Corporate Welfare Giveaways Violate Global Trade Rules
|April 29, 2004||Posted by Staff under Progress Report, The Progress Report|
Bush’s Corporate Welfare Giveaways Violate Global Trade Rules
WTO Rules Against U.S. Cotton Subsidies In Landmark Decision
Here is a recent news announcement from the United Nations Foundation news service. Taxpayers could save billions of dollars, but the U.S. doesn’t want that.
The World Trade Organization ruled on April 26, 2004, in favor of Brazil after the country filed a complaint last year that U.S. cotton subsidies are distorting world prices, violating global trade rules and affecting millions of farmers in developing countries.
The ruling is being considered a landmark because it challenges for the first time the domestic farm policies of developed countries. Reuters reports that the decision could open the door for many developing nations to file complaints against U.S., European and Japanese farm subsidies. It could also give more power to poor nations in the Doha round of global free trade talks, which collapsed in September, in part over U.S. handouts to agribusiness corporations (Andrew Hay, Reuters, April 26).
The subsidies the United States has given to its cotton producers have lowered the price of cotton worldwide, making it almost impossible for producers in developing countries to compete with the Americans. The United States estimated 25,000 corporate cotton farms control more than 40 percent of global cotton exports (Wall Street Journal, April 27).
Global cotton prices fell 15 percent this year alone. Studies suggest that the end of subsidies would draw the prices back up at least 12 percent (Clovis Rossi, Folha de Sao Paulo, April 27, U.N. Wire translation). Brazilian farmers alone lost $600 million in cotton sales in 2001 due to subsidies worth $4 billion (Reuters).
African farmers have also been extremely affected by the U.S. subsidies, losing around $250 million per year because of them. Last year, the presidents of Benin, Burkina Faso, Mali and Chad went to WTO headquarters in Geneva to call for the end of cotton subsidies. Around 15 million Africans work in the cotton industry (Folha de Sao Paulo).
Details of the WTO decision were not released by Brazil or the United States because of a confidentiality clause. Both countries have until May 10 to respond to the decision before a final version is released and made public on June 18. The organization then has three months to review appeals (Reuters).
A U.S. trade official said the United States will appeal the decision. “We believe U.S. farm programs were designed to be, and are, fully consistent with our WTO obligations,” the official said. “We have serious concerns with aspects of the panel report” (Alan Clendenning, Associated Press/Yahoo! News, April 27).
Surprise! The WTO has opposed corporate welfare handouts on other occasions too:
Also see the WWW’s most-visited site on Corporate Welfare:
The Corporate Welfare Shame Site
When countries like Burkina Faso and Chad seek free trade and the U.S. opposes it, what conclusions can you draw? Tell your views to The Progress Report!