WASHINGTON (AP) — The United States and Brazil have resolved a decade-long trade battle over subsidies Washington provided to American cotton growers, an official close to the negotiations said late Tuesday.
The agreement would resolve a bitter trade fight that had strained relations between the two countries since 2002 when Brazil brought a case against the United States charging that the subsidies Washington paid American cotton farmers were a violation of global trade rules. The World Trade Organization ruled in Brazil's favor and the United States had been forced to make annual payments to Brazil.
The agreement resolving the dispute was to be signed Wednesday in Washington by U.S. Trade Representative Michael Froman and Agriculture Secretary Tom Vilsack and their Brazilian counterparts.
The official, who spoke on condition of anonymity because the two countries had not yet announced the deal, said the agreement would allow the Obama administration to fully implement the farm bill passed by Congress in February. That measure included a new insurance program for cotton growers that was crafted to comply with the WTO ruling that the previous cotton support payments violated WTO rules against subsidies.
The United States and Brazil had held discussions over the last several months seeking to resolve the dispute. Under the agreement, Brazil will not challenge support provided to cotton farmers under the terms of the current farm bill.
The United States agreed to make a final one-time payment of $300 million to the Brazil Cotton Institute.