"The so-called 'Brazil cotton case' is a long-running World Trade Organization (WTO) dispute settlement case (DS267) initiated by Brazil--a major cotton export competitor--in 2002 against specific provisions of the U.S. cotton program. In September 2004, a WTO dispute settlement panel ruled that (1) certain U.S. agricultural support payments for cotton distorted international agricultural markets and should be either withdrawn or modified to end the market distortions; and (2) U.S. Step-2 payments and agricultural export credit guarantees for cotton and other unscheduled commodities were prohibited under WTO rules and should be withdrawn. […] Both Brazil and the United States have hoped that the WTO cotton dispute would be resolved definitively within the context of the next U.S. farm bill. In this regard, both the Senate-passed (S. 954) and House-passed (H.R. 2642) 2013 farm bills are in agreement over proposed changes to U.S. cotton support programs--cotton would no longer be included as a major program commodity, thus losing eligibility for certain price and income support programs proposed in Title I of the farm bill. Instead, those programs would be replaced by a new cotton program comprised of a stand-alone, county-based revenue insurance policy called the Stacked Income Protection Plan (STAX). The House- and Senate-passed farm bills are presently in conference to resolve differences. While a new farm bill might address issues related to the WTO Brazil-U.S. cotton case from a U.S. perspective, Brazil still retains substantial authority in making a final determination regarding the compliance of any policy changes to U.S. cotton support programs."
CRS Report for Congress, R43336