Rep. Kind, Ryan Call for Federal Cotton Subsidy Reform
Two Wisconsin congressmen are calling on the White House to resolve the U.S.-Brazil trade dispute by reforming U.S. agricultural subsidies, particularly cotton, instead of making annual payments to Brazil. This week, Reps. Ron Kind and Paul Ryan, along with two other lawmakers, sent a letter to President Obama urging him to utilize all of his resources to reform the agricultural subsidy program. They say the Export Credit Guarantee Program fails to cover its operating costs and 'effectively serves as an illegal export subsidy.'
"We need to reform these programs now. They are obstructing future trade growth and distorting the market," Kind said. "I fought hard to restructure these unfair subsidies in the 2007-2008 farm bill and will continue to work to update these fiscally irresponsible programs. We cannot continue to the easy way out by maintaining this payout."
The four lawmakers say a recent ruling by the World Trade Organization in a long-standing trade dispute between the U.S. and Brazil over U.S. cotton programs authorized Brazil to impose more than $800 million worth of tariff increases and cross-retaliation measures. In lieu of the $800 million in punitive penalties, the United States Department of Agriculture and the United States Trade Representative offered Brazil an annual payment of $147.3 million.
"We cannot expect our trading partners to play by the rules if we don't do the same," the letter read. "It is clear that our agricultural subsidies are grossly outdated and are quickly becoming a liability for future trade growth."
Their letter went on to say that eliminating the cotton subsidy program would mitigate market distortions and could save an average of $1.8 billion per year in federal program costs.