U.S. and Brazil Sign MOU as Part of “Path Forward” for Resolving Cotton Dispute
The Office of the U.S. Trade Representative has announced that the U.S. and Brazil have signed a Memorandum of Understanding (MOU) as part of the “path forward” toward resolving the upland cotton dispute.1
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Brazil to Delay Countermeasures for Another 60 Days
With the conclusion of the MOU, Brazil has announced that its countermeasures on U.S. goods will not be imposed on April 22, 2010, but will be delayed for at least 60 days while negotiations continue.
(Increased duty rates of 12-100% were set to take effect on April 7, 2010 and then later delayed until April 22, 2010 on U.S. products in over 100 tariff numbers. See ITT’s Online Archives or 03/09/10 and 04/06/10 news, (Ref: 10030910) and (Ref: 10040605), for BP summaries.)
MOU Establishes Fund to Support Brazilian/Developing Country Cotton Programs
The MOU establishes a fund for technical assistance and capacity building related to the cotton sector in Brazil. Under the MOU, the fund may also be used for activities related to international cooperation in the cotton sector in countries in sub-Saharan Africa, in Mercosur member and associate members, in Haiti, or any other developing country as the parties may agree upon.
The fund is scheduled to continue until the next Farm Bill or a mutually agreed solution to the cotton dispute is reached. Under the MOU, the U.S. may end the fund if Brazil imposes countermeasures.
Two Other Initial Steps in “Path Forward” Have Been Implemented
The U.S. has implemented the other two initial steps the two countries agreed to on April 5, 2010 as part of their “path forward” for resolving the dispute:
GSM-102 modifications. The U.S. had agreed to make some near term modifications to the operation of the GSM-102 Export Credit Guarantee Program2, and to engage with Brazil in technical discussions regarding further operation of the program. On April 6, USDA announced that it was cancelling unutilized balances from the GSM-102 program announced fiscal year 2010 to date, and that these balances would be re-announced under new fee rates. New fee rates were announced by USDA on April 19, and the unutilized balances were re-announced on April 21, 2010. (See ITT’s Online Archives or 04/08/10 news, (Ref: 10040899) #1, for BP summary of the April 6, 2010 GSM-102 modifications.)
Proposed rule on disease status of Santa Catarina, etc. The U.S. also agreed to publish a proposed rule by April 16, 2010, to recognize the State of Santa Catarina as free of foot-and-mouth disease, rinderpest, classical swine fever, African swine fever, and swine vesicular disease, based on World Organization for Animal Health Guidelines. This proposed rule was published on April 16, and includes a 60-day public comment period. (See ITT’s Online Archives or 04/19/10 news, (Ref: 10041920), for BP summary of APHIS’ proposed rule.)
The U.S. also agreed to complete a risk evaluation that is currently underway and to identify appropriate risk mitigation measures to determine whether fresh beef can be imported from certain other regions of Brazil while preventing the introduction of foot-and-mouth disease in the U.S.
U.S. and Brazil Hope to Reach Agreement on “Resolution Process” by June
Following implementation of these initial steps, the U.S. and the Government of Brazil have agreed to continue engagement on these issues, with a view to agreeing on a process by June that will allow the two sides to reach a mutually agreed solution to the cotton dispute.
1In August 2009, the World Trade Organization authorized Brazil to impose millions of dollars in countermeasures against the U.S. due to its failure to comply in the U.S.-Brazil cotton dispute. (See ITT’s Online Archives or 09/01/09 news, (Ref: 09090110), for BP summary.)
2The GSM-102 program helps to ensure that credit is available to finance commercial exports of U.S. agricultural products on competitive credit terms. By allowing assignment of the guarantee by the U.S. exporter to an approved U.S. financial institution, the program guarantees credit extended by the approved U.S. financial institution to approved foreign banks.
(See ITT’s Online Archives or 04/07/10 and 04/06/10 news, (Ref: 10040705) and (Ref: 10040605), for BP summaries of the USTR announcing the path forward toward resolving the dispute and Brazil announcing it was delaying its the duty increases.)
USTR press release (dated 04/21/10) available at http://www.ustr.gov/about-us/press-office/press-releases/2010/april/us-brazil-agree-memorandum-understanding-part-path-f
Brazil’s Ministry of Development, Industry and Foreign Trade press release (in Portuguese) (dated 04/20/10) available at http://www.mdic.gov.br/sitio/interna/noticia.php?area=1¬icia=9753