U.S. Ag Secretary Tom Vilsack has been in Brazil – providing officials there with an honest assessment about the situation of the cotton case while the farm bill is still pending. The Secretary has reportedly told Brazilian officials that USDA is running out of money and authority to make payments in the World Trade Organization cotton subsidies agreement. The U.S. agreed to make an annual 147-million dollar payment to Brazil until the next farm bill changed cotton subsidies in 2010 after a WTO panel ruled U.S. cotton subsidies had inflicted harm on the Brazilian cotton industry. But according to Vilsack – the budget restrictions placed on the department by the sequester will allow him to make only half the payment promised to Brazil in September. On October 1st – he says he’ll lose authority to make any payments. President Obama didn’t include the payments in his fiscal year 2014 budget. Vilsack noted the administration assumed a farm bill with provisions to establish a new cotton program would be passed before the beginning of the fiscal year.
The reaction from Brazilian officials indicated to Vilsack that they would be under pressure to impose the tariffs it had agreed not to impose as long as the payments were made and the farm bill addressed the cotton issue to the country’s satisfaction. He said the officials expressed that their patience isn’t limitless – and that without payment or resolution of the dispute with passage of a farm bill – the U.S. would leave them with few options. That reaction – Vilsack said – means the House and Senate need to get serious about finalizing the farm bill.
Vilsack also urged the Brazilians to buy U.S. wheat, beef and pork and find ways to cooperate with the U.S. on biotechnology and biofuels policy.