U.S.-Brazil agricultural trade negotiations


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U.S.-Brazil agricultural trade negotiations

  1. 1. Danielle Skloven8 May 2008 U.S.-Brazil Agricultural Trade Negotiations: One Messy Food Fight 2004 was a turning point in multilateral trade negotiations at the World TradeOrganization (WTO). A proposal was drawn up for the elimination of agriculturalsubsidies, as planned for when this round of trade talks was launched in Doha in 2001. Ifthe current WTO negotiations are to offer sufficient incentives for all parties involved,and for developing countries in particular, the persisting distortions in agricultural tradeon the part of the industrialized North must be eliminated. To a large degree, the future ofagricultural trade hinges on negotiations between the U.S. and Brazil, Latin Americaslargest economy and a key player in the coalition of developing countries that challengedthe U.S. and E.U. in Cancún at the Fifth WTO Ministerial Conference in September2003. When U.S. Trade Representative Robert Zoellick warned Brazil in October 2002that it could “take the southern route to Antarctica” to sell its products,i he must not haveanticipated the subsequent rise of Brazil as an increasingly influential contender inregional and global trade negotiations. Since then, Brazil has challenged the U.S. onseveral fronts regarding trade barriers and anti-dumping measures. Within the WTO,Americans and Europeans have historically made agreements on their own, after whichthe accords have been dutifully ratified by the remaining WTO members. However, theG20— led by Brazil— now plays a significant role as a third actor to check this U.S./EUhegemony. In spite of considerable criticism from developed nations for itsuncompromising stance, Brazil has been unrelenting in pursuing its goals of agricultural 1
  2. 2. trade reform before it will open its service and industrial sectors to U.S. or Europeantrade, winning several key victories along the way. This paper aims to analyze thedynamics of the U.S.-Brazil standoff in regard to agricultural trade as well as to identifythe stakes at risk for both sides. It also assesses the degree to which Brazil would benefitfrom a Free Trade Area of the Americas (FTAA) in its presently proposed form and thealternative roads Brazil may take. Barriers to and distortions of trade in agricultural products make agriculture themost protected sector in the world economy— even after eight rounds of tradenegotiations since World War Two under the WTO/GATT.ii Meanwhile, distortions andbarriers to trade in industrial products have largely been eliminated among the developedcountries. Barriers to agricultural trade depress world prices of agricultural products,significantly harming farmers in developing countries and hindering any chance for suchpopulations to rise from poverty and improve their living standards. The U.S. argues forfree trade and economic liberalization, and yet it refuses to eliminate the very policiesthat would truly allow developing countries to pursue and achieve economic developmentand prosperity. Eliminating barriers to trade in agricultural goods is not solely in theinterest of the developing world. The U.S. has much to gain as well. Reducing farmsubsidies and trade barriers (both tariff and non-tariff) would reduce food prices, reducetaxes, improve environmental conditions, and increase the likelihood of foreigncooperation with U.S. foreign policy. The WTO Doha Round of trade talks was launched in 2001, where world tradeministers agreed to complete negotiations within three years. The focus of the DohaRound was purported to be helping the poorest countries in the WTO by liberalizing trade 2
  3. 3. in agricultural goods and services. Although some agreement was reached on cuttingdomestic support and eliminating some export subsidies for agricultural goods from thewealthier countries, emerging economies (such as Brazil) refused to liberalize theirindustrial sectors and trade in services until more progress was made on agriculturaltrade.iii In July of 2006, the WTO’s Director General suspended the Doha negotiationsdue to the impasse among the G6 over the means by which to achieve the goals ofagricultural trade.iv Negotiators were working under the deadline of the expiration of U.S. TradePromotion Authority (which permits the President to negotiate trade deals and presentthem to Congress for expedited consideration). In order to take advantage of TPA, anagreement would have to have been reached by the end of 2006— a deadline that was