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Brazil Cotton Case; Biofuels; Trade; Climate Issues; Ag Economy; and the Farm Bill

Brazil Cotton Case

Sewell Chan reported yesterday at The New York Times Online that, “The United States and Brazil have reached an agreement aimed at settling a long-standing trade dispute over American subsidies to cotton growers, officials in both countries said Tuesday.

The announcement came one day before Brazil was to begin imposing up to $830 million in sanctions with authorization from the World Trade Organization. The trade body had ruled last August that American subsidies to cotton growers had violated global trade rules.

“Under the preliminary deal, Brazil would hold off on retaliation in exchange for American concessions that include the modification of an export loan program and the establishment of a temporary assistance fund for the Brazilian cotton industry. The broader issues in contention would be deferred until Congress takes up the next farm bill, most likely in 2012.”

The Times article explained that, “Under the agreement, the Agriculture Department will modify a program that guarantees loans extended by American banks to approved foreign banks for purchases of American agricultural products by foreign buyers.

The United States will also set up a technical assistance fund of $147.3 million a year. The amount represents the value of the retaliation the W.T.O. had authorized for American payments to cotton producers under a marketing loan program and a countercyclical loan program. The fund would remain in place until passage of the next farm bill or a mutually developed solution, whichever occurs first.

“Finally, the United States agreed to evaluate whether fresh beef can be imported from Brazil while preventing the introduction of foot-and-mouth disease. The authorities will move to recognize Santa Catarina, a state in southern Brazil, as free of the disease.”

Reuters writer Roberta Rampton reported yesterday that, “The United States on Tuesday headed off a move by Brazil to impose penalties on a wide range of U.S. goods by offering concessions on a export loan guarantee program and said it would try to negotiate an end to a long-standing trade spat over cotton.

“The last-minute proposal came as Brazil was set to impose tariffs and lift patent protections on $829 million in U.S. goods, which would have been its right after a 2009 World Trade Organization ruling against U.S. cotton subsidies and export credit guarantees.”

“The U.S. plan prompted Brazil to delay its planned moves, pending further bilateral talks, which Washington hopes will be agreed on by June.

But, at home, [U.S. Trade Representative Ron Kirk] and Agriculture Secretary Tom Vilsack will also face the task of convincing lawmakers of the merits of long-term changes to farm subsidies, which will become a focus as Congress works on its next Farm Bill for 2012,” the Reuters article said.

Bloomberg writer Mark Drajem reported yesterday that, “The U.S. for now dodges as much as $830 million in trade sanctions on 102 goods including ketchup, cars and boats that Brazil targeted. In addition to financial assistance for Brazilian farmers, the U.S. halted the GSM-102 program that guarantees the credit foreign customers use to by American cotton, and said it will be restarted with higher fees.

Any other changes to U.S. cotton programs are pushed back until at least 2012, when the U.S. Congress will have to revisit the broader issue of farm subsidies before existing legislation governing the nation’s agriculture policies expires.

‘It puts the serious discussion concerning changes in the U.S. cotton program before Congress in the 2012 farm bill, which is where that discussion belongs,’ Eddie Smith, chairman of the National Cotton Council, a Cordova, Tennessee-based industry trade group, said in a statement.”

Yesterday’s Bloomberg article added that, “Brazil, which was scheduled to raise tariffs on April 7, postponed implementation as talks progressed with the U.S. to resolve the dispute. Brazil Foreign Minister Celso Amorim yesterday cautioned that any breakthrough in talks would provide only a temporary solution until the U.S. Congress and President Barack Obama overhaul the subsidy program.

“‘Whatever understanding that is reached outside of what the WTO mandated will be by definition temporary,’ he said in an e-mailed statement. ‘Still, any procedural changes that offer adequate guarantees, although temporary, are welcomed.’”

Yesterday, Senate Ag Committee Chairman Blanche Lincoln, (D-Ark.), and Ranking Member Saxby Chambliss, (R-Ga.), issued the following statement regarding the pending cotton dispute with Brazil:

“We believe it is appropriate on the part of both governments to take steps to avoid the imposition of retaliatory tariffs and other countermeasures. Failure to do so would make it far more difficult to reach a negotiated resolution in this long-running dispute. We are encouraged that both sides have agreed upon a framework for dialogue and a process to further discussion. Ultimately, Congress and the Senate and House Agriculture Committees in particular are responsible for crafting changes to these programs and we look forward working with Ambassador Kirk and Secretary Vilsack as both sides explore modifications for consideration during the 2012 farm bill process.”

Also yesterday, House Ag Committee Chairman Collin C. Peterson (MN) and Ranking Member Frank Lucas (R-OK) issued the following statement on the announcement from USTR and USDA regarding discussions with Brazil on the WTO dispute related to cotton and export credit guarantee programs:

“We are pleased to see that the discussions between the United States and Brazil have yielded concrete results in this ongoing dispute and that Brazil has delayed the imposition of countermeasures. These countermeasures would ultimately be harmful to the economic interests of both countries and to our long-term bilateral relationship. However, we understand that a delay in countermeasures is not a final resolution of the dispute, and we will work closely with officials in USDA and USTR as their discussions on these programs continue.”


In other news regarding Brazil, Dow Jones writer Ian Talley reported yesterday that, “Just because Brazil decided to lift import tariffs on foreign ethanol doesn’t mean the U.S. should follow suit, groups representing U.S. ethanol producers said Tuesday.

“If the U.S. were to weaken its 54-cent-per-gallon import tariff, it would allow foreign ethanol makers to benefit from U.S. subsidies–subsidies that U.S. producers need, according to the U.S. producer group Growth Energy.”

“Over the years Brazil has built up its sugarcane-based ethanol industry to the point where it is an exporting nation with no need for imports, according to a spokesman for the Renewable Fuels Association, another U.S. producer group.”

The Dow Jones article added that, “The U.S. tariff is set to expire at the end of 2010, but U.S. lawmakers like Reps. Earl Pomeroy (D., N.D.) and John Shimkus (R-Ill.) have already begun work on legislation to extend it for five years.”

Meanwhile, Reuters writers Tom Doggett and Ayesha Rascoe reported yesterday that, “Global oil demand growth this year is expected to be slightly lower than previously forecast as weaker European consumption has overshadowed higher Asian, namely Chinese, demand, the U.S. Energy Information Administration said on Tuesday.

In its latest forecast, the EIA said world petroleum consumption this year will rise by nearly 1.5 million barrels per day, 10,000 bpd lower than its estimate last month, from 2009’s total to 85.5 million bpd this year.

“The 1.5 million bpd growth is the result of an expected recovery in the global economy, with world gross domestic product seen rising by 3 percent this year, the EIA said.”

The Reuters authors explained that, “The retail price for gasoline this summer driving season, which runs from April through September, is expected to average $2.92 a gallon, up 48 cents from last summer. The EIA said U.S. pump prices will likely exceed $3 at times during the summer, however.

“Gasoline production by U.S. refiners is expected to be down 119,000 bpd compared with last summer. That means in order to meet demand, the U.S. will have to rely on imports, fuel inventories and more ethanol blending that stretch supplies.

“‘Refinery production of gasoline will be under considerable downward pressure from growth in fuel ethanol blending and the current high level of gasoline inventories,’ the EIA said.”

Ethanol blending in gasoline this summer is expected to increase by almost 100,000 bpd, and account for about 8.9 percent of the total U.S. gasoline consumed.”


Reuters news reported today that, “U.S. Agriculture Secretary Tom Vilsack sought on Wednesday to downplay the probability of Japan agreeing to fully reopen its market to U.S. beef during his visit to Tokyo this week.”

“Asked if he expected any deal to be agreed during his visit, Vilsack said it was important to continue dialogue and build on the bilateral relationship.”

An AFP article from yesterday indicated that, “Japan said Tuesday it has no plans to ease long-standing trade restrictions on US beef imposed over mad cow disease, two days before talks in Tokyo between the two on the issue.

“US Agriculture Secretary Tom Vilsack was traveling to Japan Tuesday for a four-day visit in a renewed attempt to settle the long-running dispute that has created friction between the allies.

But Japan’s Agriculture Minister Hirotaka Akamatsu said he ‘has no plan to ask the government’s food safety commission to review US beef,’ even if Vilsack demands it during their meeting scheduled for Thursday.”

Climate Issues

Reuters writer Timothy Gardner reported yesterday that, “The Environmental Protection Agency will soon issue rules that will determine which power plants and factories will face greenhouse gas regulations, an agency official said on Tuesday.

“The measure, known as the ‘tailoring rule,’ will set emissions thresholds for the big emitters of gases blamed for warming the planet, such as coal-fired power plants and plants that make cement and glass.

“EPA Administrator Lisa Jackson said earlier this year that only plants that emit 75,000 tonnes per year or more of carbon dioxide are likely to be regulated under the rule in the next two years. The EPA wants to limit U.S. Clean Air Act regulations, or ‘tailor’ them, so they apply only to larger polluters to avoid overwhelming federal and state agencies with paperwork.”

The article pointed out that, “The Obama administration has long said it prefers that Congress pass legislation to limit greenhouse gases.

“But with climate legislation stalled in Congress, the EPA has begun to issue rules that are expected to help cut emissions — which has angered some U.S. lawmakers and industry.

The 75,000 tonne threshold could lead to a rash of lawsuits against the EPA as it pits big power plants against small ones, said Kevin Book, an analyst at ClearView Energy Partners.”

Bloomberg writer Simon Lomax reported yesterday that, “Federal rules on how to phase-in permitting requirements for greenhouse gas pollution at industrial facilities including power plants may be finished this month, a U.S. Environmental Protection Agency official said.

“‘We expect that rule to be done very shortly, hopefully by the end of the month,’ EPA assistant administrator Gina McCarthy said at a conference today in Washington hosted by the U.S. Energy Information Administration.”

Dow Jones news reported yesterday that, “Although the agency has yet to publish an economic analysis of its greenhouse-gas proposals, the EPA is fighting the perception that Clean Air Act regulations will be burdensome.

“‘We’re going to do it in a way that’s first and foremost sensible,’ but also, ‘sensitive to economic concerns,’ McCarthy said. ‘We want to do it in a way that’s deliberate, that’s phased, that allows innovation to happen,’ she said.

“The new rule won’t come into force before January 2011, and then at first for only the largest emitters, such as coal-fired power plants. Other emitters will be phased in over time.”

In related news, Anne C. Mulkern of Greenwire reported yesterday at The New York Times Online that, “Environmental activists this week are stepping up a battle to protect U.S. EPA’s ability to regulate greenhouse gas emissions, staging demonstrations and lobbying lawmakers at their local offices.

“Carrying signs with slogans like ‘Fight Climate Change Now’ and ‘We Can’t Wait for Climate Action,’ members of the coalition 1Sky already have rallied outside the regional offices of 10 senators and seven House members. They plan to visit at least three more senators’ offices this week.”

“The moves come as lobbyists for utilities, refineries and large businesses press lawmakers and their aides to back legislation and climate bill language that would block EPA. It is a top goal for many industries. At the same time, legislators in 17 states have introduced measures that would block or limit EPA’s authority to regulate greenhouse gases. Five of those bills came from Democrats,” the article said.

Meanwhile, Amy Harder reported yesterday at NationalJournal Online that, “Americans are now more likely to favor producing energy over protecting the environment, according to a new Gallup poll.”

Ag Economy

An American Farm Bureau news release from earlier this week stated that, “Retail food prices at the supermarket showed a modest increase during the first quarter of 2010, according to the latest American Farm Bureau Federation Marketbasket Survey.

The informal survey shows the total cost of 16 food items that can be used to prepare a meal was $45.54, up $2.64 or 6 percent higher compared to the fourth quarter of 2009. The total average price for the 16 items dropped by $1.87 or about 4 percent less compared to one year ago. Of the 16 items surveyed, 14 increased and two decreased in average price compared to the prior quarter.”

Dan Piller reported yesterday at the Green Fields Blog that, “The Humane Society of the U.S. will release a video tomorrow morning in Des Moines that it said was shot undercover at an Iowa egg-laying facility that it says reveals what it calls ‘appalling suffering at multiple egg factory farms.’

“The Humane Society’s president, Wayne Pacelle, will be on hand at the Marriott Hotel to introduce the video and talk about the reforms the society wants.

“Under Pacelle’s leadership the Humane Society in recent years has expanded beyond its original focus as protector of pets and has taken on the practice of animal confinements for livestock and poultry.”

Mr. Piller noted that, “Iowa is the nation’s number one egg-laying state. According to the U.S. Department of Agriculture, Iowa’s 52.3 million laying hens produce 1.21 billion eggs monthly. The No. 2 egg state is Ohio, whose 26.5 million layers, produce 603 million eggs in a month.”

Farm Bill

Minnesota Public Radio reported yesterday that, “Rep. Collin Peterson says he wants to make the federal farm program more efficient.

“The U.S. House Agriculture Committee Chair said he’s starting work this spring on the 2012 farm bill.

Peterson said he will try to reduce direct government payments to farmers and use that money to create a better safety net.

“‘In my opinion, that money should be used to support the average, middle-sized commercial farmer, because they’re the people that produce most of our food and I think that’s the part of the system we really want to protect,’ he said.”

Keith Good