Brazil threatens US sanctions over cotton subsidies

[cal04]

Brazil plans to impose trade sanctions against the United States for the first time, if the US does not lift its cotton subsidies.Earlier this year, the World Trade Organisation (WTO) ruled that the US subsidies were a breach of international trading regulations and the deadline for the US to comply was July 1.

US President George W Bush has indicated his administration will obey the ruling but very little has been done. In an agreement reached late yesterday, Brazil will give the US until the end of September, when the US Congress is expected to rule on eliminating its $46 billion subsidy program.

Analysts are predicting this will not happen.
Brazil has asked the WTO to authorise its claim for up to $3 billion in trade sanctions if the US does not comply by the new deadline.

http://www.abc.net.au/news/newsitems/200507/s1415949.htm

[mom cat]

1. Who said this administration supports free trade!

[Oversea Visitor]

2. Haha

Brazil sanction US. Mine mine wonder who will follow that example soon.

[whatelseisnew]

3. USDA Proposes Legis Changes to Cotton & Export Credit

http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1RD?printable=true&contentidonly=true&contentid=2005/07/0242.xml

USDA News Release # 0242.05

WASHINGTON, July 5, 2005 -Agriculture Secretary Mike Johanns today announced that the Bush Administration is sending proposed statutory changes to the Congress in the program generally known as the Step 2 cotton program and the export credit guarantee programs to comply with a recent WTO cotton decision in a dispute with Brazil.

"By implementing these proposed changes, we are being fully responsive to the WTO decision," said Johanns. "This step is essential for United States to continue to be a leader in the WTO Doha negotiations, which are crucial to U.S. market access and the long-term prosperity of our farmers and ranchers. We very much appreciate the close cooperation of the industry groups in developing this approach and will work with the Congress as this proposed legislation is considered."

The proposed statutory changes would eliminate the Step 2 program, remove a one-percent cap on fees that can be charged under the export credit programs, and terminate the Intermediate Export Guarantee Program (GSM-103).

Repealing the Step 2 program would remove both the export subsidies and import substitution subsidies that the WTO cited and address issues related to suppression of cotton prices in world markets. Eliminating the one-percent fee cap would make the Export Credit Guarantee Program more risk-based. Terminating the GSM-103 program would reinforce the recent U.S. decision to stop using longer-term export credit guarantees.

On June 30, USDA announced that beginning July 1, the Commodity Credit Corporation (CCC) would use a risk-based fee structure for the Export Credit Guarantee Program (GSM-102) and the Supplier Credit Guarantee Program (SCGP). Fee rates are now based on the country risk that CCC is undertaking, as well as the repayment term (tenor) and repayment frequency (annual or semi-annual) under the guarantee. The new structure responds to a key finding by the WTO that the fees charged by the programs should be risk based.