Monday, March 8, 2010

Brazil, U.S. Cotton War

Cotton War Between U.S. and Brazil

After winning a case against the U.S. last year at the WTO for government subsidies to U.S. cotton farmers, Brazil has struck back legally after the U.S. continued its policies after the decision by the WTO.

Cotton farmers in the U.S. receive subsidies from the U.S. government when prices fluctuate, along with loan guarantee program for foreign buyers of cotton produced in the U.S.

In retaliation for not changing its policies, Brazil will start to impose larger tariffs against a number of American products in response. The tariffs will take effect in April if negotiations don't settle anything.

Tariffs on cotton could be taxed at 100 percent based on the Brazilian plan put forth. Other major American products could also be hit with major tariffs like household appliances and major consumer electronics like TV sets, which reportedly could double. Automobiles would also be hit hard, with duties up to 50 percent imposed on them.

This isn't even near the end of what Brazil is allowed to do under the ruling of the WTO case it won, as it could also hit American intellectual property rights, including the breaking of patents in areas like media, technology and pharmaceuticals.

It's incredible to me that the U.S. has continued to disregard the ruling of the World Trade Organization, while disrespecting one of their more important trading partners. This has been brewing and battled over for over eight years, and the U.S. should have responded with concrete action; not saying they wished they could have negotiated something. The fact that the U.S. refused to negotiate something is the problem. That and the babying of the U.S. cotton industry, which should stop being subsidized and compete on the global market.

Some say this would force changes in U.S. farm bill, and that would be a hard sell to politicians. Who cares? That farm bill needs to be thrown out and farmers in the U.S. forced to compete against their global counterparts. It's ridiculous for American farmers to need subsidies in light of the advantages they already have with capital and equipment over their foreign competitors.

Cotton War Between U.S. and Brazil

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