful case in the WTO only entitles a complainant to impose countervailing duties. He noted that the European Union continues to block U.S. hormone-treated beef despite two separate WTO rulings against the EU ban.

"None of this promises we'll change policy," said Lubben. "It only promises we'll have more complaints and more dispute settlement to go through."


Image credit: Cotton photo from the USDA ARS Image Gallery.

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