WTO deal could mean dethroning U.S. cotton

August 04, 2004|By Jay Hancock

IS KING COTTON, oppressor of the poor and striving, scheduled for the guillotine?

It kind of looks that way. Last weekend's World Trade Organization deal mentions the crop 11 times, which is extraordinary.

Trade communiques are usually vague, designed to offend as few special interests as possible. Yet the Geneva WTO accord, intended to help impoverished nations by cutting rich-country farm subsidies, names names and levels threats.

The WTO "recognizes the importance of cotton for a certain number of countries and its vital importance for developing countries," says the agreement. "It will be addressed ambitiously, expeditiously, and specifically, within the agriculture negotiations."

And why shouldn't it be?

"Cotton is a poster child for what's wrong with U.S. farm policy," says Daniel T. Griswold, a trade analyst at the libertarian Cato Institute. "This one is especially galling because it hurts some of the poorest countries in the world and benefits some of the richest farmers. The [anti]-egalitarian impact of this program is especially expensive."

Look at cotton if you want to understand the WTO negotiations making headlines this week. Or to check out an amazing example of corporate welfare. Or to see how U.S. farm supports harm the Third World.

Oxfam International, a London-based aid organization, has this to say about how U.S. taxpayers subsidize "the fabric of our lives":

"To paraphrase Winston Churchill, nowhere in the entire field of human trade is so much damage inflicted on so many vulnerable people by so few wealthy farm corporations."

Scattered across the south from Virginia to California, U.S. cotton growers got $2.2 billion in taxpayer subsidies for the 2002-2003 season, says Gerald Estur, statistician for the International Cotton Advisory Committee in Washington.

And that was an off year. The previous year cotton welfare came to $3.9 billion, according to Oxfam - more than the $3 billion value of the entire U.S. cotton crop. It would have been cheaper to plow up the plants and give farmers cash.

Cotton subsidies, refined under the egregious Farm Security and Rural Investment Act of 2002, are almost too big and complex to track.

Cotton growers get federal payments based on prior production. Two more programs boost payments if cotton prices fall. Growers get insurance against bad weather and taxpayer help for irrigation.

Two other deals funnel hundreds of millions of dollars to exporters who buy U.S. cotton. What's more, quotas limit cotton imports that might compete with U.S. producers. And countless government bureaucrats are required to administer the programs.

Most of the subsidy money goes to a few mega-growers. The richest 10 percent of U.S. cotton farmers get 73 percent of the payments, according to Oxfam. The top 1 percent get a fourth of the payments, and 10 farms got an average of almost $1.7 million each in 2001-2002.

The WTO declared the whole arrangement illegal a few weeks ago under litigation filed by Brazil, but Washington is appealing.

While U.S. cotton growers thrive at taxpayer expense, Third World farmers struggle. The United States is the second-biggest cotton producer, after China, and the biggest cotton exporter.

Without artificial government support, U.S. production would fall, cotton prices would rise and some of the world's more desperate places might gain a foothold in the international economy.

Much of West Africa is ideal for growing cotton. But Oxfam figures U.S. cotton subsidies effectively subtract at least 1 percent from the gross domestic product and about 10 percent of the export earnings of Burkina Faso, Mali and Benin, among the poorest nations in the world.

Ironically, West Africa was the source of slaves who enriched U.S. cotton barons in the early 1800s.

"No, you dare not make war on cotton," South Carolina Sen. James H. Hammond, who favored the death penalty for abolitionists, said in 1858. "No power on earth dares to make war upon it. Cotton is king."

It'll be a long process in the WTO, but dethroning the king could help West Africans and U.S. taxpayers alike.

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