Brazil considers retaliation if US cotton payments end

RIO DE JANEIRO - Reuters

Brazilian Foreign Minister Antonio Patriota speaks in this file photo. The US will cease paying a $147 million annual settlement to Brazil that is part of a long-running trade dispute over subsidies. REUTERS photo

Brazil’s foreign minister, Antonio Patriota, said on Aug. 8 he could not rule out retaliation if the United States stopped paying Brazil monthly compensation for controversial cotton subsidies.

The dispute flared up days before the arrival of U.S. Secretary of State John Kerry, who is to plan an October state visit to Washington by President Dilma Rousseff.

The payments to Brazil could be suspended under automatic spending cuts that would take effect if the Obama administration and Congress fail to agree on the size of the U.S. deficit for the fiscal year starting Oct. 1.

Ties between the two countries have been roiled by recent revelations of U.S. spying on Brazil’s Internet communications.

“We are going to study our options and one option that cannot be excluded is cross-retaliation,” Patriota told reporters in Rio de Janeiro, where he met with Canada’s foreign minister John Baird. “We are facing an interesting situation that will require a decision by Brazil,” he said.

Brazil, the United States’ top trade partner in South America, has already identified possible targets for retaliation. In March 2010, before Washington agreed to the payments, the Brazilian government published a list of some 100 U.S. goods that could be subjected to import tariffs.