US, Brazil say they have come to preliminary agreement in long-running cotton dispute

US, Brazil come to preliminary cotton agreement

WASHINGTON — The United States and Brazil say they have come to a preliminary agreement in a long-running trade dispute over billions of dollars in subsidies paid to U.S. cotton farmers.

The announcement comes one day before Brazil was to raise tariffs on hundreds of millions of dollars in American goods, including autos, pharmaceuticals and electronics. The World Trade Organization says Brazil can take punitive action because the United States has failed to get rid of subsidies the WTO says are illegal.

The Brazilian government brought the case to the WTO in 2002, alleging the United States remained the world’s second-largest cotton producer by paying out the subsidies. The United States will set up a $147 million annual assistance fund for Brazil as part of the agreement.