The US Is Forking Over $300 Million To Settle A Decades-Old Cotton Dispute

The United States will pay Brazilian cotton producers $300 million to settle a decade-old dispute over cotton subsidies, two officials familiar with the settlement said on Tuesday, the first concrete step to repair ties hurt by an espionage scandal. The agreement will be formally signed on Wednesday morning in Washington after Brazilian Agriculture Minister Neri Geller and Foreign Minister Luiz Alberto Figueiredo traveled to the U.S. capital to finalize details. In exchange for the one-off payment to the Brazil Cotton Institute, or IBA, Brazil agreed not to take any further trade measures against the United States. The official said the United States could implement a new farm bill without concerns about retaliation. In 2004, Brazil won a challenge against U.S. cotton subsidies at the World Trade Organization, giving it the right to impose $830 million in sanctions against U.S. products. Brazil agreed to suspend the penalty if the United States paid into an assistance fund for Brazilian cotton farmers. The United States stopped paying the monthly compensation in October last year due to budget disagreements in Congress, prompting the Brazilian government to threaten to slap higher tariffs on U.S. products. The retaliation would have deepened diplomatic tensions between both countries, officials and experts said at the time. Reports earlier this year said the United States was willing to pay at least $460 million in compensation to Brazilian growers to end the dispute, according to Brazilian diplomatic documents obtained by hackers and leaked to the local press...more

Our policy is very simple:  In order to keep subsidizing U.S. cotton producers, we must also subsidize Brazilian cotton producers.