Brazil, U.S. reach agreement in 11th-hour talks

Brazil’s threat to impose stiff tariffs on a range of U.S. products and commodities as of April 7 has been withdrawn thanks to negotiations that began April 1 and concluded with an agreement announced April 6.

The tariffs were to be in retaliation for U.S. government subsidies to American cotton growers.

In exchange for Brazil’s agreement not to impose countermeasures, the U.S. agreed to work with Brazil to establish a fund of approximately $147.3 million per year on a pro rata basis to provide technical assistance and capacity building. Under terms to be agreed by the U.S. and Brazil in a Memorandum of Understanding, the fund would continue until passage of the next Farm Bill, or mutual agreement on a solution to the cotton dispute, whichever is sooner.

The U.S. also agreed to make some near-term modifications to the operation of the GSM-102 Export Credit Guarantee Program, and to take steps to clear the way for U.S. imports of fresh beef from the Brazilian state of Santa Catarina.

Following these initial steps, the U.S. and Brazil will continue discussions with a view to agreeing on a process by June that resolves the cotton dispute. See the full text of the U.S. Trade Representative release at

Update: 4/21/10 Brazil’s Foreign Relations Ministry announced it will suspend tariff retaliation on U.S. goods 60 days while it studies the U.S. offer of compensation for domestic cotton subsidies.

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