The United States has convinced Brazil to postpone until 2012 the implementation of sanctions against the United States in retaliation for U.S. cotton subsidies that were the subject of a World Trade Organization dispute.
In a statement released June 17, the government's foreign trade chamber ( CAMEX ) said that negotiations with the United States in recent weeks have progressed satisfactorily in meeting "commitments assumed in the memorandum of understanding signed between the two governments on April 20 which creates a national fund of $147 million annually" to finance technical assistance for Brazilian cotton farmers.
However, CAMEX also said: "The agreement does not represent a final solution to the problem, but it does set parameters for a final settlement and foresees the gradual and substantial reduction in the harm done by U.S. farm subsidies."
The statement indicates that Brazilian officials believe that Congress will undertake substantial reductions in U.S. cotton subsidies when the U.S. farm subsidy program again comes up for congressional review in 2012. Most long-time agricultural policy observers believe Brazil 's optimism is likely misplaced and that little will change with the next farm bill.
The CAMEX statement also indicates that the United States has pledged itself to gradually reducing such subsidies, in practice, even before the 2012 congressional review of the cotton program. And the agreement sets up a bilateral mechanism to review subsidies on a quarterly basis through the end of 2012.
In March, Brazil released a list of 102 U.S. products whose tariffs would be raised starting April 7 unless Washington presented an acceptable proposal to open negotiations. The government also threatened cross-retaliation sanctions affecting U.S. intellectual property rights.
Brazil later set a value of $829.3 million on its sanctions divided into two parts. The first was the list of 102 American products with a total value of $561 million whose tariffs would in most cases be either doubled or tripled if the sanctions take effect.
The second part of Brazil 's threatened sanctions would be $268.3 million in cross-retaliation measures affecting intellectual property.
According to CAMEX , " Brazil commits itself to not adopt countermeasures authorized by the WTO as long as the framework agreement remains in effect."
The statement said that after the new farm bill has been approved in 2012, the two governments "will examine the modifications introduced in that legislation and evaluate the possibility of informing the WTO that a mutually satisfactory solution to the dispute has been reached."
