The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

The US ends its WTO cotton quarrel with Brazil with a $300 million payoff

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Sacks of organically-grown cotton in Sibirila, Mali. Photo: Rebecca Blackwell / Oxfam America.

Over ten years of dispute ends not with a bang, but with a whimper.

Well, that’s the end of the much-discussed WTO fight over cotton between Brazil and USA. US taxpayers will pay $300 million to the Brazilian Cotton Institute. And Brazil will agree not to complain again until the next Farm Bill, if ever.

I’ve been following this dispute over Brazilian cotton since 2002, through many twists and turns. Brazil’s legal case was innovative and successful. It was a very hard-fought, with the US resisting mightily (legally and politically). It had the potential to be quite transformative by reducing the impunity that rich countries enjoy in setting trade and subsidy rules. Brazil was also exploring innovative and powerful ways to retaliate, including waiving US copyright and patents. That could have been game-changing.

As a secondary though important impact, success in the case could really have helped cotton farmers in poorer countries by raising cotton prices and reducing the flood of US cotton exports.

But, in the end, it was a deflated balloon. A payment from a rich country to a less rich country. Not much real reform in US cotton subsidies. Not much real assistance to poor cotton farmers, or to poor countries producing cotton.

Poorer countries stood by, cheerleading Brazil. Being used as props in the trade debate, they got nothing but dribs and drabs in the end.

In the years that Brazil and the US have been arguing over cotton subsidies, cotton prices and have gone from very low to very high and back again.  Currently, cotton prices are quite low, which is bad for cotton farmers – unless of course they’re protected by generous subsidies from the US Government.   In the meantime, in West Africa, as many as 10 million cotton farmers struggle to make a living with very little support from anyone.

I’m sad about this.

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  1.'William Gillon

    You and I have both been following this since 2002. You may recall our meeting in 2003 in Cancun. Much has changed since the case began, good and bad. US policies have dramatically changed. So has U.S. cotton acreage and U.S. responses to world prices. You would do well today to take a look at the international cotton market at a whole, to view the policies and actions of the US, China, and Africa in context with a view to what will actually help African growers long-term. Brazil has a strong farm economy. China currently holds cotton stocks equivalent to half a years’ supply of cotton. They have been building those stocks for years. Many, many elements go into world cotton prices and demand, not just U.S. farmers or U.S. programs.

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