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Brazil Slaps Trade Sanctions on US Over Cotton Dispute
The Brazilian government has announced trade sanctions against a variety of American goods in retaliation for illegal US subsidies to cotton farmers.
Carlos Marcio Cozendey, head of economic affairs at Brazil's foreign ministry, told a news conference: "US farm subsidies are condemned worldwide. This archaic practice must stop." (photo by flickr user Le Xav'.) The World Trade Organization (WTO) approved the sanctions in a rare move.
Brazil published a list of 100 US goods that would be subject to import tariffs in 30 days, unless the two governments reached a last-minute accord.
It said it regretted the sanctions, but that eight years of litigation had failed to produce a result.
It said it would raise tariffs on $591m (£393m) worth of US products - from cars, where the tariff will increase from 35% to 50%, to milk powder, which would see a 20% increase in the levy.
Cotton and cotton products would be charged 100% import tariff, the highest on the list.
The Office of the US Trade Representative said it was "disappointed" by Brazil's decision and called for a negotiated settlement.
Critics say the US has given its cotton growers an unfair advantage by paying them billions of dollars each year.
In 2008, the WTO ruled that subsidies to US cotton producers were discriminatory.
Tall order
Carlos Marcio Cozendey, head of economic affairs at Brazil's foreign ministry, told a news conference: "The idea was to distribute the retaliation broadly in order to maximise pressure.
"US farm subsidies are condemned worldwide. This archaic practice must stop."
However some analysts say major changes to these subsidies would involve modifying agricultural legislation - a tall order for the US Congress against a difficult economic and political backdrop, says the BBC's Gary Duffy in Sao Paulo.
Our correspondent says the dispute, which began in 2002, is one of the few in which the WTO has allowed cross-retaliation, meaning the wronged party can retaliate against a sector not involved in the case.
He adds that it appears the Brazilian government has deliberately chosen a wide range of products in order to have maximum impact.
Safety net
Cotton producers in the US argue that the system of subsidies has changed since the WTO made its original ruling in 2005.
"The US has made changes in the cotton programme as well as the export guarantee programme," Gary Adams, chief economist at the National Cotton Council told the BBC, adding that US cotton production was now 40% to 45% lower.
Mr Adams said he believed that subsidies were still justified.
"We feel this is a very important financial safety net for producers," he said.
Steven Bipes of the Brazil-US Business Council urged the US to take steps to avoid what he called "damaging" retaliation by Brazil.
"The business community finds it extraordinarily important that countries, including the US, comply with its WTO obligations and otherwise negotiate to find common ground when there are disputes," he told the BBC.
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9 Comments so far
Show AllIt's time to end all subsidies to "for profit" businesses. Do we really need to give tax dollars to tobacco farmers? And what part of capitalism do the "free market fucks" of the world not understand? Corporations get more subsidies (read welfare) than actual low income families that need it. Until enough people actually feel the pinch, nothing will change. But eventually, enough people will, but by then will they have the will and drive to do anything about it? Will they, like other countries around the world, really take to the streets?
Every sovereign, developed nation subsidizes agriculture, for both economic and national security purposes. the US and EU are no exception. Only the poor do what the World Bank, IMF, DOW and Monsanto instruct them to do in utter subservience. That said, the US has long eyed Brazilian cotton production with grave concern. Native tribes traditionally used cotton, but it was after the Civil War, when many Southerners, led by confederate colonel and ex-Alabama senator William Hutchinson Norris, fled to Brazil, where slavery was still legal, and established their cotton plantations in Sao Paulo that production really took off. When it comes to playing dirty, it's no surprise that the boll weevil, which ravaged the South's cotton crop in the late 19th century, suddenly popped up in Sao Paulo in the 1980s, abruptly ending Brazilian cotton exports until now, that technology has somewhat subdued the pesky weevil. So yes, I'll take those cries of foul play with a teeny grain of salt please.
that pesky weevil thing emerging in south america somehow reminds one of the
way the Europeans as "first USA'ans" "gave gifts" of Small-pox and common cold-laden blankets to native indians ....to decimate THEM....both cases and others - including the USA's Exporting of "free market and privatization and capitalism"
TROJAN HORSES as foreign policies "designed to render other nations PERMANENTLY subjugated to our Will and the Will of our Chamber of Commerce" (John Perkins -- Former CIA "economic hitman") .
with such a HISTORY - right from its own inception as "our infant empire" (george washington) through the Decimation of Native Indians to STEAL their land and resources and the ensuing Enslavement System - that lives ON today in the Capitalist Corporatism -
the USA practically deserves FIRST - and uniquely MILES above all others - to be NEVER TRUSTED other than to have MALEVOLENT INTENT against other nations and cultures to SERVICE ITS own exceptionalist rapaciousness.