notmet.v As a result, the major impetus for altering U.S. farm policy has been removed.The U.S. insisted that it had made a satisfactory offer to reduce domestic agriculturalsupport that neither Brazil nor the EU had matched with market opening for agriculturaland industrial goods. Brazil and the EU contended that the proposed U.S. reductions ofdomestic support did not go far enough in reducing trade distortion.vi Meanwhile, the U.S. farm bill—which expired in 2007—has created a battle inWashington that will have far-reaching ramifications. Over the last decade, the farm billhas allowed the U.S. Department of Agriculture to spend tens of billions of dollars insubsidies on the nations cotton and rice farmers (along with corn, soybean, wheat, sugarand milk producers). Prices on nearly all commodities have been rising rapidly in cost.The average 2008 farm household income is expected to reach USD 90,000— nearlytwenty percent above the national average.vii Commodity farmers are set to receive USD 3
  4. 4. 13 billion in direct and indirect payments, disaster bailouts, crop insurance andconservation incentives in 2008 alone.viii Already, U.S. subsidies to cotton have been found in violation of WTO rules, theCanadians are currently challenging the level of subsidies, and several other sectors areconsidered at risk of future WTO challenges. Nonetheless, the U.S. farm bill (as itstands) is supported by well-funded, solidly-entrenched interest groups. The protectionof corn, ethanol, and sugar are all major points of contention between the U.S. and Brazil.Even though ethanol from sugar cane is cheaper and more energy-efficient to producethan ethanol from corn, lawmakers are not about to cut corn and ethanol subsidies, or liftthe tariff, at the risk of creating new competition for American farmers and ethanolproducers.ix U.S. policymakers argue that Brazil’s lower wages and looser environmentalstandards put U.S. farmers at a competitive disadvantage—the same arguments put forthby those opposed to NAFTA. In reality, however, this handicap not would not havenearly as detrimental an effect as some in Washington claim it would. In fact, a recentU.S. Department of Agriculture analysis concluded that under the FTAA, U.S agriculturewould actually benefit— in the wheat, corn, soybean, and cotton sectors— even thoughsugar and orange juice might face increased competition.x The current lack of agreement among the WTO members has resulted in theproliferation of bilateral and regional trade agreements. One such free trade agreement isthe Free Trade Area of the Americas (FTAA). Diverging opinions of the United Statesand Brazil, similar to those issues that divided developing and developed countries in theDoha Round, held this agreement up as well. The main issue that led to the standoffbetween the two countries is the content of the following section of the FTAA Draft 4
  5. 5. Agreement: Chapter 9 Article 7 of the FTAA draft, reads “Parties shall eliminate andshall not introduce or reintroduce in any form export subsidies for agricultural productsexported to other parties.”xi Merely defining the phrase “export subsidies” have beendifficult. U.S. legislators are reluctant to reduce the subsidies due to the political clout ofinterest groups from the farming states, particularly among producers of sugar and orangejuice, who see subsidy reduction as far too politically charged to confront, and whosesectors would be highly vulnerable to competition from Latin America. U.S. policy makers are now at a critical juncture in U.S. farm policy as Congressis considering a new farm bill that will set the future direction of agricultural trade. Theproposed farm bill generally retains the highly over-valued and economically illogicalfarm subsidy programs of the 2002 farm bill. If the proposed U.S.D 300 billion farm billis signed into law, prospects for either successful WTO negotiations or an FTAA couldbe eliminated, and the U.S. will be vulnerable to an increase of adverse WTO rulings.Specifically in regard to agricultural trade with Brazil, the issue of ethanol is on theforefront of negotiators’ minds. It is no secret that Brazil, the world’s largest producer ofsugar cane ethanol, has grown increasingly frustrated with the U.S. tariff on importedbiofuel. Now, after years of discussions and threats between Brazilian and U.S.politicians over the tariff, Brazil says it has no choice but to take a serious action againstthe U.S. trade barrier in the form of a WTO case challenging U.S. subsidies for domesticcorn and ethanol production. Brazil has not officially added ethanol to the complaint it filed in July 2007against U.S. farm subsidies. Furthermore, the process could take a considerable amountof time, as Brazilian government officials are waiting for the new U.S. farm bill to pass to 5
