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| USW presses U.S., Brazil to negotiate settlement after WTO ruling |
| 3/10/2010 |
by World Grain Staff
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The U.S. Wheat Associates (USW) expressed concern over the implications for U.S. wheat after Brazil won a World Trade Organization (WTO) dispute settlement against the U.S. involving the use of illegal subsidies to support the domestic cotton industry.
A WTO arbitration panel awarded Brazil up to $830 million in potential retaliatory measures against the U.S. This includes punitive tariffs on U.S. goods totaling $560 million and an additional $270 million in sanctions through restrictions on intellectual property rights for pharmaceutical products. Import duties on wheat will increase to 30% from 10% in addition to the 25% Merchant Marine Tax on wheat shipped to Brazil's northeast ports.
USW said the WTO decision to allow Brazil to penalize the use of the GSM-102 program for U.S. wheat exports, where the U.S. does not compete with Brazil for wheat commodity, is a major concern to U.S. wheat producers. The USW said many wheat customers still find value in the program. In fiscal year 2008-09, $693.5 million in GSM-102 export credit guarantees were used for wheat exports worldwide. A decision by Brazil to penalize the use of the GSM program could impact the export of 3.5 million tonnes of wheat, to buyers that rely on this program for credit, according to the USW.
Brazil is a major wheat importer and is routinely one of the top three wheat importers in the world. The latest five-year average for total imports is 6.4 million tonnes. The USW said that the U.S. wheat market share to Brazil has ranged from almost zero to about 12% over the past 10 years.
USW said increased duties on U.S. wheat imports would shut the U.S. out of the Brazilian wheat market. The U.S. is already at a tariff disadvantage to Argentina for this market. USW said it would continue to push the U.S. and Brazilian governments to reach a negotiated settlement before the higher tariff levels are effective.
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