Cotton Subsidies: US and Brazil Battle It Out

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Cotton is big business, it “ranks just behind corn, soybeans, wheat, and hay among the leading cash crops of United States”[1] “U.S. Cotton accounts for more than $25 billion in products and services annually”[2] In the U.S. Cotton Market Monthly Economic Letter for February 2010/2011 the US ranks among the largest producers of cotton worldwide, coming in third with roughly 16% of world production behind China (26%) and India (22.5%), and before Pakistan (7.6%) and Brazil (7.1%) with the rest of the world accounting for the remaining 20%. The US is the world’s largest exporter with more than 40%.[3] The US has a clear interest in Cotton, its rules, regulations, and as Brazil knows all too well, its subsidies.

US cotton subsidies program is a topic that generates a lot of controversy and in 2010 Brazil brought that to the American publics attention. Brazil’s battle against the US has resulted in a $147.3 million a year payoff from the American Government. The Washington Post reports “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.”[4] Many would like to see reforms to or even repeal of the subsidy program, a desire that is certainly being ignored with the implementation of a subsidy program benefiting a foreign nation. Among those opposed to the recent decision are “four House members, Democrats Ron Kind (Wis.) and Barney Frank (Mass.) and Republicans Jeff Flake (Ariz.) and Paul D. Ryan (Wis.), [whom] put it in a recent letter to the president, [saying] the cotton program is ‘quickly becoming a liability for future trade growth. Instead of effectively reforming our programs, we are electing to pay $147.3 mill...

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4) "Brazil's Victory in Cotton Trade Case Exposes America's Wasteful Subsidies." The Washington Post 3 June 2010: 1. Washington Post - Politics, National, World & D.C. Area News and Headlines - Washingtonpost.com. 3 June 2010. Web. 22 Feb. 2011. .

5) "House Defeat of Kind Supports US Govt Agreement with Brazil." Fibre2fashion - Premier B2B Marketplace For World Textile, Apparel & Fashion Industry, Best B2B Textile Portal, B2B Trade & Business Portal. 21 Feb. 2011. Web. 22 Feb. 2011. .

6) Joffe-Wait, Chana , Kenney, Caitlin. "The Cotton Wars." Planet Money. 29 Oct. 2010. National Public Radio. 19 Feb. 2011 .

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