U.S. and Brazil Reach Agreement on Cotton Dispute

(New York Times – Serwell Chan)

The United States and Brazil have reached an agreement aimed at settling a long-standing trade dispute over American subsidies to cotton growers, officials in both countries said Tuesday.

The announcement came one day before Brazil was to begin imposing up to $830 million in sanctions with authorization from the World Trade Organization. The trade body had ruled last August that American subsidies to cotton growers had violated global trade rules.

Under the preliminary deal, Brazil would hold off on retaliation in exchange for American concessions that include the modification of an export loan program and the establishment of a temporary assistance fund for the Brazilian cotton industry. The broader issues in contention would be deferred until Congress takes up the next farm bill, most likely in 2012.

The Brazilian sanctions were to include $591 million in higher tariffs on a wide array of goods, including autos, pharmaceuticals, medical equipment, electronics, textiles and wheat. Read more here.