Inside US Trade | May 3, 2002
A senior Brazilian official this week said Brazil is expected to launch three World Trade Organization dispute settlement cases against the agricultural policies against the U.S. and the European Union. Brazil is expected to first challenge U.S. soybean subsidies, then the European Union export subsidy program for sugar, and then U.S. cotton subsidies.
These cases will be staggered rather than being brought all at the same time, because Brazil does not have the resources to manage them all simultaneously, according to Pedro Camargo, Secretary of Production and Trade in Brazil's Agriculture Ministry.
Camargo said Brazil would most likely bring cases against U.S. soybean and cotton subsidies under the WTO Agreement on Subsidies and Countervailing Measures. Articles 5 and 6 of that agreement allow members to take action against subsidies when they result in "serious prejudice" against another member.
Soybeans are Brazil's number one export, and Brazil's cotton exports have dropped even as productivity in the sector has increased, Camargo said in an April 30 interview with Inside U.S. Trade.
He said that the soybean case was important from a systemic point of view, because it will underline the urgency of reaching a new agreement on agriculture in the WTO. It will also demonstrate, he said, that countries can no longer count on being exempted from any challenge to agriculture subsidies. In the WTO "peace clause," members agreed not to bring subsidies cases against other countries' agricultural programs provided that trade-distorting support did not exceed 1992 levels. But in soybeans, U.S. support has increased significantly past those levels, he said.
Camargo said Brazil was still performing economic analyses to justify its case against the U.S. on soybeans, and that officials might incorporate elements of the newly-passed U.S. farm bill into its WTO challenge. "There are some new instruments that will need to be analyzed."
For instance, he noted that the new bill authorizes direct payments to soybean producers, which had not been the case in the past.
He acknowledged that there were ambiguities in the new bill with respect to what payments could be counted as "green box" or non-trade distorting support exempt from WTO limits, and what must be counted as amber box. But Camargo said Brazil would make its own judgment about which programs qualified as green box, and would not wait for the U.S. to designate them in notifications to the WTO.
On soybeans, Camargo said Brazil's agriculture ministry had some months ago recommended that Brazil move ahead with a WTO dispute settlement case. But the case had not yet gotten the green light from the foreign affairs ministry and the office of President Fernando Henrique Cardoso, he said.
His comments indicated that while a case against U.S. cotton subsidies is in the pipeline, which he said was strengthened by increased payment levels in the new farm bill, it may be months away as it will come only after the cases on soybeans and EU sugar subsidies are set in motion.Inside US Trade:
