Brazil's cotton industry

US House blocks cotton payments to Brazil

The U.S. House of Representatives voted on Thursday to block a $147m annual payment to Brazil's cotton industry, renewing a decade-old trade dispute with that country.

The chamber voted 223-197 to amend a farm spending bill to would block the payment, which the United States agreed to last year in response to a 2002 Brazilian complaint to the World Trade Organization. That case alleged the US remained the world's second-largest cotton producer by paying the subsidies to its growers.

By making the payments to Brazil, the United States can continue to subsidize its own cotton farmers. Democratic Rep. Ron Kind, a frequent critic of domestic farm subsidies, offered the amendment. Kind was joined by fiscal conservatives who said the Brazil payment is wasteful.

"Let's end this nonsense of stacking subsidy program on top of subsidy program to blackmail other governments who have a WTO decision in their hands," Kind said on the House floor.

The US agreed to the annual payment in April 2010 after Brazil threatened to raise tariffs on hundreds of millions of dollars in American goods, including autos, pharmaceuticals and electronics. The WTO had said Brazil could take punitive action because the US had failed to remove the cotton subsidies, which the WTO said were illegal.

Members from Southern cotton farming states argued against the amendment, saying it could turn the cotton industry on its head. The Senate has not weighed in on the issue.

The House is expected to pass the spending bill, which pays for food and farm spending programs, including the programs of the Agriculture Department and the Food and Drug Administration. The bill would cut hundreds of millions of dollars in domestic and foreign food aid.

(Published by CNBC - June 16, 2011)

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