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The Case Against King Cotton

December 7, 2003
HARVESTING POVERTY
The Case Against King Cotton
NYTimes

The Bush administration has wisely decided to lift steel tariffs deemed
illegal by the World Trade Organization. But an even more potent test
of American fealty to principles of fair competition, and to international
trade law, looms on the horizon. Will the United States scrap its
costly array of cotton-growing subsidies if they, too, are found illegal by
the W.T.O.?

The question is of immense importance to impoverished farmers in places
likeWest Africa, whose livelihoods are hurt by America's unfair,
taxpayer-financed version of global trade. It is also pressing. Brazil
has mounted a strong legal challenge to America's cotton subsidies. It is a
historic case, the first time agricultural subsidies are being credibly
challenged before the W.T.O. A preliminary decision is expected next
spring.

There is nothing that creates more anger and disillusionment in poor
and developing countries than the refusal of rich nations to play by fair
rules when it comes to agriculture. The United States, Europe and Japan use
government subsidies to make their farmers' products more competitive.
In many cases, they wind up selling their produce for less than it costs
to grow, elbowing other countries' goods out of the global marketplace.

Until now, the losers got no help from the W.T.O. At that body's inception
in 1995, the wealthy nations rammed through a so-called peace clause
that gave them the right to bend the rules as much as they wanted as long as
their subsidies did not rise beyond the level of 1992. They argued that
it would provide some time to address the issue through negotiations. But
as the failed September W.T.O. talks in Cancún showed, Europe, Japan and
the United States are unwilling or unable to terminate the addiction to
farm subsidies on their own.

Fortunately, the peace clause will lapse next year, despite shameless
attempts by Europe and America to have it extended. And Brazil's cotton
challenge can proceed regardless because Washington's payments to
cotton growers have exceeded the already astronomic 1992 levels. Brazil's
lawyers have mounted a compelling case, as even some Bush administration
officials privately concede, that America's subsidies have indeed suppressed
global prices and stolen market share from others.

American cotton costs a great deal to produce by international standards.
Yet even though global cotton prices were crashing from 1999 to 2002,
our share of global exports grew to 40 percent, from 25 percent. That was
because Washington propped up King Cotton with $12.9 billion in
subsidies. We were, in effect, paying the rest of the world to buy American
product rather than the cheaper cotton grown in Africa and South America. In
recent arguments in its W.T.O. case, Brazil offered credible expert testimony
that absent Washington's subsidies, America would have exported some 40
percent less cotton. That actually seems like a conservative estimate. Still,
it illustrates the magnitude of the injustice being perpetrated against
poor nations for which cotton might be the only competitive export.

Antiglobalization protesters who claim to act on behalf of the world's
poor are fond of taking aim at the World Trade Organization, but the cotton
case shows that what the developing world needs is not a weaker trade
referee, but a stronger one capable of standing up to rich nations.

Poor African farmers and American taxpayers stand to gain if the W.T.O.
does what Congress should have done long ago, and kills our cotton
subsidies.

Brazil should prevail, and with the peace clause's retirement, more
such cases should be brought against indefensible agricultural
protectionism.

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