You just know the farm-bill debate on the House floor is going to be fun with these guys still around.
On Friday, the Three Musketeers of Farm Bill Reform in the House introduced legislation to cut off any U.S. taxpayer payments to Brazil because of the cotton case.
In a news release, U.S. Rep. Ron Kind, D-Wis., announced the legislation with Rep. Jeff Flake, R-Ariz., and Rep. Earl Blumenauer, D-Ore., "to put an end to the $147 million in taxpayer dollars going to the Brazilian cotton agribusiness each year."
“Failing to reform our own domestic cotton program has resulted in millions of taxpayer dollars unnecessarily subsidizing BrazilΆs cotton industry,” Kind said. “This has got to stop. ItΆs clear that the Agriculture Committees arenΆt going to make the commonsense reforms we need to eliminate these payouts – which is why IΆve authored this bill. WeΆve got to get our priorities straight to ensure a fiscally responsible, smart food and farm bill for the 21st century.”
KindΆs legislation simply stops all payments to the Brazilian Cotton Institute. The bill also puts pressure on the House and Senate Agriculture Committees to make the necessary reforms to be World Trade Organization compliant, the news release stated.
“ItΆs absurd that U.S. taxpayers have been on the hook for millions to Brazil cotton farmers for years because of CongressΆ unwillingness to reform our cotton subsidy programs,” Flake said. “Eliminating this penalty funding will put much-needed pressure on Congress to actually rein in our cotton subsidies so theyΆre WTO-compliant.”
“The current model of paying off Brazilian cotton farmers only serves to coddle corporate agribusiness here in the U.S.,” Blumenauer said. “Rather than continuing to spend millions of taxpayer dollars in this way, American cotton farmers need to get their own house in order. This legislation is an important step in reducing the cost of the cotton program to the American taxpayer, while simultaneously encouraging reform.”
In 2008, Brazil successfully argued before the WTO that U.S. agriculture subsidies to cotton producers violated WTO agreements. Following the WTOΆs ruling, instead of reforming the cotton program, when facing retaliatory tariffs and sanctions from Brazil, Congress and the Administration agreed to pay the Brazilian cotton industry $147.3 million a year – the amount determined as the losses Brazilians incur as a result of U.S. cotton subsidies.
As Kind states in his news release, "The Senate Agriculture Committee had an opportunity to put an end to the subsidies going to the Brazilian Cotton Institute in their markup of the farm bill this week. Unfortunately, they instead created an entirely new, heavily subsidized “insurance” program for American cotton producers, which covers shallow revenue losses, and costs $3.2 billion over 10 years."
There was more today about Brazil and the STAX Program from today's Washington Insider report:
Brazil Viewing Proposed Cotton Program With Skepticism
The cotton program being developed by the Senate Agriculture Committee is drawing intense scrutiny from trade officials in Brazil who believe that as currently configured, the program will be even more trade-distorting than previously was the case.
Roberto Azevedo, Brazil's ambassador to the World Trade Organization, told the Bloomberg BNA news service that the Brazilian government was still examining in detail the proposed farm bill, which contains a new safety net for cotton growers called the Stacked Income Protection Plan (STAX).
"It looks very similar to what has been proposed by the National Cotton Council which, from our previous analysis, would introduce a very high element of distortion in the cotton markets," Azevedo told Bloomberg.
Brazil earlier launched successful WTO dispute proceedings against the U.S. cotton programs. The WTO ruled in 2005 that U.S. marketing loan payments, countercyclical payments and export credit guarantees for cotton caused serious prejudice to the trade interests of Brazil by depressing global prices for cotton.
Azevedo said that under the proposed STAX program, "you can have extremely high prices, you may be making wonderful profits, and you will still get payments. That is the problem: you're getting money where you otherwise wouldn't." And, he added, "depending on prices, on the market conditions, those expenditures will be a lot higher than they would have been with the previous programs." If that proves to the case, Brazil and the United States could find themselves once again before another WTO dispute settlement panel.
