The United States needs to quickly comply with a World Trade Organization ruling by reforming market-distorting subsidies paid to the U.S. cotton industry, a group of U.S. lawmakers says in a letter to President Obama.
Brazil won its WTO case against U.S. cotton subsidies in 2008 and threatened this year to begin imposing retaliatory tariffs on U.S. goods. Rather than comply with the WTO ruling, U.S. negotiators have arranged a deal that would pay Brazil $147 million per year not to retaliate.
The plan is to keep paying Brazil until the next farm bill to be written by Congress in 2012 and the cotton subsidies would be overhauled then, but it's "absurd" to waste that much money in payments to Brazil , says Rep. Ron Kind (D-Wis.). "The concern is $147 million a year — that's going to be half a billion dollars before we have a chance to address the subsidy programs," Kind said.
The United States is creating "a whole new tax-payer subsidized program to Brazilian producers on top of what is going on with our own farm (subsidies) at home," Kind said.
Kind, together with Reps. Barney Frank (D-Mass.), Jeff Flake (R-Ariz.) and Paul Ryan (R-Wis.), sent a letter recently to Obama asking for his support in overhauling the U.S. cotton subsidies.
"The U.S. cotton program is a barrier to trade and economic growth and must be reformed," the lawmakers said in the letter. "In light of this (WTO) ruling, we urge you to take a strong stance in working to reform these egregious subsidies."
The United States , through the agreed payments, is preserving "our right to subsidize American cotton farmers by extending that subsidy to Brazilian cotton farmers," Frank said in a prepared statement.
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