Wednesday, June 16, 2010

Obama gives your money to Brazilian cotton farmers

From the editorialists of the WSJ...

U.S. cotton farmers took in almost $2.3 billion dollars in government subsidies in 2009, and the top 10% of the recipients got 70% of the cash. Now Uncle Sam is getting ready to ask taxpayers to foot the bill for another $147.3 million a year for a new round of cotton payments, this time to Brazilian growers.

We realize that in today's Washington this is a rounding error. But the reason for the new payments to foreign farmers deserves attention. If it becomes a habit, it is unlikely to end with cotton.

Here's the problem: The World Trade Organization has ruled that subsidies to American cotton growers under the 2008 farm bill are a violation of U.S. trading commitments. The U.S. lost its final appeal in the case in August 2009 and the WTO gave Brazil the right to retaliate.

Brazil responded by drafting a retaliation list threatening tariffs on more than 100 U.S. exports, including autos, pharmaceuticals, medical equipment, electronics, textiles, wheat, fruits, nuts and cotton. The exports are valued at about $1 billion a year, and the tariffs would go as high as 100%. Brazil is also considering sanctions against U.S. intellectual property, including compulsory licensing in pharmaceuticals, music and software.

The Obama Administration appreciates the damage this retaliation would cause, so in April it sent Deputy U.S. Trade Representative Miriam Sapiro to negotiate. She came back with a promise from Brazil to postpone the sanctions for 60 days while it considers a U.S. offer to—get this—let American taxpayers subsidize Brazilian cotton growers.

That's right. Rather than reduce the U.S. subsidies to American cotton farmers that are the cause of the trade fight, the Administration is proposing that U.S. taxpayers also compensate Brazilian cotton farmers for the harm done by the U.S. subsidies. Thus the absurd U.S. cotton program would dip into the Commodity Credit Corporation to pay what is a bribe to Brazil so it won't retaliate...

Here's the data from EWG (focusing only on cotton):

It's been $29.7 billion since 1995. Click here.

More than 260K recipients, 30 of which received more than $10 million, 211 of which received more than $5 million, and 5,533 who received more than $1 million.


At June 17, 2010 at 9:41 AM , Blogger Eric Schansberg said...

On Facebook, someone took this and made a nice joke about a band called "Brazilian Cotton Farmers" and where they might be playing this summer.

My response:

No, they'll be playing with two other bands: The Smashing Oranges-- where a high proportion of the orange crop was destroyed for decades to keep the price higher. And Licensing Peanuts-- where you need a license to grow and sell peanuts in the U.S.


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