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Illegal Cotton Subsidies

April 28, 2004
Those Illegal Farm Subsidies

America's lavish handouts to its farmers harvest poverty throughout the
developing world. And they are illegal as well. That's the conclusion of a
World Trade Organization panel that heard Brazil's challenge to the cotton
subsidies that belie this nation's commitment to free and fair trade.

Cotton is far from the only crop that American farmers are able to dump on
the international market at low prices thanks to federal subsidies. But it
is one of the most outrageous cases. Brazil was wise in choosing it as the
first target in the developing world's challenge of the roughly $1 billion a
day in subsidies that rich nations dole out to their farmers. If the
preliminary ruling stands, as expected, it may mean the beginning of the end
for European and American practices that provide their farmers an unfair
advantage.

In addition to Brazil, an agricultural superpower, some of the world's
poorest nations, including the West African republics of Mali, Benin and
Burkina Faso, are vindicated by the W.T.O.'s decision. Cotton is West
Africa's cash crop, the one economic activity in which the region has a
competitive advantage. By underwriting much of the costs of America's 25,000
cotton farmers with checks that can total $3 billion a year, Washington
erases that advantage. Aided by American experts who are critics of this
warped system, Brazil convincingly argued that in the absence of subsidies,
the United States would have produced and exported substantially less cotton
than it did in recent years. Consequently, growers elsewhere would have
enjoyed greater market share and higher prices.

The glaring contradiction between American farm subsidies and the principles
underlying the global trade system has long posed a moral and political
problem for Washington. Now it is also a legal problem. Instead of digging
in its heels and spending years appealing the panel's ruling, the Bush
administration needs to seize upon it as a reason to negotiate the surrender
of rich nations' trade-distorting farm subsidies.

The administration has a mixed record on this issue. It offered proposals to
start weaning corporate farmers off their subsidies two years ago -
admittedly after approving a farm bill that exacerbated the problem. Then it
backed away in the face of strong opposition from Congress and the European
Union. That retreat not only hurt the poor nations' farmers, but also
American taxpayers, consumers and most business interests, including more
competitive farmers.

The W.T.O.'s talks on the further liberalization of trade faltered over the
subsidy issue at Cancún last year, but this week's ruling will vastly
strengthen the position of Brazil and others advocating the dismantling of
agricultural subsidies that distort trade. The sooner they prevail, the
better.

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