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WTO Doesn't 'Cotton' to US Subsidies

Friday, November 20, 2009

Brazil announces retaliatory trade sanctions on U.S. products after World Trade Organization targets U.S. cotton subsidies. Bloomberg reporter Jennifer Freedman writes that:

The WTO gave Brazil permission in August to impose $294.7 million in sanctions against U.S. goods -- the second-highest amount ever permitted by the Geneva-based trade arbiter -- and Brazil’s government earlier this month released a list of 222 products that may be subject to increased duties. The list includes cotton and other agricultural and textile products as well as U.S. exports such as electronics, cosmetics, ketchup, cars, chewing gum, medical equipment and pharmaceuticals.

WTO judges found in September 2004 that as much as $4 billion in annual U.S. payments to cotton farmers violated global trade rules by encouraging excess production and driving down world prices. In June 2008, they upheld a finding that the U.S., the world’s largest exporter of the fiber, hadn’t done enough to scrap aid to its cotton producers.

At a time of economic crisis, when America is fighting to regain a manufacturing and export foothold, Brazil can now make many products U.S. producers would like to sell in that country much more expensive for Brazilian consumers. That has to make you wonder about the wisdom of the $21.3 billion in taxpayer-funded subsidies that U.S. cotton growers received from 1995-2006.

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