U.S. Cotton Subsidy Shame
The Washngton Post ran yesterday an excellent editorial on the U.S. government's idiotic policy of massively subsidizing cotton growing. The World Trade Organization has ruled that the $3 billion in annual subsidies is a trade barrier and has awarded Brazil the right to retaliate by charging countervailing duties on U.S. exports of nearly $150 million per year. Not wishing to endure the wrath of U.S. software makers, wheat growers, and the like whose products would suffer the Brazilian tariffs, the Obama administration simply sends a check directly to the Brazilian government. As the Post editorial explains:
The federal government has spent more than $50 billion propping up cotton growers since 1991, with subsidies averaging more than $3 billion per year over the past decade. Most of this aid supports large, politically connected agribusinesses in the Sun Belt—although the Arkansas Department of Corrections' operation, manned by convicts, has also received some of the cash. Thanks partly to the subsidies, U.S. producers can outcompete lower-cost producers on the world market; American farms account for about 40 percent of global exports. In 2002, Brazil complained to the World Trade Organization about this, arguing that the U.S. programs violated international free-trade agreements that the United States itself had championed. It took a while, but the WTO has agreed, authorizing Brazil to retaliate by levying tariffs against other American products. Brazil's threat to use that authority against U.S. goods, from wheat to software, forced the Obama administration to buy a truce last month…
The Post is entirely correct when its editors write:
Not only is it a wasteful sop to special interests, but it's also an obstacle to free and fair trade that needlessly complicates U.S. relations with the rest of the world. Reform—or, better, repeal—is long overdue.
Yes. The editors conclude with this most likely vain hope:
If this sorry episode doesn't shame Washington into ending this fiasco, nothing will.
Whole Post editorial here.