Brazil’s Road to Victory Over U.S. Cotton

May 4, 2004 | New York Times


It began with Brazil’s soybean farmers.

Pedro de Camargo Neto, then a top official of the Brazilian Rural Society, Brazil’s most influential agriculture lobby, kept hearing complaints in the late 1990’s from farmers that, just as they were starting to turn a profit with their soybean exports, they were getting clobbered by lower-priced American soybeans that were heavily subsidized with taxpayers’ money.

“Something was wrong here,” he said in a telephone interview. “I didn’t understand how this could be happening.”

After looking closely at the subsidies for the richest American agribusinesses and their impact on Brazilian farmers, Mr. Camargo – who was Brazil’s deputy agriculture minister at the time – began a campaign in 2001 to sue the United States at the World Trade Organization.

Last week, the W.T.O. finally issued a preliminary ruling favoring Brazil and two African nations over the United States in the first case brought against a developed nation’s domestic subsidies. The ruling concerned cotton, not soybeans, and Mr. Camargo is no longer in government, but he could not be more thrilled with the outcome.

It was not an easy battle for Mr. Camargo, who faced political obstacles at almost every turn.

A cattle rancher with a master’s degree in engineering from the Massachusetts Institute of Technology, Mr. Camargo thought he had understood the logic of globalization and liberalized trade. He had been an adviser for Brazil during global trade negotiations in the Uruguay round. The premise was that developing countries like Brazil could better lift their farmers out of poverty through trade, and not aid.

“This is really a pioneering case,” Mr. Camargo said after hearing about the preliminary outcome. “I wish this would have happened while I was still in the government. It’s nice to be recognized.”

The W.T.O. ruled that the multibillion-dollar subsidies to the biggest American cotton farmers and agribusinesses amounted to unfair trading practices.

It could mean a breakthrough in a decade-long fight by the world’s developing nations to force rich countries to end their $300 billion in subsidies and supports to the biggest farmers.

Another case is pending against the European Union for its sugar subsidies.

“He is the godfather, the visionary of the cotton and sugar cases,” said Scott D. Andersen, the lawyer who represents Brazil from the Geneva office of Sidley Austin Brown & Wood.

A slight, soft-spoken rancher, Mr. Camargo, 55, said he was surprised by the skepticism he first encountered within the Brazilian government when he broached the idea. Some officials at the ministry of foreign affairs did not want to take on the world’s superpower over a farm issue.

“I’d bring them one study on challenging subsidies, and they’d say, ‘Bring another,’ ” Mr. Camargo said. “Then I’d take two and they would ask for four more. Some people did everything they could to get in the way.”

One solution he came up with was to balance the pain. He pushed to file a suit against the European Union as well as the United States. He even floated the notion of filing a third suit, this one against Japan for its barriers to Brazilian beef exports.

But the minister of agriculture at the time – Marcus Vin?cius Pratini de Moraes – said that might be too much.

“Pratini told me: ‘Look, Pedro, you’ve already filed two complaints. Don’t get us involved in a third,’ ” Mr. Camargo said.

Moreover, those lawsuits are expensive – already Brazil has spent over $1 million on the cotton case. Benin and Chad, two West African countries that have been badly hurt by the cotton subsidies, could never have afforded to bring their own case but were included as third parties in Brazil’s lawsuit. It was the first time any African nation has been involved in any W.T.O. litigation.

“Brazil was getting hurt by the cotton subsidies, but the African countries were getting destroyed,” Mr. Camargo said. “We knew this would strengthen the case even more.”

The World Bank, the United Nations Development Program and the Organization for Economic Cooperation and Development have all done studies showing that the agricultural subsidies and supports of the world’s wealthiest nations are the biggest impediments for poor countries trying to trade their way out of poverty.

Indeed, the subsidy systems often hurt small farmers in the wealthy nations. In the United States, the country’s biggest cotton farmers – the top 10 percent – received 78 percent of the $1.3 billion in subsidies in 2002, the last year for which figures are available.

Mr. Camargo – a wealthy rancher in S?o Paulo state in the middle of Brazil’s farm belt – is not one of the dispossessed.

But he remains involved in the legal action, advising the private sector on the agricultural trade talks and acting as a consultant to Brazil’s Commodities and Futures Exchange.

“I was already very involved in these issues before I joined the government, so there’s no point in stopping now that I’m back in the private sector,” Mr. Camargo said. “This is what I do.”

Elizabeth Becker reported for this article from Washington and Todd Benson from S?o Paulo.

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