  6. 6. determine if their case will stand.xii Regardless, such a challenge to U.S. ethanolsubsidies before the world’s trade-governing authorities would serve as a majorprecedent. On the one hand, Brazil’s biofuel complaint could jump-start the currentWTO trade negotiations. However, if Brazil and the United States could not work outtheir differences over ethanol, the WTO would be called upon to rule in a precedent-setting case that could determine how biofuels would be traded. Undoubtedly, such adecision in an area as sensitive as environmental protection would rouse vitriolic debatefrom members of civil society. In an effort to reduce the complexities of the multilateral trade forum of theWTO—where innumerable interests must be considered—the U.S. and Brazil have co-chaired the project of an FTAA. Formal negotiations for the FTAA were launched at theSantiago Summit in 1998, where leaders committed to making progress on the agreementby 2000. As happened at the WTO, the U.S. refused to discuss non-tariff barriers foragricultural products. Meanwhile, Brazil hoped negotiations would improve marketaccess for their most important good: agricultural products.xiii While the U.S. economy isgenerally one of the most open in the world, with its average tariff rates below fivepercent, 130 U.S. tariffs are higher than 35 percent. Of those, 100 are in agribusiness andon many of Brazils most valuable exports, such as tobacco, dairy products, and orangejuice.xiv By stripping the proposed FTAA of any agricultural negotiation, the UnitedStates has removed the main benefit Brazil sought from liberalized trade. By 2004,leaders were still unable to agree on the terms of the FTAA. As a result, Brazilianpresident Inácio Lula de Silva began to look towards consolidating South Americaneconomic and political leverage. To do so, he re-initiated talks of strengthening 6
  7. 7. MERCOSUR in an effort to strengthen South American solidarity in the face of tradenegotiations with the U.S. Brazil’s membership in MERCOSUR allows it to maximizeits economy of scale as well.xv Clearly Brazil is the great current question mark as U.S. trade strategy movestoward implementing its current strategy of “competitive liberalization.”xvi U.S. policymakers cannot afford to continue to ignore Brazil’s demands. It has the world’s biggestfarm trade surplus (USD 27.5 in 2007), and it is the leading producer of beef, poultry,pork, ethanol, coffee, orange juice concentrate, sugar, and tobacco. In the past eightyears, Brazil’s farm exports have grown at an average of twenty percent a year.Nonetheless, relatively low U.S. average agricultural tariffs mask the high cost Brazilfaces from out-of-quota peak U.S. tariffs. For example, as part of U.S. support for thedomestic sugar growing and processing industry, strict quotas are set to restrict theamount of sugar imports that may enter the country. The purpose is to maintain thedomestic price of sugar above a set minimal level. The United States Department ofAgriculture (USDA) allocates quotas among eligible countries, with Brazil receivingapproximately 13 percent of the world total. In-quota imports are subject to a very lowduty; however amounts entering above the quota are subject to a tariff of approximately78 percent ad valorem (fixed per-unit). Brazil has expressed concern over the small butgradual increases in quotas given to the Central American countries under the CAFTA-DR, warning that such actions deter Brazil from future negotiations with the U.S., giventhat Brazil is the world’s largest producer of raw and refined sugar.xvii Even if significant progress could be made on agricultural issues in the Doharound, and Brazilian trade complaints could be ameliorated in bilateral working groups 7
