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Brazilian cotton growers declare victory in U.S. $300 million settlement

The Brazilian Cotton Producers Association said today that it had achieved a victory in the U.S. government’s changes to the GM-102 program and the U.S. agreement to pay $300 million to the Brazilian Cotton Institute to settle the case Brazil won against the U.S. cotton program in the World Trade Organization.

U.S. Trade Representative Michael Froman and Agriculture Secretary Tom Vilsack announced earlier today that the United States had agreed to make the $300 million payment and that the Brazilian government had in turn agreed to give up its right to retaliate against U.S. products.

“This historic case and its resolution bring a new victory to Brazilian cotton producers with the signing of a memorandum of understanding that guarantees the basic principals for free and fair competition in the world market,” the association, known by the Portuguese acronym ABRAPA, said in a news release.

After more than a decade of disputes and months of negotiations since the United States suspended payments under a previous memorandum of understanding, “ABRAPA is convinced that the agreement achieved between the two nations is the best solution for Brazilian cotton producers and for Brazilian agriculture,” the group said.

“Among the changes gained through this new bilateral agreement, the most important are those related to the U.S. program GSM-102, especially as it concerns the provision which now limits export credits to a maximum period 18 months,” ABRAPA added. “This negotiated change benefits not only Brazilian cotton producers, but all Brazilian agriculture.”

The group noted that the final agreement provides for the transfer of the $300 million this month to the Brazilian Cotton Institute, known by the Portuguese acronym IBA, and allows the institute“greater flexibility in the use of these funds ... for expanded technical assistance and extension to the Brazilian cotton sector as well as financing of international cooperation in this sector to countries in Sub-Saharan Africa, member-states of Mercosul (the Common Market of South America), in Haiti and in any other developing country agreed upon by the parties.”

“It is important to note that the memorandum of understanding signed by Brazil and the U.S.A. does not imply or denote Brazil’s recognition of compatibility between those WTO agreements related to policies and programs discussed in the cotton dispute and those now associated with the Agricultural Act of 2014 (the farm bill) adopted by the U.S. Congress earlier this year, nor does the bilateral accord prejudge the recommendations and decisions made by the WTO Dispute Settlement Body with respect to their effective or correct implementation,” the statement continued.

“After years of some of the most consequential negotiations in Brazilian history, ABRAPA wishes to publicly recognize and thank the Brazilian foreign ministry and the Brazilian government who have worked so diligently since the beginning of the cotton dispute, especially during this last phase of the negotiations of today’s agreement that in large part recognizes and resolves the concerns of Brazilian cotton producers,” the group said.

“The successful conclusion of the cotton case, all of the lessons learned, and the gains achieved through the teamwork of both the public and private sectors will serve as the benchmark for future victories for Brazilian agriculture on an international scale.”

The 2014 farm bill contained changes to the GSM-102 program and a new cotton program.