U.S. Rep. Bill Cassidy (R-La.) led a bipartisan group of rice-state representatives in a letter to U.S. Trade Representative Ron Kirk and U.S. Department of Agriculture Secretary Tom Vilsack that expresses concerns and seeks specific responses about Brazil's use of a government sponsored domestic marketing and pricing initiative for rice exports. The Program for Product Flow (PEP) gives an unfair advantage to Brazil's rice exports, the letter says.
The PEP Program provides a subsidy to a buyer of paddy, or harvested, rice that equals the difference between a set support price and the prevailing market price. The subsidy is provided on the condition that a buyer moves the rice to specific regions within Brazil or to an export destination. In 2010-2011, Brazil's rice industry harvested and exported a rice crop that was 17 and 25 percent greater, respectively, than the previous year. During that period, Brazil expanded its rice exports to the United States and in countries where the United States competes commercially, such as Haiti, Nicaragua and Nigeria.
"Making the export of rice a condition for receiving price support is an export subsidy and we understand that Brazil has a 'zero binding,' in WTO terms, for rice export subsidies," the letter says. "In other words, Brazil cannot use export subsidies for rice without breaking its WTO obligations."
The Representatives ask Kirk and Vilsack to identify specific actions the U.S. government has taken with regard to Brazil's 2010-2011 rice exports and an explanation about the use of the PEP Program during the same period.