The US and Brazil Resolve Cotton Dispute

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October 1, 2014

    On October 1, 2014, the United States and Brazil released the “Memorandum of Understanding Related to the Cotton Dispute”, which formally ended the cotton disagreement Brazil brought to the World Trade Organization (WTO).  The agreement stipulates that the United States will pay $300 million to the Brazilian Cotton Institute.  In turn, Brazil will drop their WTO complaint and the country will refrain from bringing a cotton dispute back to the WTO at least until September 2018.  The agreement also alters GSM-102, which the US Department of Agriculture defines as a “program [that] provides credit guarantees to encourage financing of commercial exports of U.S. agricultural products, while providing competitive credit terms to buyers.”  In a press release, the Office of the United States Trade Representative stated there will be “new rules governing the fees and tenor of guarantees under the GSM-102 Program.”  The document also contains transparency and reporting requirements for each country.

    US Trade Representative Michael Froman declared, “I am pleased that the United States and Brazil have found a permanent resolution to the Cotton dispute.  Today’s agreement brings to a close a matter which put hundreds of millions of dollars in U.S. exports at risk.”  Secretary of Agriculture Tom Vilsack additionally believes that “through this negotiated solution, the United States and Brazil can finally put this dispute behind us.  Without this agreement, American businesses, including agricultural businesses and producers, could have faced countermeasures in the way of increased tariffs totaling hundreds of millions of dollars every year.”

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