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US Digs a Hole with Cotton Subsidies, Then Jumps In

Wednesday, April 7, 2010

This week (April 6), US officials struck a deal aimed at staving off Brazilian trade retaliation for subsidies paid to American cotton growers. Brazil had won the right  to impose tariffs and lift patent protections on $829 million in U.S. goods in a 2009 World Trade Organization ruling that the cotton subsidies and export credit guarantees violated global trade rules.

According to The New York Times, the terms of the agreement are:

The Agriculture Department will modify a program that guarantees loans extended by American banks to approved foreign banks for purchases of American agricultural products by foreign buyers.

The United States will also set up a technical assistance fund of $147.3 million a year. The amount represents the value of the retaliation the W.T.O. had authorized for American payments to cotton producers under a marketing loan program and a countercyclical loan program. The fund would remain in place until passage of the next farm bill or a mutually developed solution, whichever occurs first.

The technical assistance money would go to the Brazilian cotton industry.

"How is it possible that we can't find money in the budget to meeting funding promises for conservation programs that protect our water and soil quality, but we can send $147 million a year in US taxpayer funds to subsidize Brazilian cotton farmers in order to keep the subsidy spigot open for US cotton farmers?" asked Environmental Working Group Senior Vice-President Craig Cox.

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