Officials say framework averts painful trade war with Brazil until new farm bill is passed

By DAN WHEAT

Capital Press

Temporary resolution of the U.S.-Brazilian cotton dispute is good news for Pacific Northwest pear, cherry and potato growers and Midwest wheat farmers.

Brazil has been threatening to impose 10 to 30 percent tariffs on a broad array of U.S. goods, including autos, pharmaceuticals, medical equipment, wheat, cotton, fruit and nuts.

The Office of the U.S. Trade Representative announced a framework on June 17 aimed at resolving the dispute and averting more than $560 million in countermeasures against U.S. goods that were scheduled to go into effect on June 21. An additional $240 million in countermeasures against intellectual property rights could have followed.

The framework is intended to maintain markets and allow for further negotiations so the 2012 Farm Bill can put the U.S. into compliance with a World Trade Organization ruling in favor of Brazil, said Mark Powers, vice president of the Northwest Horticultural Council in Yakima, Wash.

"It is good news and we're hopeful the wheels don't come off the truck," Powers said.

An expected 30 percent tariff on pears would have cut about $4 million out of what was a $13.6 million market for Northwest pears in the last season, Powers said.

Brazil typically is the No. 3 export market for Northwest pears but it only runs from fall harvest through January, he said. It's one of the few export markets for Bartlett pears, he said.

Brazil bought 512,000, 44-pound boxes of Northwest pears in 2009, up from 268,000 in 2008, according to The Pear Bureau Northwest in Portland. The bureau estimated a 20 to 30 percent drop in exports to Brazil with a tariff.

The tariff would not have applied to apples, Powers said.

A 20 percent tariff on top of an existing 14 percent Brazilian tariff on U.S. potatoes would have eliminated $1 million in Washington state dehydrated potato exports to Brazil, according to the Washington Potato Commission.

A tariff would have hurt what Northwest cherry growers view as an emerging market. The Northwest exported just 30,000 20-pound boxes of cherries to Brazil in 2009, up from 5,000 in 2008.

The Northwest doesn't export wheat to Brazil because of TCK smut and the cost of freight. But U.S. wheat prices would have been hurt had annual exports of about $196 million of Midwest wheat to Brazil been lost, the Washington Grain Commission has said.

Brazil threatened to impose WTO-authorized tariffs after the WTO ruled against U.S. cotton subsidies and a U.S. export credit guarantee.

Brazil is the 10th largest trading partner of the U.S. with total two-way goods trade of approximately $60 billion in 2009, according to the Office of the U.S. Trade Representative.