  8. 8. with the United States, Brazil may still choose not to liberalize areas where either itcannot easily fulfill the conditions set forth in the Draft Proposal of the FTAA (forinstance, enforcing protection of IPR), or where the United States has a distinctcomparative advantage or particular interest (industrial goods, services, investment).There is perhaps little U.S. trade negotiators can do to nudge Brazil off its course ofcontinuing to advance MERCOSUR and pursuing selective priorities in the WTO, whileleaving the FTAA to remain dormant indefinitely. Observers of the ongoing negotiationsdisagree as to whether agricultural trade liberalization in the form of an FTAA willactually benefit the people of Brazil to the extent that it would be worth exposing Brazil’suncompetitive sectors to U.S. business. Former Brazilian Minister of Foreign Relations Samuel Pinheiro Guimarãesposits that the Brazilian economy would regress in its economic development if it enteredinto a single Western Hemispheric market with complete free trade in goods and services.In Guimarães and many others view, U.S. competition will destroy Brazils industrialbase and lead to a large Brazilian trade deficit. He explains that once the MERCOSURcommon external tariff (which reaches 35 percent) is removed, there will no longer beany incentive for foreign companies to invest in Brazil. Rather, he believes thattransnational companies will choose to establish their factories along the U.S.-Mexicoborder and subsequently export to Brazil. Additionally, a continental trading bloc wouldcreate even more bargaining power than that held by MERCOSUR. Brazil’s maininterest in the FTAA is the elimination of barriers to trade in agricultural goods.However, Guimarães cautions, overdependence on agricultural goods is unwise, becausethe price of agricultural goods—as opposed to industrial goods—are price inelastic.xviii 8
  9. 9. Guimarães does not address the possibility of Brazil’s liberalizing its service industryactually improving the quality of its service sector, though. The flood of morecompetitive American services into Brazil could have the effect of forcing Brazil totighten up it’s service industry in the face of such competition. Other scholars contend that multilateral trade reform is likely to lead towidespread benefits in Brazil. There are three main reasons provided for this conjecture.First, both commercial and family-run farms in Brazil are net sellers of exported productswhose prices will rise. Approximately 18 million Brazilians (about 27 percent of thecountry’s employed population) works in the agricultural sector.xix Consequently, asignificant segment of the population would experience income growth as a result ofliberalization of agricultural products. Second, the potential losses to farms in import-competing sectors have in fact already been incurred by opening up trade withinMERCOSUR, so no domestic price declines would ensue from hemisphericliberalization. Third, non-agricultural households will ultimately gain from higheragricultural prices, as the effects of higher profits and wages in the agro-food sector willoutweigh the impacts of higher food prices. These gains are reinforced by non-agricultural liberalization at the global level.xx As for the Brazilian public’s opinion of the proposed FTAA, citizens arebecoming wary of the risks involved in a liberalization project as all-encompassing as theFTAA. Though relieved to have put the days of hyperinflation behind them, manyBrazilians say they are tired of the governments neoliberal policies and doubt that freetrade will improve their situation. Public service salaries have stagnated for seven years, 9
  10. 10. while consumer prices have tripled. Approximately 570,000 factory jobs have been lostin the industrial suburbs of São Paulo since the start of the Real Plan in 1994.xxi In an attempt to remove the unjust limitations to their exports, Brazilian tradenegotiators challenged U.S. cotton subsidies in September 2002 under the WTO disputesettlement procedures, arguing that the 2002 farm bill violated the WTO Agreements.Brazil specifically denounced U.S. domestic support measures, export credit guaranteesand other measures that it held were export and domestic content subsidies. Braziliannegotiators argued that these subsidies caused the U.S. to produce excess supplies ofcotton, thereby depressing world prices (a complaint heard from many other developingcountries that depend on the textile industry as well. In September 2004, the WTO panelfound that Step 2 subsidies,xxii loan deficiency payments and countercyclical paymentstogether resulted in egregious prejudice and thus violate U.S. WTO commitments.Additionally, the export credit guarantee program (as provided for under Title III of the2002 farm bill) was judged to be WTO inconsistent. This was the first WTO decision onagricultural subsidies.xxiii The cotton ruling is particularly relevant to the future of agricultural trade for tworeasons. First, subsidy programs are vulnerable to challenges if they suppress marketprices or if they unfairly reduce the production in other countries and thereby harm theinterests of commodity producers in other WTO member states. Second, the ruling thatcrop insurance, counter-cyclical payments and direct payments all counted towardssupport for cotton illustrates just how broad the WTO view is regarding what counts assupport. The multilateral institution will not be hesitant to hold the U.S. accountable foranything that hints of unjust protectionism. 10
