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Cotton Case Agreement Ends Threat of Retaliation on US Wheat Exports

Cotton Case Agreement Ends Threat of Retaliation on US Wheat Exports

08 October 2014

US - The announcement this week that Brazil and the United States have negotiated a settlement in a long-running trade dispute will help US wheat growers remain competitive in one of the world’s largest wheat importing nations.

In 2005, and again in 2008, Brazil won a case against US cotton support programs and export credit guarantees in the World Trade Organization (WTO), giving it the right to impose retaliatory measures on US products if a settlement could not be reached. Brazil’s government published a long list of US goods, including US wheat, against which it might retaliate. After many years of negotiation, the agreement ends the threat of retaliatory tariffs to US wheat exports to Brazil.

“Brazil has been a major US . wheat importer since 2013,” said Shannon Schlecht, vice president of policy with US Wheat Associates (USW).

“US wheat growers support the settlement because it protects our competitive position in Brazil, preserves the GSM-102 Export Credit Guarantee Program and provides certainty for trade with Brazil.”

In the final settlement, Brazil also agreed not to launch future disputes over US farm programs for the life of current US farm legislation. In return, the United States will make a reparation payment to Brazil’s Cotton Institute and place new disciplines on the GSM-102 program.

USW and the National Association of Wheat Growers (NAWG) believe the GSM-102 program remains a vital option to our customers. The agreement means that this important program will continue operating, though with its features somewhat modified.

"NAWG applauds the administration’s efforts to settle this ongoing dispute, which will allow US wheat growers to continue their strong trading partnership with Brazil. In addition, NAWG is pleased that negotiators found a path forward with Brazil that decouples trade opportunities for both countries from policy disagreements," said Paul Penner, president of NAWG and farmer from Hillsboro, Kansas.

“We value the WTO as an organization and support fair trade policies and adherence to WTO disciplines,” Schlecht said. “ US negotiators deserve credit for forging a workable agreement for US agriculture that lays a smooth path for more productive relationships with our trading partners in Brazil."

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