An agreement that suspends the threat of Brazilian trade sanctions recently hammered out by U.S. and Brazil trade negotiators will have little immediate impact on cotton farmers, says Shawn Wade, Communications Director, Plains Cotton Growers, Inc.
“The agreement allows the cotton program to continue through the life of the farm bill,” Wade said, “except for the GSM program.” USDA’s export credit guarantee programs (GSM-102, GSM-103, and SCGP) underwrite credit extended by private U.S. banks to approved foreign banks for purchases of U.S. agricultural products by foreign buyers.
Wade said losing GSM may have a small influence because some countries that buy U.S. cotton use it. “It’s not a make or break issue.”
Wade said the agreement puts the Brazil case “into the farm bill debate, where it needs to be.”
Focus in farm bill debate could be on the marketing loan, Wade said. “Cotton farmers need that. Cotton uses the marketing loan more than other commodities do.”
Overall, the cotton industry is pleased with the agreement, which provides time to deal with the issue within context of overall U.S. farm policy, and for other U.S. industries that faced the possibility of trade sanctions being imposed by Brazil, Wade said.
Officials at the National Cotton Council (NCC) say both sides concur that a mutually agreed outcome in the next farm bill would provide the best opportunity to create a long-term settlement of the dispute.
"The framework agreement between the U.S. and Brazil reflects a significant effort by the (Obama) Administration to forestall the imposition of damaging retaliatory trade action by Brazil while preserving the normal policy process in the United States," NCC Chairman Eddie Smith said.
"It was a difficult agreement to negotiate, and we commend the Administration for its determination to find common ground with Brazil."