  11. 11. In addition to cotton, Brazil joined seven other WTO members in bringing acomplaint against U.S. tariffs on other products produced by its highly-protected,uncompetitive industries. Orange juice may be the source of the next battle. Brazil andthe U.S. produce, in total, 90 percent of the worlds orange juice. Brazil exports all but 1percent of its juice. Meanwhile Americans drink 68 million glasses a day — a more thanUSD 3 billion market.xxiv But to protect U.S. citrus growers, Washington has placed a 52percent tariff on Brazilian orange juice. In the past 15 years, this exorbitant tariff hasdiminished Brazils share of the U.S. frozen concentrated orange-juice market from 45percent to less than 15 percent.xxv Giving its fight with U.S. policy makers a renewed zeal, Brazil elected a newgovernment in 2002. Luiz Inácio Lula de Silva (“Lula”) ran his 2002 election campaignportraying the FTAA s as a project of “annexation” rather than “integration.”xxvi Thevictory of the Workers’ Party, the PT (Partido dos Trabalhadores), has brought to powerthe Brazilian left. Lula won a surprising victory in the presidential election of October2002, with some 60 percent of the popular vote.xxvii This was the fourth time Lula hadrun, and many had anticipated that policy in Brazil—which has notoriously sufferedlimited economic growth, persistent extreme income inequality, and faltering socialpolicy—would take a radical turn. From the very beginning Lula and the PT projected a relatively anti-American,anti-globalization policy. Since his election, policymakers in Europe have been far morewilling than those in the U.S. to support Brazil politically and to accept Lula. Bush’srecent efforts at conciliation could be the harbinger of a major change in U.S. policy, andthey afford the opportunity to take U.S.-Brazilian relations in a more cooperative 11
  12. 12. direction than has been the case for a long time. Nevertheless, Lula has successfullyharnessed decades of pent-up frustration with hefty U.S. tariffs. In March 2007, Lula signed a proposal with President Bush to promote theethanol industry in the region. The prospect for an international ethanol market is stilluncertain, but if it does take off, Brazil would most certainly be a central global supplierdespite the fact that domestic demand is rising. Its ethanol production, which mainly usessugar cane, is far more efficient than that of the U.S., which makes ethanol with corn.The success of the Flex cars and the use of a mixture of the both gas and ethanol in oldercars has led Brazil to invest heavily in ethanol production. In fact, all gas sold in Brazil isa mix of 77 percent gasoline and 23 percent ethanol.xxviii On March 9, 2007, the U.S. and Brazil signed a Memorandum of Understanding(MOU) to promote greater cooperation on ethanol and biofuels in theWestern hemisphere. The agreement involves (1) technology-sharing between theUnited States and Brazil, (2) conducting feasibility studies and providing technicalassistance to build domestic biofuels industries in third countries, and (3) workingmultilaterally to advance the global development of biofuels.xxix Despite such diplomaticgestures, Congress has voted to extend high ethanol tariffs through2011, and legislation is currently being debated that would make the tariffs permanent. The cost of ethanol per gallon of fuel from sugarcane in Brazil, at 83 cents pergallon of fuel, is lower than the cost from corn in the U.S.—USD 1.09 per gallon. Inaddition to the higher cost of production, there are additional costs in the U.S. associatedwith transporting ethanol from the production locations in the Midwest to majorpopulation areas, particularly in the coastal regions. This has led to an increase in the 12
