Cotton Sources Dispute Claims of Potential WTO Issue Re: Cottonseed

U.S. would be unlikely to come anywhere near breaching WTO support commitments

US cotton and trade policy experts are taking issue with the suggestion that making cottonseed eligible for safety net programs under the 2014 Farm Bill could land the US in breach of its subsidy commitments under the WTO or spur a WTO challenge by Brazil, noting what the cotton industry has asked for should not create any potential issue.

The stance the National Cotton Council and others have taken is that there would be cottonseed base acres established if they were to be declared an “other oilseed” and be made eligible for the Ag Risk Coverage (ARC) or Price Loss Coverage (PLC) programs. Under such a scenario, contacts argue provisions in the farm bill spell out that any the total number of base acres on a farm cannot exceed the actual cropland acreage on the farm – that there would be a reduction in the generic base acres equal to the level of any cottonseed base acres that are established.

In addition, trade policy contacts observe that should cottonseed be considered an “other oilseed,” any payments generated under ARC or PLC would essentially be decoupled as the crop would not have to be grown to garner the payment. They point out any cottonseed payments generated should be considered non-product specific support which is subject to the 5% di minimus (determined as 5% of total value of total US ag production). Trade policy contacts say that would equate to around $20 billion in support, and the addition of cottonseed would not be anywhere near that mark.

And, those same sources point out the US limit on domestic subsidies via the Aggregated Measure of Support (AMS) is $19.1 billion and total US domestic ag supports are not forecast near that level and would not broach that mark should cottonseed be added to the mix as an “other oilseed.”

Comments: It’s clear this issue will continue to be a point of contention between the administration, the US cotton industry and others. Both sides have made and continue to lay out their arguments, including lawmakers on the Hill who firmly believe that there is no need to reopen the 2014 Farm Bill to have cottonseed be considered an other oilseed, something that appears to be the view of the administration and their legal reading of the legislation.

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