In retaliation for subsidies to cotton growers
Role reversal -- Brazil slaps trade sanctions on US
| Whatever you think of the World Trade Organization, it sometimes gets it right. Like when it rules against subsidies that tilt the playing field. This 2010 article is from the BBC, March 9. |
by the BBC
Brazil published a list of 100 US goods that would be subject to import tariffs in 30 days, unless the two governments reached a last-minute accord.In a rare move, the World Trade Organization (WTO) approved the sanctions.
In 2008, the WTO found that US subsidies to US cotton producers, authorized by Congress in the annual agricultural bill, were discriminatory and unfairly help US producers undersell foreign competitors and depress world market prices.
Brazil, which has pursued the issue with the World Trade Organization for eight years, argued successfully that the US has been able to hold its place as the world's second-largest cotton producer by paying some $3 billion to American farmers each year. China is the largest exporter of cotton, while Brazil is fifth.
It said it regretted the sanctions, but that eight years of litigation had failed to produce a result.
It said it would charge cotton and cotton products a 100% import tariff, the highest on the list.
It would raise tariffs on $591m (£393m) worth of US products -- from cars, where the tariff will increase from 35% to 50%, to milk powder, which would see a 20% increase in the levy.
Carlos Marcio Cozendey, head of economic affairs at Brazil's foreign ministry, told a news conference: "The idea was to distribute the retaliation broadly in order to maximize pressure.
"US farm subsidies are condemned worldwide. This archaic practice must stop."
Steven Bipes of the Brazil-US Business Council urged the US to take steps to avoid what he called "damaging" retaliation by Brazil.
"The business community finds it extraordinarily important that countries, including the US, comply with its WTO obligations and otherwise negotiate to find common ground when there are disputes," he told the BBC.
The Office of the US Trade Representative said it was "disappointed" by Brazil's decision and called for a negotiated settlement.
Presumably negotiation would let the US Congress off the hook. Otherwise, major changes to cotton subsidies would involve modifying agricultural legislation -- always a tall order for politicians dependent upon campaign contributions from agri-business.
The dispute, which began in 2002, is one of the few in which the WTO has allowed cross-retaliation, meaning the wronged party can retaliate against a sector not involved in the case.
Cotton producers in the US argue that the system of subsidies has changed since the WTO made its original ruling in 2005.
"The US has made changes in the cotton program as well as the export guarantee program," Gary Adams, chief economist at the National Cotton Council told the BBC, adding that US cotton production was now 40% to 45% lower.
Mr Adams said he believed that subsidies were still justified. "We feel this is a very important financial safety net for producers," he said.
JJS: A safety net is important, but not just for Big Business. Bigger picture, if society shared its commonwealth fairly, then all members of society would enjoy a safety net. Such an extra income apart from one’s labor would not be a subsidy but a social salary, a share of society’s surplus.
In a market economy, producers doing a decent job don’t need subsidies. So why pay them? What subsidy doesn’t tilt the playing field?
A better role for government than favoring insiders who make hefty campaign contributions might be to adopt geonomics. That is, don’t subsidize anybody, just pay citizens a dividend from the flow of socially-generated values. Those values attach themselves to land and privilege, so government would charge full market-value for land deeds and the other valuable pieces of paper it issues, such as corporate charters. Doing that would recover trillions annually, while ending subsidies and other favors for Big Business would save trillions. We could even get to the point where we could lock the hood on the economy!
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Jeffery J. Smith runs the Forum on Geonomics.
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Also see: Prepare for the Best
WTO suggests abolishing agri-biz subsidies
Massive black money economy cripples nation |
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