  13. 13. competitiveness of Brazilian ethanol imports despite steep tariffs in the U.S.. On eachgallon of ethanol imported to the U.S. from Brazil, there is a USD 0.54 tariff. The Bushadministration has avowed that this tariff is not up for discussion. Meanwhile,agricultural lobbyists who use corn as animal feed hope to see the tariff removed fromthis years farm bill.xxx Furthermore, volatility in U.S. domestic ethanol prices, whichsometimes leads to spikes, provides Brazil with the opportunity to export ethanol to theU.S.. Brazil, with its comparative advantage of low-cost ethanol production, wouldclearly benefit from the removal of the U.S. duties. Faced with such unresponsiveness on the part of the U.S., Brazil has turnedelsewhere to gain economic prowess. Brazil stands firmly to making no additionalconcessions beyond those already under discussion in the Doha Round. In thediscussions surrounding the FTAA, MERCOSUR has already responded to the U.S.decision to differentiate among CARICOM (the Caribbean Common Market), thecountries of Central America, the Andean Community, and MERCOSUR by refusing tosubmit offers for tariff reductions in services; nor have any of the four countries in thegroup presented a formal position on investments or governmental purchases.Increasingly, Brazil seems to favor a minimal FTAA rather than any strategy thatforesees replication of the NAFTA and U.S.-Chile agreements. If MERCOSUR wereable to retain cohesion in the face of the FTAA negotiations through further progresstoward deepening integration in the form of a common market, then it would be able towithstand the U.S. version of hemispheric integration. Otherwise, the FTAA processcould directly threaten its survival because there might be less economic rationale forsmaller regional blocs. The open timeline for an FTAA plays into the hands of Brazil in its attempt to 13
  14. 14. establish a South American negotiating bloc in the meantime. Other Latin Americancountries are more dependent on the U.S. market than Brazil; therefore neither Brazil, northe U.S. (which stands to benefit tremendously from access to the southern market) islikely to abandon the chance of a hemispheric agreement altogether. However, Lula hasnegotiated trade agreements with other emerging countries such as China, India, andSouth Africa in the meantime, indicating that Brazil is in no hurry to sign onto an FTAAon America’s terms. Such agreements have been aimed at reducing Brazil’s dependencyon the U.S. and the E.U. and to secure access to rapidly emerging markets. Meanwhile,the free trade agreements that the U.S. has entered into with small Central Americancountries are of little benefit to the U.S. economy and are little more than symbolicgestures. Brazil must now seek a balance between standing firm on its trade reform agendaand making some concessions in order to move forward in either the regional ormultilateral arena. On one hand, it must avoid appearing to be the major source ofnegotiation hold-ups. On the other hand, it must not appear to be too conciliatory andlose the support of other emerging economies that share many of its interests. The U.S.stands to gain immensely from a multi-lateral agreement and should make a freshassessment of the value of its protected industries versus the potential benefits of accessto the Brazilian and greater Southern market. Essentially, the United States must cut itsagricultural subsidies or risk losing out on the substantial benefits of the FTAA to theU.S. economy. In spite of the fact that expansion of trade is an important short-run priority forBrazil, the crucial strategic question for the country’s economic development is the 14
  15. 15. creation of a sustained process of such development and the construction of politicaldemocracy in the long term. The implementation of a viable development strategy andthe construction of a solid democratic system depends on the gradual reduction ofdomestic social disparities, the elimination of external vulnerabilities, and the realizationof Brazil’s extraordinary potential. Only the U.S., China, and Brazil can be found on allthree lists of the ten largest countries, ten most populous countries, and ten countries withthe greatest GDP. This combination of territory, population, and capital stock, as well asthe absence of significant religious, ethnic, or border conflicts makes for exceptionaleconomic and political potential. Nonetheless, today approximately 50 million people inBrazil survive on less than two dollars a day. This sector of the population is growing. The substantial asymmetry among the trading partners of the FTAA and the basicneeds of ordinary citizens should be taken into consideration during the negotiations,rather than focusing solely on the single factor of economic profitability. In his address atthe United Nations, President Bush declared that, “The United States is ready to eliminateall tariffs, subsidies and other barriers to free flow of goods and services as other nationsdo the same.” Statements by President Bush will continue to smack of hypocrisy untildomestic agricultural support and other barriers to trade are addressed with no concealedagendas. By continually insisting on equal terms for such controversial issues as theservice trade, IPR, and government procurement, while remaining unwilling to eliminateits farm subsidy programs, the U.S. obstructs the one trade area where Latin Americaotherwise might have a comparative advantage. U.S. policy makers should realize that the current ongoing bilateral and sub-regional efforts can only complicate the advancement of the FTAA or the WTO 15
