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Published August 08, 2013, 01:05 PM

Vilsack talks cotton payments, GMO with Brazilian officials

Agriculture Secretary Tom Vilsack has told Brazilian officials that the U.S. Department of Agriculture is running out of money and authority to make payments in the World Trade Organization cotton subsidies agreement. But he urged them to buy U.S. wheat, beef and pork exports and find ways to cooperate with the U.S. on biotechnology and biofuels policy.

By: Jerry Hagstrom, Agweek

Agriculture Secretary Tom Vilsack has told Brazilian officials that the U.S. Department of Agriculture is running out of money and authority to make payments in the World Trade Organization cotton subsidies agreement. But he urged them to buy U.S. wheat, beef and pork exports and find ways to cooperate with the U.S. on biotechnology and biofuels policy.

In a telephone interview from Rio de Janeiro on Aug. 7, Vilsack told Agweek he traveled to Brazil with the goals of giving Brazilian officials an “honest assessment” about the situation of the cotton case while the farm bill is still pending, to “see where we are aligned” and to learn about Brazilian agriculture.

After a WTO panel ruled that U.S. cotton subsidies had inflicted harm on the Brazilian cotton industry, the U.S. agreed in 2010 to make an annual $147 million payment to Brazil until the next farm bill changed the subsidies. The payments have been made to avoid Brazil imposing retaliatory tariffs on a range of U.S. products.

But Vilsack said the budget restrictions placed on USDA by the sequester will allow him to make only half the payment promised to Brazil in September, and that on Oct. 1, he will lose authority to make any payments.

Vilsack did not say how much the September payment would be, but dividing the $147 million payment by 12, and that amount by half comes to $6.12 million.

Jim Miller, then agriculture undersecretary for farm and foreign agricultural services, developed the program of payments to Brazil without congressional action. But even though it was an executive branch decision and the money comes from the Commodity Credit Corp., Vilsack said he cannot continue the payments because President Barack Obama did not include it in his fiscal year 2014 budget.

Vilsack noted that the administration assumed the farm bill, with provisions to establish a new cotton program, would be passed before the beginning of the fiscal year on Oct. 1.

The secretary said he told Brazilian Minister of Agriculture Antonio Andrade and Brazilian agriculture and foreign ministry officials, that he had no authority to continue the payments and that the proper resolution to the case is the passage of the farm bill.

According to Vilsack, the Brazilian officials said their country’s patience is not limitless, and “absent a payment or resolution of the dispute with passage of farm bill that we leave them with very very little options,” a reaction that seemed to indicate Brazil would be under pressure to impose the tariffs that it agreed not to impose as long as the payments were made and the farm bill addressed the cotton issue to Brazil’s satisfaction.

Vilsack did not say whether the Brazilian officials expressed views on the new cotton program in the farm bill. He emphasized that Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., and Sen. Roy Blunt, R-Mo., his traveling companions, were with him when he delivered the message to the Brazilian officials.

The Brazilian reaction, he said, means that the House and the Senate should “get serious” about finalizing the farm bill.

No authority

A congressional resolution to continue USDA funding will not give Vilsack authority to continue the payments. Congress could pass a measure to fund the Brazil payments, but Vilsack noted that there has been opposition to the payments in Congress.

Earlier this year, Vilsack told Congress that the sequester made it impossible for USDA to move money around to pay meat and poultry inspectors. That position forced Congress to pass a special measure moving money from one USDA account to another to provide money for the meat inspectors.

While members of Congress might argue that the administration started the Brazil payments and could use executive branch authority to continue them, the administration’s unwillingness to continue them places more pressure on Congress to finish the farm bill or create a trade crisis that would involve industries beyond agriculture.

On biotechnology, Vilsack said he urged the Brazilians to join the U.S. in encouraging China to synchronize its regulatory processes with other countries and establish policies under which low levels of biotech presence would be acceptable.

Congress, Vilsack concluded, needs to act on the farm bill, immigration reform and water and resources development, to keep up with Brazil.

“I come out of here more committed and more concerned about the lack of a farm bill,” he said.

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