Vilsack Says U.S. Proposals May End Brazil Cotton Impasse

U.S. House and Senate agriculture committee proposals for a new farm law represent a “good faith” effort by lawmakers to resolve a trade dispute over cotton with Brazil, U.S. Agriculture Secretary Tom Vilsack said.

The proposals passed this week may modify farm subsidies enough to satisfy the South American nation, Vilsack said today in an interview in Mexico City. The U.S. competes with Brazil in exporting grain, soybeans, beef and cotton.

“We would not intentionally pass legislation with the knowledge or awareness that it was going to invite a series of challenges,” Vilsack said after a meeting with Enrique Martinez, Mexico’s agriculture minister. Farm-bill subsidy plans, which emphasize crop insurance over price-pegged supports, represent “a real good-faith effort to resolve that issue with Brazil and to get it finished once and for all,” Vilsack said.

The U.S. is paying $147 million a year to Brazilian cotton farmers in a temporary settlement of a World Trade Organization case over policies that support the fiber. Under the agreement, the payments were to continue until a new farm law changed the U.S. subsidy system. In return, Brazil is holding off on broader retaliation allowed by the WTO.

The Senate bill, which would cost $955 billion over 10 years, includes reforms that may not satisfy Brazil, while spurring other cases, according to Senator Pat Roberts of Kansas. The House and Senate proposals include floor prices for commodities including cotton.

“The WTO stove is hot,” Roberts said during Senate Agriculture Committee debate over the bill this week. “We should not reach out to touch it again.”

The full Senate will take up its version of the bill next week. Lawmakers are seeking to pass a new farm law after failing to renew policy last year.

To contact the reporters on this story: Eric Martin in Mexico City at emartin21@bloomberg.net; Alan Bjerga in Washington at abjerga@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net; Steve Stroth at sstroth@bloomberg.net

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