U.S., Brazil Sign MOU on Next Steps on the "Path Forward" to Resolving the Cotton Dispute

April 23, 2010

On April 20, 2010 the U.S. Trade Representative (USTR) announced that the U.S. and Brazil have signed a Memorandum of Understanding (MOU) as part of the “path forward” on resolving the World Trade Organization Cotton Dispute.   The MOU states that the U.S. will contribute monthly payments to a fund for technical assistance and capacity building related to the cotton sector in Brazil. 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.

With the conclusion of the MOU, Brazil has announced that its countermeasures on U.S. good will not be imposed on April 22, 201, but will be delayed at least 60 days while negotiations continue. The fund will continue until Congress passes the next Farm Bill or a mutually agreed solution to the cotton dispute is reached. The U.S. may end the fund if Brazil imposes countermeasures.

The U.S. has implemented other steps agreed to on the April 5, 2010 as part of the path forward. On April, 19, 2010 USDA modified the General Sales Manager 102 program (GSM 102, one of the programs explicitly faulted by the WTO), applying new fee rates for unutilized 2010 GSM-102 balances.

Also, on April 16, 2010 the USDA published a proposed rule to recognize the State of Santa Catarina as free of foot and mouth disease, rinderpest, classical swine fever, Africa swine fever, and swine vesicular disease, based on the World Organization for Animal Health Guidelines. 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.

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.