Agriculture Secretary Mike Johanns announced that the Bush Administration is sending proposed statutory changes to the Congress in the program generally known as the Step 2 cotton program and the export credit guarantee programs to comply with a recent WTO cotton decision in a dispute with Brazil.
"By implementing these proposed changes, we are being fully responsive to the WTO decision," said Johanns. "This step is essential for United States to continue to be a leader in the WTO Doha negotiations, which are crucial to U.S. market access and the long-term prosperity of our farmers and ranchers. We very much appreciate the close cooperation of the industry groups in developing this approach and will work with the Congress as this proposed legislation is considered."
The proposed statutory changes would eliminate the Step 2 program, remove a one-percent cap on fees that can be charged under the export credit programs, and terminate the Intermediate Export Guarantee Program (GSM-103).
Repealing the Step 2 program would remove both the export subsidies and import substitution subsidies that the WTO cited and address issues related to suppression of cotton prices in world markets. Eliminating the one-percent fee cap would make the Export Credit Guarantee Program more risk-based.
Terminating the GSM-103 program would reinforce the recent U.S. decision to stop using longer-term export credit guarantees.
On June 30, USDA announced that beginning July 1, the Commodity Credit Corporation (CCC) would use a risk-based fee structure for the Export Credit Guarantee Program (GSM-102) and the Supplier Credit Guarantee Program (SCGP).
