U.S. deposits $30 million for Brazilian cotton research fund

The United States has deposited $30 million in an account owned by the Brazilian Cotton Institute (“IBA”) as part of a deal to avoid retaliations after a World Trade Organization dispute panel ruled in favor of Brazil because of US cotton subsidies. The money was the first installment of a total of $147 million annually that will be used  to finance cotton production projects in Brazil.
 
The fund will be managed by the government, through the ministries of Agriculture, Foreign Relations and Development, Industry and Foreign Trade, and private enterprises, under the leadership of the Brazilian Association of Cotton Producers (Abrapa).
 
  In November last year, after eight years before dispute settlement panels, the WTO authorized Brazil to retaliate against the United States for damages estimated at  $830 million annually because of subsidies to cotton farmers in the US. Of this total, $591 million was allowed in the form of surtaxes on imports from the US and another $240 million in reduced payments for intellectual property involving royalties, trademarks, patents and copyrights.
 
However, an agreement was reached which will suspend retaliation by Brazil until 2012, when the U.S. Farm Bill is up for congressional renewal. Under the deal, the US has promised to limit spending on subsidies and reduce aid programs and credit guarantees for US cotton exports.