  16. 16. negotiations. Washington considers the recent ratification of the DR-CAFTA as a majorachievement towards the FTAA. However, DR-CAFTA has only further frustratedBrazilian officials, because it directly challenges Brazil’s role as a regional leader. Brazilis prepared to work to advance the FTAA, but only if it can be harmonized with authenticBrazilian interests.Notesi Daniel McLaughlin, “Take a Hike to Antarctica”, Brazzil, Nov. 2002,<http://www.brazzillog.com/pages/p10nov02.htm>.ii Mario Berrios et al, “Prospects and Challenges for the Liberalization of Agricultural Trade in the WesternHemisphere,” in Integrating the Americas: FTAA and Beyond, eds. Antoni Estevadeordal et al (Cambridge:Harvard University Press, 2004) 265.iii Amy S. Dwyer, “Doha’s Plan B: The Current Pause and Prospects for the WTO,” paper presented to theGlobal Business Dialogue, Washington, D.C. Sept. 2006.iv Mac Margolis, “Brazil’s Growing Power,” Newsweek, vol. 140, no. 11, Feb. 2004, 3 . 16
  17. 17. v Dwyer 3.vi Estevadeordal et al, introduction, in Integrating the Americas: The FTAA and Beyond, edited by AntoniEstevadeordal et al (Cambridge: Harvard University Press, 2004) 3-33.vii Kym Anderson and Will Martin, “Agriculture: The Key to Success of the Doha Round,” in Trade, Doha,and Development, edited by Richard Newfarmer (Washington, D.C.: The World Bank, 2006) 153.viii Anderson and Martin, 156.ix Berrios et al 276.x John Link and Mary Burfisher, “Free Trade Area of the Americas: What are the Benefits for U.S.Agriculture?” Agricultural Outlook, no. 270, April 2000, 15-19.xi Third Draft FTAA Agreement, November 2003, <http://www.ftaa-alca.org/ftaadraft03/index_e.asp>.xii Charles Mann and Susanna B. Hecht, “How Brazil Outfarmed the American Farmer,” Fortune, vol. 157,no. 1, Jan. 2008, 92.xiii Estevadeordal et al 3-33.xiv Berrios et al, 269.xv Marcelo de Paiva Abreu, “The Political Economy of Economic Integration in the Americas: LatinAmerican Interests,” Integrating the Americas: The FTAA and Beyond , edited by Estevadeordal et al(Cambridge: Harvard University Press, 2004) 425.xvi U.S. Trade Representative Robert Zoellick has argued the case for bilateral agreements as “a speedyroute to free trade,” see Financial Times, November 19, 2002).xvii Jasper Womach and Randy Schnepf, “Potential Challenges to U.S. Farm Subsidies in the WTO,” inCRS Report For Congress, Congressional Research Service, April 2007.xviii Rubens Antonio Barbosa, “The Free Trade Area of the Americas,” Fordham International LawJournal, February 2004, 1021.xix Institute for the Integration of Latin America and the Caribbean, Inter-American Development Bank.xx Abreu 420.xxi Fernando Lorenzo and Marcel Vaillant, “Integration in the Americas: Welfare Effects and Options forMERCOSUR,” in MERCOSUR and the Creation of the Free Trade Area of the Americas, FernandoLorenzo and Marcel Vaillant, eds., Woodrow Wilson International Center for Scholars (Washington, D.C.,2005) 107.xxii Under this program, when the U.S. price was higher than the world price, the government gave theindustry payment for exporting. Step 2 subsidies were initially put in place to help the textile industry andgenerally amounted to around $300 to $400 million annually.xxiii Anderson and Martin 167.xxiv "Orange Growers Ask for Tariffs. " New York Times (New York) 28 Dec. 2004, ProQuest.xxv Hal Hogan and Ray Goldberg, “Can Florida Orange Growers Survive Globalization?” Harvard BusinessSchool Case No. 2-904-415, 3 Nov., 2003.xxvi Andrew Hurrell, “Lula’s Brazil: A Rising Power, but Going Where?,” Current History, Feb. 2008, vol.107, no. 706.xxvii Albert Larcada and Anna Gangadharan, “Aspiring to Leadership: Brazil, President Lula and Sugar-CaneEthanol,” Council on Hemispheric Affairs, 24 Aug. 2007.xxviii U.S. Energy Information Agency, “Country Analysis: Brazil 2007.”xxix “CRS Report on U.S.-Brazil Potential Cooperation on Biofuels,” 27 Sept, 2007, 4.xxx “CRS Report” 5. 17