WTO Cotton Settlement Ripped In Ag Budget Debate

WASHINGTON (DTN) -- The WTO Brazilian cotton settlement has become a $147 million albatross in the House debate on the $125.5 billion food and agriculture appropriations bill.

The cotton settlement has given lawmakers who want to cut farm programs an opening for debate on overall farm subsidies. Further, other lawmakers trying to fend off cuts to food-aid programs have slammed the cotton payments as well.

House Agriculture Committee Chairman Frank Lucas, R-Okla., was successful Wednesday stripping language out of the appropriations bill that would have reduced direct payments to upland cotton farmers to pay for the Brazilian cotton settlement. Lucas also had language removed that would have lowered the income eligibility cap for farm programs to $250,000 adjusted gross income.

Nonetheless, on Wednesday evening the three-head group of House ag-policy reformers -- Rep. Ron Kind, D-Wis., Rep. Jeff Flake, R-Ariz., and Rep. Earl Blumenauer, D-Ore. -- pushed again to strip the cotton payments from the appropriations bill.

The U.S. settled last year with Brazil as part of a World Trade Organization case on a cotton marketing program from the 2002 farm bill. Even though the program was eliminated in the 2008 farm bill, Brazil won the right to place punitive tariffs on U.S. goods. Under an agreement, the Obama administration agreed to pay $147 million annually to the Brazilian government.

Kind offered an amendment Wednesday night to simply strip the $147 million out of the bill. They argued that taxpayers shouldn't be paying off Brazilians to continue paying farm-program payments to U.S. cotton farmers. A vote on Kind's amendment, and several other pending amendments, will happen Thursday.

Agriculture Committee members and others had stated the Brazilian payment was needed to remain WTO-compliant. Flake blasted that assertion.

"It's been our farm programs, which, on their best day, are out of step with reality, moved to the realm of the absurd, when we hatched a program to fund the institute in Brazil to fund the cotton industry there --- to start subsidizing Brazilians so we could continue to subsidize our own farmers," Flake said.

Lucas and House Ag Committee Ranking Member Collin Peterson, D-Minn., came to the floor to defend the Brazilian payments. Peterson said Brazil and China have exploited trade agreements and subsidized their cotton industries heavily. U.S. farmers have been on the short end of trade deals and the program Brazil sued the U.S. under has been changed repeatedly. Peterson said Brazil really didn't want to negotiate to work out differences in that case.

"There is more to this than people are talking about here. This is not about saving money. This is about making sure that we can have a safety net in this country so we can have production agriculture in the United States and not ship it all to other countries," Peterson said.

Lucas cautioned that if the amendment passes and the settlement isn't funded, that would put at risk $800 million in retaliatory tariffs on U.S. goods. Lucas said it wouldn't be agricultural industries affected, but likely other, unrelated industries. The amendment "would expose the U.S. to job-killing sanctions," Lucas said.

"They will go after everybody outside of production agriculture to get that $800 million in retaliatory tariffs," he said.

Lucas also said there would be cuts to farm programs in the next farm-bill process, or more likely cuts could come if there is a major agreement on overall federal budget reductions and the debt ceiling. Further, Lucas said that starting next week, the House Agriculture Committee will conduct an audit of all farm programs to begin looking for policy changes.

Kind, Flake and Blumenauer also criticized that conservation, rural development and nutrition programs were being cut but commodity programs under Title I were being held unharmed until the farm bill debate.

"These programs are outdated, they are impossible to justify to the American taxpayer, especially with the deficit reduction all of us are interested in participating in this year," Kind said.

Flake had championed the push to take money from direct payments for U.S. cotton farmers to pay the Brazilian case. He also questioned whether there would be cuts to farmers in the next farm bill and when that would likely happen.

"Nobody really believes we're going to be doing a farm bill this year," Flake said. "Nobody believes we're going to be doing one next year. So we're going to be continuing to do this year after year after year."

Blumenauer also has an amendment that would cap farm payments at $125,000 a year. Lucas issued a statement Wednesday night on Blumenauer's $125,000 payment cap, urging lawmakers to vote against it, citing that it would have a devastating effect on farmers, particularly those facing disasters right now.

"This amendment asks us to tell the farmers affected by these catastrophes that while they were trying to save their equipment, livestock, and personal property from devastation, we were changing the rules in Washington," Lucas stated. "So they may have lost everything, but we in Washington have decided it was only worth $125,000.

"For that reason alone I urge my colleagues to oppose this amendment. But I also urge you to oppose it because policy changes like this one should be conducted within the broader context of all farm policy."

The cotton issue also came up in debate over food aid. On Tuesday, Rep. Rosa DeLauro, D-Conn., was incensed that the $650 million was being taken out of the Women and Infant Children feeding program, but the cotton funding had been restored, even though she had successfully gotten the funding stripped earlier.

"This majority has no problem spending $147 million for Brazilian cotton farmers, but they loathe to do the same for infant children and women in the U.S.," DeLauro said.

Rep. Jack Kingston, R-Ga., chairman of the House Appropriations Subcommittee for Agriculture, responded that the rolls for WIC had declined by more than 300,000 from February 2010 to 2011, and that the federal government has several duplicative feeding programs to help the hungry.

"We will make sure no one falls through the crack," he said.

June 17, 2011

Source: AP