Global Policy Forum

By Helena Cobban*

It's official: an appeals panel of the World Trade Organization (WTO) ruled last week that most of the $4 billion-plus that the US government gives annually to producers and exporters of US cotton is illegal under current trade rules. The panel also stated that these payments - of which $3.2 billion are producer subsidies, while the rest help underwrite costs of exporting - must be ended by July 1.

This may be tough news for the 7,500 US cotton farmers (out of a total of 20,000) who have been getting these price supports from Washington. But it's great news for millions of cotton farmers in poor parts of the world who have been unable to compete in world markets against America's heavily subsidized cotton fibers.

Two years ago, I was in Mozambique, talking with citizens of that very low-income country about their hard-fought efforts to escape from the legacies of long wars and, more recently, two years of major flooding. Issues of lost or threatened family livelihoods were front and center for most I talked with. Many complained about the tough International Monetary Fund requirements that had forced Mozambique to end its earlier subsidies for basic commodities, and thereby kept many Mozambicans in grinding poverty. (The UN calculates that some 37 percent of the country's people get by on less than $1 a day.) And then, the US wiped out our national cotton industry with its subsidies to its own farmers!" one church-based social activist exclaimed. "Is there really one law for the rich and one for the poor?"

It's not only Mozambique. Many other African countries - including countries in West Africa that are still threatened by civil strife - have felt the pinch of US cotton dumping, too. In many of those countries, a loss of family livelihoods that's directly linked to Washington's cotton subsidies has exacerbated and prolonged the conflicts. In all of them, it has kept the levels of poverty and human want quite unacceptably high.

What is the US required to do, and what will be the effects on US cotton farmers? The WTO ruled that if the US subsidies are not ended by July 1, then Brazil (which brought the case at the WTO) will have the right to impose trade sanctions against the US. But US lawmakers and the Bush administration should end these damaging subsidies for their own reasons, anyway. Quite simply, it's the right thing to do. Perhaps some of the money saved could be used to help the less well-off recipients of the subsidies to convert their farms to crops that are competitive, without any further need for subsidies. (Most of the subsidies, however, went to large-scale producers who can probably make their own adjustments to the market without continuing governmental support.)

The rest of the money saved should surely go into a "repair" fund to help rebuild the cotton farms and communities in poor countries that were economically poleaxed by those years of unfair US subsidies. In 2004, US aid to all 540 million residents of sub-Saharan Africa came to less than $3.3 billion - far less than the total support given to just 7,500 US cotton farmers! That aid figure should rise, anyway. Back in 1990, the world's rich nations pledged to boost the aid they give to developing countries to 0.7 percent of national income. But today, the US gives less than 0.15 percent of national income in government-allocated overseas aid (and less than 0.05 percent in nongovernmental aid). Moreover, a large part of the governmental aid goes to just two recipients: Israel, whose people enjoy a lifestyle similar to that of many Europeans, and Egypt. Just 15 percent of US aid goes to people in very low-income countries. Those low aid figures express a lot about what we think America's role in the world should be. In addition, everyone around the world hears about the massive amounts our government has spent on the war in Iraq, and wonders why our priorities have gone so askew.

For many years now, the main wisdom of development economists has stressed that "trade, not aid" is the best way for countries to climb out of poverty. Mozambique, Benin, Mali, and other very poor cotton-producers tried to make that approach work - and they were prevented from doing so by the US subsidies. The March 3 ruling was a victory for the world's low-income countries. It showed they might have some hope of getting a fair deal, one day, out of the world trade system. Now, the Bush administration, Congress, and all Americans should follow through by responding quickly and generously to the ruling. They should look, too, at the government subsidies to other economic sectors that may be equally damaging to low-income partners in the world trade system - and reform those subsidies, too, with or without a further WTO ruling.

About the Author: Helena Cobban is working on a book about violence and its legacies.

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