BBC | November 4, 2003
Brazil has become increasingly confident under President Lula Cotton farmers in Brazil have accused the US of destroying their industry - but now an increasingly confident Brazilian Government has said it is set to hit back on trade. The Brazilian farmers blame the collapse of their industry on subsidies paid out by the US government to American cotton growers.
Their anger was exacerbated last year when US President George W Bush signed the Farm Bill - the largest ever subsidies bill in the US.
"Not just for myself, but for all Brazilians, the American subsidies have caused an enormous amount of suffering," Paulo, a former cotton farmer, told BBC World Service's Living Beneath The USA programme.
"We have high production costs here, and they cannot get a price good enough to keep themselves alive."
Protection
Until the early 1990s, cotton was Brazil's main export. The country was the third-largest producer of cotton in the world, most of which came from the southern state of Parana.
If there were no subsidies and competition was free, Parana would still be producing much more than they are right now
Elliot Ollini, executive director, Brazilian Cotton Growers Association
WTO chief leads cotton review However, when the price of cotton fell in the world market, many of the farmers had no option but to stop production and move to other crops.
Other factors undoubtedly played a role in Brazil's cotton crisis - such as pests and the opening up of Brazil's markets at a time when the world cotton price was low.
But US help for cotton farmers has increased substantially - between 1999 and 2002, they received $20bn.
Subsidies mean farmers receive a guaranteed price for the cotton, no matter the world price. Cushioned by this protection, American farmers have produced ever more cotton - in turn leading to over-supply, pushing the world market price down even further.
"This is not fair because if there were no subsidies and competition was free, Parana would still be producing much more than they are right now," said Elliot Ollini, executive director of the Brazilian Cotton Growers Association.
"We could be exporting much more, so our market would be much more than it is right now."
The cotton crisis created mass unemployment amongst those who previously had been hired to pick the cotton. Many moved to big cities - but being unqualified, they could not find work.
'Proactive policy'
But now Brazil - the world's ninth-largest economy and growing in self-confidence - is fighting back over trade, spurred on by what it sees as success at the Cancun trade talks in September.
Brazil is one of the world's largest exporters of agricultural products, and its agribusiness is highly efficient. Some 30% of the country's labour force is employed in agriculture, and it represents 40% of the country's exports.
The US points out that the EU and Japan have farming subsidies too "What we see now is more proactive, more assertive policy, dealing not only with trade but also with politics, finance and diplomacy," Rubens Barbossa, the Brazilian ambassador to the US, told Living Beneath America.
At Cancun, Brazil - together with China, India and Egypt - challenged subsidies within the developed world, estimated at over $300bn.
Mr Barbossa said he believed that even though these talks collapsed, for the first time many in the developing world feel much more united, and able to take on the richer countries.
"For the first time, we managed to get support from a sizeable group of developing countries - the G20+, which includes 65% of the world's population, 50% of the agriculture production in the world.
"This is a new thing, and Brazil was instrumental to the creation of this group."
'Posturing'
Brazil's direct strategy is now to become a key player in a number of trading blocs in order to strengthen its hand in negotiations with the first world.
Some of Bush's key electoral support comes from farming states - which could prevent subsidies from falling This is a tactic it is using in South America too, taking command of Mercosur, the bloc that consists of itself, Argentina, Uruguay and Paraguay.
This could be seen as highly expedient, as trade with Latin America has been one of the top priorities of the Bush administration - especially with the Free Trade Area of the Americas - the FTAA - to be established by 2005.
Brazil hopes to increase the country's bargaining power in talks towards the creation of the FTAA, which ultimately will link 34 countries.
However, Roger Noriega, the US head of Latin American affairs, played down the real impact that the new trading blocs Brazil was leading could have.
"There was a group of countries that was determined to make some political point [in Cancun]," he argued.
"We wish they had spent more time and energy negotiating - which is what that sort of session is supposed to be about."
Certainly, with President Bush's key electoral support coming from many of the farming states - and with an election next year - it would not seem likely that a dramatic change in subsidy policy is to be expected soon in the US.
However, Mr Noriega said he was positive that in the future trade negotiations could "recover some momentum".
"The Doha round [of trade talks] may take longer than we expected, but the process is still something that holds a lot of promise - not just for the developed world but particularly for the developing world," he said.
"There has to be less political posturing and more serious negotiating on all sides."BBC:
