Cotton wars

Caspar Henderson
28 April 2004

On 26 April Brazil won a preliminary ruling at the World Trade Organisation (WTO) that requires the United States to lower the subsidies it pays farmers to grow cotton.

Peter Sutherland, architect of the World Trade Organisation and passionate champion of the merits of a global trading system, talks to openDemocracy

The ruling was welcomed by groups that campaign for “fair trade”. According to research by Oxfam, subsidies to cotton comprise one of the most grotesque abuses in the international trading system. 125,000 American cotton farmers received $3.9bn in subsidies in 2002, twice as much as they had in 1992. This are more than the entire GDP of Burkina Faso, a country in which more than 2 million people depend on cotton production, and more than the entire US aid budget for Africa’s 500 million-plus people.

“This has to be viewed as a landmark” Kevin Watkins, Oxfam’s head of research, tells Globolog. “This ruling makes it clear that many of the measures that the US and European Union refuse to categorise as subsidies are subsidies, and distort trade”.

Also in openDemocracy, Patrick Mulvany on “The dumping-ground: Africa and GM food aid”

“The dispute was never really about cotton, but the entire structure of support through the US Farm Act and, by extension, the European Union’s Common Agricultural Policy” says Watkins, who was the principal author of Rigged Rules Double Standards.

Where next? If a final decision, expected in June 2004, upholds the preliminary ruling, the United States will face heavy financial penalties. Nearly all preliminary rulings are eventually upheld by the WTO, and according to Watkins “unless the US administration has new grounds in its appeal that weren’t in its original case it won’t have a leg to stand on”.

Kevin Watkins, George Monbiot, Paul Kingsnorth, Katharine Ainger and Roger Scruton are among the contributors to openDemocracy’s vital debate after the WTO summit in Cancún. For details, see Caspar Henderson, “Cancúnblog – from Mexico to the world” (October 2003)

Nevertheless, the Bush administration is appealing against the WTO ruling. Its calculation is a delicate one. On the one hand, the US cotton industry does not employ many people and the largest cotton-producing states, Texas and California, are unlikely to be swing states in the November election. On the other hand, big cotton has been integral to the US ruling classes since long before the American Civil War and, since Reconstruction, continuously thereafter. Add in other big farming operations and you have a well organised set of groups that receive around $19 billion in subsidies year. Their supporters in Congress will unite to fight their corner.

Still, increasing pressure on the Federal budget, the interests of the majority of corporations not engaged in agriculture which would benefit from improved terms of trade make a powerful combination. The interests of the American people may play a role too. After an ugly fight, the administration, which will take all necessary action to stay in power, is likely to comply with the WTO ruling sometime in its next term of office.

Such an outcome would look like a vindication of at least parts of the more optimistic view of globalisation described by Jagdish Bhagwati in his book In Defense of Globalisation. But there will still be a long way to go to improve conditions and terms between global partners of vastly different wealth and power such as the United States and the nations of Africa.

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