George Bush has surrendered to Brazil afer it made a moplaint to the World Trade Organisation and has announced he will propose the scrapping of the US subsidies to cotton farmers and exporters.
Or to put it another way, Bush has dragged his feet and only the treat of sanctions from Brazil has forced him to concede he will have to finally accept the abolition of subsidies.
Either way its bad news for a few huge cotton farm owners in about 4 US states, including Texas and good news for the developing world’s farmers who have been undercut by the highly subsidised US exports.
The dispute over cotton is long standing and the WTO finally ruled on Brazil’s complaint in March this year. That found against the US system of of subsidies for the cotton growers and 10 year credit guarantees for exporters. The cotton indusry in the US has managed to get huge subsidies on the back of lobbying and promoting the image of the small family farm. In reality they are huge corporation owned agribusinesses.
The effect of subisidies and guarantees is conservatively estimated to depress the world price by 13%. This is about the lowest figure, others suspect the real effect is much greater. What is fairly certain is that an increase in the world price might mean that a small African farmer or farm worker may be able to afford a pack of writing paper so their kids can go to school and that cutting the subsidies Bush will be able to pay for the doubling of aid to Africa he has just announced.
A good thing all round apart from a few lobbyists then? Well no, Bush has dragged his feet on this one. The WTO gave the US to June 30 to end the subsidies. On July 5 Bush announced he would be asking Congress to legislate the abolition. That was after some half-hearted adjustments to the details in the guise of complying with the ruling angered Brazil so much they formally asked the WTO to allow them to impose import taxes on some US goods in retaliation to the continued illegal subsidies. This is more of a sabre rattle than a real threat but got the right reaction as Bush caved in. BBC Story.
An interesting sideline with all these WYO rulings against the US is that Bush has found it impossible not to comply with them. The relative weakness of the US economy means it can no longer ignore retailation threats and it no longer has the military power to impose its will on any awkward customers.
(x posed form Daily Kos)
