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BRAZILU.S. cotton subsidies spur trade sanctionsBrazil announced trade sanctions Monday on a range of American goods, affecting products from Heinz ketchup to Ford automobiles, retaliating for billions of dollars that the United States pours into domestic cotton subsidies.The World Trade Organization last year authorized Brazil to set $829.3 million in annual penalties against the United States for anticompetitive subsidies. The sanctions will remain in place as long as the practice continues, Brazil said.The Office of the U.S. Trade Representative said that it was "disappointed" and that Washington prefers continued negotiations.Brazil says the United States has been able to remain the world's second-largest cotton producer by paying some $3 billion to American farmers each year. China is the largest exporter; Brazil is fifth.
The Four Congressmen of the Cotton Subsidy Apocalypse?Posted by Sallie JamesYet another show of that rare commodity, bipartisan efforts to reduce the size of government today. Four members of the House—two Republican and two Democrat—have sent a letter to President Obama, calling on him to reverse the insane policy of bribing Brazilian farmers with subsidies in an attempt to correct, in accordance with the perverse two-wrongs-make-a-right school of logic, for illegal U.S. subsidies. (There were other questionable parts of the deal with Brazil).Barney Frank (D, MA), Ron Kind (D, WI), Paul Ryan (R, WI) and Jeff Flake (R, AZ) make compelling arguments for finding a better and more permanent solution to the dispute than the current (dodgy) deal with Brazil, including arguments about fiscal responsibility, the adverse effects of distorting markets in this way, and the implications for the U.S. economy of continuing to operate the cotton program in its current form.They also cleverly allude to President Obama’s emphasis on enforcement in his trade policy, pointing out that enforcement runs two ways:Should we fail to effectively reform [the cotton] program now, American businesses and workers wil pay the price because we refused to write a law that complies with our international obligations. We cannot expect our trading partners to play by the rules if we are not willing to do the same. [emphasis added]The press release from Rep. Flake’s office contains some great quotes, too. Flake, for example, says, “This proposal takes our federal farm subsidy policy from the impractical to the absurd.†But I’ll give the last word to Rep. Frank, who has this gem to offer:[T]he Obama administration apparently feels compelled to preserve our right to subsidize American cotton farmers by extending that subsidy to Brazilian cotton farmers. People looking for an illustration of the meaning of the phrase, ‘from bad to worse,’ need look no further.
