The Farm Fight ¨è

Developing nations are beginning to use the WTO to push back.
29-3-122
The sticking point remains farming. The U.S. said last month that it would reduce its ceiling on trade-distorting support to its farmers by 60%. The European Union countered with an offer to cut import tariffs on agricultural products an average of 46%, though some goods would have smaller cuts. The offer is 'Europe's bottom line,' says the E.U.'s Trade Commissioner, Peter Mandelson, although France--whose farmers retain near mythic political clout--still may veto any agreement it doesn't like. Says Mike Johanns, U.S. Secretary of Agriculture: 'It does appear to me that we will not make as much progress in Hong Kong as we had hoped for.'
Even if there is an agreement, it may not be the breakthrough Africa is waiting for, say critics. Europe wants to exclude some products from its tariff cuts, and the U.S. proposal would effectively ease subsidies 2% by renaming supports or disguising them as other payments. 'It's a case of smoke and mirrors,' says Celine Chaveriat, head of Oxfam's Make Trade Fair campaign. 'If this offer goes ahead, trade-distorting domestic subsidies will remain almost completely unchanged.'
In a world of perfect Ricardian economics, West African cotton growers would be thriving. That's because they can produce and trade high-quality more cheaply than just about anyone--for about 31¡Ë per lb., compared with 68¡Ë per lb. in the U.S.

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29-4-123
But the subsidies U.S. farmers receive help destroy any advantage West Africa's farmers have. Since the mid-1990s, when U.S. exports of subsidized cotton began growing--according to Oxfam, U.S. sales went from a low of 17% of the world export market in 1998 to 41% in 2003--the world cotton price has dropped by more than half. The International Cotton Advisory Committee, which promotes cooperation among cotton-producing countries, estimates that developing world cotton growers, including Burkina Faso, Brazil, India, Mali and Pakistan, have lost $23 billion over the past four years to Western subsidies. The irony, says Oxfam, is that annual losses in export earnings in most West-African cotton-producing countries are comparable to U.S. aid donations. Burkina Faso, for instance, received $10 million in U.S. aid in 2002 but lost an estimated $13.7 million in exports because of U.S. cotton subsidies.
Developing nations are beginning to use the WTO to push back. Brazil, now the world's second largest cotton exporter after the U.S., last year won a WTO ruling that Washington's cotton subsidies unfairly distorted world trade. A U.S. appeal was denied. And when Congress failed to act on U.S. Department of Agriculture proposals to fix the WTO problem by a September deadline, Brazil, exercising its right under WTO rules to 'retaliate,' announced that it would no longer honor patents and copyrights on U.S. movies, pharmaceuticals and other items. The U.S. warned Brazil to back off or face the wrath of Congress, but Brazil is seeking $1 billion in damages through the WTO. If the case enters the WTO arbitration process, the U.S. will make a counteroffer.

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