BRASILIA, (Reuters) – Brazil suspended yesterday retaliatory measures against U.S. goods over a cotton subsidy dispute until 2012, temporarily freezing a long-running row that has demonstrated the South American nation’s trade clout.
The United States pledged this year to make some short-term tweaks to its export credit guarantees and give Brazil about $147 million a year in damages for a “technical assistance” fund for cotton growers.
That fund will remain in place until there is a long-term solution to the cotton dispute, or the next U.S. farm bill is passed. The current U.S. farm law is set to expire on Sept. 30, 2012.
“Brazil doesn’t rule out taking countermeasures at any moment” if it believes the United States is breaking its agreement, Roberto Azevedo, Brazil’s envoy to the World Trade Organization, told reporters in Brasilia.
“We don’t have an interest in retaliating, and the U.S. does not have an interest in being retaliated against,” he added.
In April, Brazil delayed for 60 days trade retaliation against the United States after the U.S. government met the last of three conditions Brazil had set for suspending import duties on U.S. goods.
The deal heads off $829 million in retaliation against U.S. goods that the World Trade Organization has ruled was Brazil’s right after it found U.S. cotton subsidies and its export guarantee program illegal.
Brazil had been considering retaliation by lifting patent protections, which would have hurt U.S. makers of pharmaceuticals and chemicals.