Lugar Welcomes Brazil Cotton Areement, Laments Poor Policy

Press Release

U.S. Sen. Dick Lugar welcomed the agreement between the United States and the government of Brazil that will suspend sanctions against U.S. exports and intellectual property valued at nearly $800 million per year. However, Lugar believes the ultimate agreement is a giveaway of U.S. taxpayer dollars to Brazilian farmers and adds insult to already wasteful cotton subsidy policies.

The trade retaliation was authorized under World Trade Organization commitments and stems from a long standing case against the trade impact of U.S. cotton subsidies. On June 17, Brazil agreed to suspend $829.3 million in annual retaliation against U.S. goods. In doing so Brazil accepted an offer from the Obama Administration to establish a "fund for technical assistance and capacity building" for the Brazilian cotton sector valued at $147.3 million annually. The U.S. Department of Agriculture is planning to make the payment out of funds from the Commodity Credit Corporation (CCC), an entity it controls that can borrow money directly from the Treasury which Congress then must replenish.

"I welcome Brazil's willingness to settle this impasse. It is important that our economy is not further impinged by trade retaliation against a host of U.S. goods, but I also share the frustration of taxpayers that the administration has decided, without clear authority from Congress, to pay Brazilian farmers nearly $150 million per year while largely maintaining the very cotton subsidy programs that brought about this situation," Lugar said.

In an April 30, 2010, letter to President Barack Obama regarding the proposed fund, Lugar wrote, "I do not believe U.S. taxpayers should be expected to provide an additional $147.3 million in federal outlays when other cost-saving options exist. I hope you will agree that these payments should not increase CCC borrowing and subsequent Congressional appropriations, and these funds should be derived from programs associated with cotton production and promotion, from which this trade dispute originated.

"My preference would be to address the trade situation at hand by reforming the cotton program now. I am prepared to introduce legislation to achieve these immediate reforms. But absent that direct approach, our government must tailor our trade and agriculture policies in a way to protect the American taxpayer and our domestic export opportunities."

Lugar has not received a reply from the White House.

Lugar's letter and more information are available at http://lugar.senate.gov/news/record.cfm?id=324640.

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