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government-trade

Farm Bill Defeated in House

GOP leadership surprised by legislation's demise.

WASHINGTON — The House rejected a comprehensive farm, nutrition and conservation bill on Thursday, leaving in limbo programs affecting cotton farmers and textile producers, and potentially agitating a trade dispute with Brazil.

The defeat of the $940 billion bill on a vote of 195 to 234 came as a surprise to GOP House leadership. The legislation aimed to broadly implement farm safety-net policies, and conservation and food stamp programs, over the next five years. But a majority of Democrats refused to support it because it contained steep cuts to food stamp programs, and 62 Republicans also voted against it. The Senate passed a farm bill earlier this month, but the failure in the House threw passage of the legislation into doubt.

Federal funding for a program supporting U.S. textile mills that use domestic cotton will expire on Sept. 30 if Congress does not pass either a new farm bill or an extension of the current farm legislation.  Under the Economic Adjustment Assistance program in the bills, the government gives domestic textile mills 3 cents a pound on domestic or imported upland cotton they use, as long as the money is invested in acquiring, modernizing or expanding land, plants, buildings or equipment.

The National Council of Textile Organizations “is hopeful that leaders in the House will work with the Agriculture Committee chairman to resolve the remaining issues in the 2013 farm bill that caused its defeat,” said Sarah Pierce, senior vice president of NCTO. “Given the important Economic Adjustment Assistance program that is contained within the bill, NCTO urges the House leadership to act fast to bring a passable bill to the floor. U.S. textile producers rely on the economic adjustment assistance programs to reinvest in their plants and equipment, which allows for more American jobs in rural communities nationwide.”

The bill’s failure in the House could also aggravate a long-standing cotton subsidy dispute with Brazil. The legislation sought to bring into compliance U.S. cotton subsidy programs that were found to violate World Trade Organization rules in a case brought by Brazil dating back to 2002. Brazil has maintained that U.S. cotton subsidies depress global cotton prices. The WTO sided with Brazil and issued a series of findings between 2005 and 2008.

The U.S. and Brazil reached an agreement in 2011 that averted $800 million in sanctions. The U.S. agreed to make some changes in its cotton export and credit guarantee program, and to work with Brazil to establish a $147.3 million fund to provide technical assistance and capacity building for the Brazilian cotton industry. Brazil has identified a list of U.S. exports it would sanction, including raw cotton, woven fabric, cotton pants and shorts, and some jewelry and beauty products.

An official at the Brazilian embassy, who requested anonymity, said they are still evaluating the situation and declined to comment.

“If Congress does not enact a new farm law, payments to Brazil of $147 million a year will continue,” said Terry Townsend, executive director of the International Cotton Advisory Committee. “Eventually Brazil may lose patience and decide to retaliate, but for the time being I think the status quo will continue.”