Aug. 7 (Bloomberg) -- A failure by Congress to pass a new agriculture law by Sept. 30 could void a trade agreement that has kept Brazil from imposing sanctions on U.S. imports, Agriculture Secretary Tom Vilsack said.
The 2010 deal through which the U.S. pays Brazil $147 million a year to aid its cotton industry won’t be funded once the current farm law starts expiring at the end of next month, Vilsack said today in a telephone interview from Brasilia. He met in the Brazilian capital with the acting foreign minister and agriculture minister of the biggest South American economy.
Vilsack said the ministers both raised the issue of retaliatory measures “and expressed concern that we can’t make the payment and don’t have the policy right.”
Brazil is taking the money in exchange for holding off on $830 million a year in tariffs it can impose against U.S. imports by a World Trade Organization ruling on U.S. cotton subsidies. Under the agreement, the $147 million in payments would continue until a new farm bill changed cotton programs.
Efforts to pass that legislation have stalled in the U.S. Congress. The current law, passed in 2008, expired last year, and then was extended until the end of September.
Automatic federal budget cuts, known as sequestration, also may keep the U.S. from making the payments, Vilsack said.
Vilsack has been in Brazil since Aug. 2. Also traveling with him are Senators Debbie Stabenow, a Michigan Democrat and chairwoman of that chamber’s Agriculture Committee, and Roy Blunt, a Missouri Republican.
The U.S. Senate, which in June passed a reauthorization of agricultural and nutrition programs that would cost $955 billion over 10 years, last week named its negotiators to work out a final bill with the House, which has approved a plan for farm programs without including food aid to needy families.
Food stamps, the biggest U.S. Department of Agriculture expense, has emerged as the most significant point of disagreement between the two chambers. House Republicans will look in September to move a nutrition bill that would cut $40 billion over 10 years from the Supplemental Nutrition Assistance Program and similar initiatives, about 10 times the size of cuts the Senate has already approved, Agriculture Committee Chairman Frank Lucas said last week.
The bill will probably meet with stiff resistance from Democrats. The Agriculture Committee’s ranking member, Collin Peterson, said last week the move “kills any hopes of passing a five-year farm bill this year.”
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