On April 6, last minute action by the Obama administration averted a near trade conflict with Brazil concerning the trade-distorting U.S. cotton subsidy programs. With the provisional deal, the U.S. avoided about $830 million in trade sanctions on over 100 American exports targeted by Brazil. Those retaliatory tariffs would have gone into effect on April 7. More changes to U.S. cotton programs, which were declared illegal under the WTO’s 2008 ruling, have been pushed back to as early as 2012 when Congress will have to revisit the farm bill. So, …
In a retaliatory response to the U.S. government’s unwillingness to eliminate domestic cotton subsidies, Brazil has announced higher tariffs on over 100 American goods ranging from cars to ketchup. Trade issues are central to the bilateral relationship between Brazil and the United States. Brazil is an attractive export destination for U.S. manufacturing, parts and capital equipment sectors. The United States has been the largest source of Brazil’s imports in these sectors, with the U.S. producers responsible for about a 15 percent share. The already thriving Brazilian market for U.S. exports has great …
In many ways the Bush Administration has fought hard for free trade … but they are far from perfect. As the Wall Street Journal reports, the White House finally lost its four-year effort to defend cotton subsidies from a complaint by Brazil in the World Trade Organization. If the US fails to turn away from the current drift towards protectionism the costs will be high: If the U.S. refuses to act, Brazil now has the right to retaliate against U.S. products to the tune of $4 billion. That price will …
