Another Blow to Cotton Subsidies

It is a landmark ruling by every measure --- one that will have a major and lasting effect on U.S. cotton subsidies, perhaps all farm subsidies.

The World Trade Organization has upheld a complaint filed by Brazil claiming that U.S. payments to cotton farmers guarantee unfair trading advantages over other countries. This marks the first time a country has been challenged over its domestic cotton subsidies and the first case that looks at the effect of export subsidies on agricultural products.

U.S. farmers, Brazil contends, would not have been able to maintain their second-place ranking in world cotton production without these payments. Indeed, it claims U.S. cotton production would have fallen 29 percent and that American exports would have dropped 41 percent. This would have led to a rise in international cotton prices of 12.6 percent, which would have helped Brazilian farmers.

Posted by Jim Langcuster at April 27, 2004 10:17 AM | TrackBack