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US pushed to reform cotton subsidies in farm bill as Brazil watches
Source: The Guardian
US pushed to reform cotton subsidies in farm bill as Brazil watches
Paige McClanahan
guardian.co.uk, Thursday 19 July 2012 11.53 BST
US lawmakers have been busy this summer shaping the latest version of the farm bill, the far-reaching legislation that governs how the US treats its farmers and feeds its poor people, among many other things.
Discussions and hearings have been going on for weeks, but there is one topic that few people on Capitol Hill seem to be paying attention to: how Congress's failure to reform US cotton subsidies may hurt millions of farmers in other countries, along with Hollywood, American pharmaceutical companies and the US music industry.
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Ten years ago, Brazil challenged the US at the World Trade Organisation (WTO), claiming that heavily subsidised US cotton had flooded the global market, dragging down prices and making it much harder for Brazil's cotton farmers to earn a profit on their exports. The generous American subsidies violated the commitments that the US made when it joined the WTO, the Brazilians argued. The excessive payments were both unfair and illegal, and they wanted compensation.
The WTO agreed. In 2004, the dispute settlement body, the "judicial branch" of the WTO, ruled that the US had to reform its cotton subsidies or face "retaliation" from Brazil. A subsequent panel ruled that, given the most recent cotton trade statistics, Brazil had the right to impose punishing trade measures worth more than $800m (£500m) against the US.
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Paige McClanahan
guardian.co.uk, Thursday 19 July 2012 11.53 BST
US lawmakers have been busy this summer shaping the latest version of the farm bill, the far-reaching legislation that governs how the US treats its farmers and feeds its poor people, among many other things.
Discussions and hearings have been going on for weeks, but there is one topic that few people on Capitol Hill seem to be paying attention to: how Congress's failure to reform US cotton subsidies may hurt millions of farmers in other countries, along with Hollywood, American pharmaceutical companies and the US music industry.
[font size=1]-snip-[/font]
Ten years ago, Brazil challenged the US at the World Trade Organisation (WTO), claiming that heavily subsidised US cotton had flooded the global market, dragging down prices and making it much harder for Brazil's cotton farmers to earn a profit on their exports. The generous American subsidies violated the commitments that the US made when it joined the WTO, the Brazilians argued. The excessive payments were both unfair and illegal, and they wanted compensation.
The WTO agreed. In 2004, the dispute settlement body, the "judicial branch" of the WTO, ruled that the US had to reform its cotton subsidies or face "retaliation" from Brazil. A subsequent panel ruled that, given the most recent cotton trade statistics, Brazil had the right to impose punishing trade measures worth more than $800m (£500m) against the US.
[font size=1]-snip-[/font]
Read more: http://www.guardian.co.uk/global-development/2012/jul/19/us-cotton-subsidies-farm-bill-brazil
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