This is what real nations do to protect domestic jobs.
Obviously that is what nations would do to protect themselves.
HOWEVER - NONE has been as aggressive and loudly demanding ...even to the point of invasions and wars as well as very, very actively undermining other economies that don't OBEY washington ...as the USA that OTHER nations NOT subsidize in order FOR the USA to "enter" as dominate THEIR markets...but that when it goes the other shoe...the USA is FIRST to claim the RIGHT to "protect" itself.
what DID the USA do TO Haiti's agriculture and other industries - it destroyed them through US Subsidized industries DUMPING in Haiti ....
same as with mexico, same as with countries in south america and elsewhere..
while THREATENING them in all kinds of ways if THEY dared disobey or even question the USA"s OWN subsidizing of its rapacious industries .
as General Smedley Butler , US MArine , 1933 - would say:
".....you wanted to make sure Haiti, Dominican Republic and others are PACIFIED so that OUR banks, industries and financial giants can set up shop and dominate them?....i'd do it for you...i've participated in the RAPE of a Dozen South American Nations for the sake of OUR Chamber Of Commerce...our Big Finance, our Big Banks, our Big Corporations....we are a Nation of Gangsters and Racketeers for capitalism.....the true purpose of our foreign policy and our Armed Forces is to make the world safe for our BIG BOSS: our Supernationalistic Capitalism ....and our Cultural and Economic Assault.....what we do is EVIL".
About time....
Life is not all about the US economy.
This would be a good time to start getting used to it.
Imagine that -- the US Cotton INdustry (part of the US Chamber of Commerce) - spokesman says:
"we feel this (US Cotton subsidies) is a very important Financial Safety Net for Producers (of the USA)"
and YET THIS very same argument , when Used BY other nations - has - the USA's history of foreign Trade been a BIG , BIG
NO NO NO....as in "open up YOUR markets to the free market system...NO subsidies"...
as Henry CK Liu of Asiatimesonline would say in his many articles:
that ... related to the USA as "the world's true Main Currency Manipulator and the Head of the Global Monetary Manipulation Snake"....
the USA is also "really a Protectionist Nation Pretending to be Free Market".....
Good, someone to stand up to the american imperialistic juggernaut because the people in america sure won't.
But don't be surprised when one of them secret 'behind the closed doors deals' comes flying out and everything ends up 'SAME AS IT EVER WAS, SAME AS IT EVER WAS, SAME AS IT EVER WAS!!!
Or, look out brazil, here comes the american military!
These are important issues, but the article, previous comments and WTO all miss the main issue.
US New Deal farm programs managed supply and kept reserves, and used price floors and ceilings, not subsidies. They are needed because the main farm commodities like cotton lack proce responsiveness on both supply and demand sides. They don't self correct very much or very quickly.
These programs were weakened starting in 1953 as a hidden subsidy (cheap grain) to agribusiness. The much lower price supports and supply management were ended after 1995. Being (sometimes much) bigger than OPEC in oil for some key commodities, we set the world prices. This is what hurts foreign countries, low prices caused by weakening and eliminating these policies. This is what subsidizes Cargill, ADM, animal factories, ethanol, Kelloggs, Walmart, etc.: the lack of price floors and supply management.
Subsidies are a smokescreen to quiet down and divide the angry farmers. Actually, when subsidies were increased greatly under Reagan, market prices went down more (price floors were dropped) so farmers ended up with less. Same with the Gingrich era Freedom to Farm act. More blame of farmers for bigger subsidies, but farmers total income/bu was even less. When USDA-ERS (online) studied commodity costs and returns for 4-5 crops INCLUDING subsidies, for each crop studied, it was a net loss (vs. full costs, not just operating costs).
It's not fair that US farmers don't go broke as fast as other farmers (that we get subsidies). But eliminating subsidies to farmers without addressing the larger hidden de facto subsidies (ie. multibillions per year in below cost grains to Cargill and ADM, or similar for cotton) doesn't help Brazil or LDCs because it doesn't raise prices. See links at "Brad Wilson" "zspace".