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Why end US Cotton Subsidies

from the March 10, 2005 edition -

Time to end US cotton subsidies

By Helena Cobban

CHARLOTTESVILLE, VA. - It's official: an appeals panel of the World
Trade Organization (WTO) ruled last week that most of the $4
billion-plus that the US government gives annually to producers and
exporters of US cotton is illegal under current trade rules. The panel
also stated that these payments - of which $3.2 billion are producer
subsidies, while the rest help underwrite costs of exporting - must be
ended by July 1.

This may be tough news for the 7,500 US cotton farmers (out of a total
of 20,000) who have been getting these price supports from Washington.
But it's great news for millions of cotton farmers in poor parts of the
world who have been unable to compete in world markets against America's
heavily subsidized cotton fibers.

Two years ago, I was in Mozambique, talking with citizens of that very
low-income country about their hard-fought efforts to escape from the
legacies of long wars and, more recently, two years of major flooding.
Issues of lost or threatened family livelihoods were front and center
for most I talked with. Many complained about the tough International
Monetary Fund requirements that had forced Mozambique to end its earlier
subsidies for basic commodities, and thereby kept many Mozambicans in
grinding poverty. (The UN calculates that some 37 percent of the
country's people get by on less than $1 a day.)

"And then, the US wiped out our national cotton industry with its
subsidies to its own farmers!" one church-based social activist
exclaimed. "Is there really one law for the rich and one for the poor?"

It's not only Mozambique. Many other African countries - including
countries in West Africa that are still threatened by civil strife -
have felt the pinch of US cotton dumping, too. In many of those
countries, a loss of family livelihoods that's directly linked to
Washington's cotton subsidies has exacerbated and prolonged the
conflicts. In all of them, it has kept the levels of poverty and human
want quite unacceptably high.

What is the US required to do, and what will be the effects on US cotton
farmers? The WTO ruled that if the US subsidies are not ended by July 1,
then Brazil (which brought the case at the WTO) will have the right to
impose trade sanctions against the US.

But US lawmakers and the Bush administration should end these damaging
subsidies for their own reasons, anyway. Quite simply, it's the right
thing to do. Perhaps some of the money saved could be used to help the
less well-off recipients of the subsidies to convert their farms to
crops that are competitive, without any further need for subsidies.
(Most of the subsidies, however, went to large-scale producers who can
probably make their own adjustments to the market without continuing
governmental support.)

The rest of the money saved should surely go into a "repair" fund to
help rebuild the cotton farms and communities in poor countries that
were economically poleaxed by those years of unfair US subsidies.

In 2004, US aid to all 540 million residents of sub-Saharan Africa came
to less than $3.3 billion - far less than the total support given to
just 7,500 US cotton farmers! That aid figure should rise, anyway. Back
in 1990, the world's rich nations pledged to boost the aid they give to
developing countries to 0.7 percent of national income. But today, the
US gives less than 0.15 percent of national income in
government-allocated overseas aid (and less than 0.05 percent in
nongovernmental aid). Moreover, a large part of the governmental aid
goes to just two recipients: Israel, whose people enjoy a lifestyle
similar to that of many Europeans, and Egypt. Just 15 percent of US aid
goes to people in very low-income countries.

Those low aid figures express a lot about what we think America's role
in the world should be. In addition, everyone around the world hears
about the massive amounts our government has spent on the war in Iraq,
and wonders why our priorities have gone so askew.

For many years now, the main wisdom of development economists has
stressed that "trade, not aid" is the best way for countries to climb
out of poverty. Mozambique, Benin, Mali, and other very poor
cotton-producers tried to make that approach work - and they were
prevented from doing so by the US subsidies.

The March 3 ruling was a victory for the world's low-income countries.
It showed they might have some hope of getting a fair deal, one day, out
of the world trade system. Now, the Bush administration, Congress, and
all Americans should follow through by responding quickly and generously
to the ruling. They should look, too, at the government subsidies to
other economic sectors that may be equally damaging to low-income
partners in the world trade system - and reform those subsidies, too,
with or without a further WTO ruling.

* Helena Cobban is working on a book about violence and its legacies.

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