|
WTO ruling good news for cotton farmers
2007-10-18 09:59:03
By Editor
The controversial issue of free and fair global trade has troubled the world for centuries.
In fact, one of the reasons that led to the outbreak of the infamous two World Wars was international trade rivalries, as each of the industrialized countries sought to control trade and markets at the expense of yet other and equally powerful industrial giants.
For purposes of harmonizing global trade, the General Agreement on Tariffs and Trade (GATT) was first signed in 1947.
It provided an international forum that encouraged free trade between member states by regulating and reducing tariffs on traded goods and by providing a common mechanism for resolving trade disputes.
Later in 1995, GATT was better re-organized as World Trade Organization (WTO), though its mandate fundamentally remained the same.
The WTO has ever since outlawed the practice by either rich or poor countries bent on providing farm and export subsidies because of its potential to distort global trade by causing unfair competition.
Unfortunately, for the past 17 years or so, the US and EU, both WTO members have stubbornly numbed their senses over this crucial matter which is of bread and butter importance to the developing countries.
The US in particular, has routinely been taking blame from WTO for its habitual provision of huge subsidies to its cotton farmers (hardly 40 in number), consequently hitting hard on cotton peasants in poor countries, including Tanzania, through unfair cotton trade distortion.
Apparently, things are changing for the better, as WTO doesn`t like entertaining members who preach about drinking water during the day, but then gulp wine at night.
On Monday, while handling trade disputes, it ruled that the US had failed to bring subsidies and export credit guarantees to US cotton farmers into conformity with the WTO.
We must state from the outset that we are not anti-US, only that the WTO verdict is sure to boost the trade morale of developing countries.
In the long run, both developing countries and major world powers like the US stand to gain from this arrangement.
The subsidies and export credit guarantees were put in place through the 2002 Farm Bill which the WTO had ruled against in 2005.
The case against the US was initially brought to the WTO attention by Brazil, having claimed that the US only retained its place as the world`s second-largest cotton grower by paying out USD12.5 billion in government subsidies to its farmers between August 1999 and July 2003.
The WTO ruling should be seen as a victory not only for Brazil`s cotton industry, but also for Tanzania’s cotton farmers who are yet to gain meaningfully from increased producer payments.
Although Washington is expected to make an appeal against the ruling, it was fitting for African cotton producing countries to rally support for Brazil, which reserves the right to impose annual sanctions of up to USD4bn on the US, even though through less retaliatory actions.
As Oxfam has correctly observed, confronting the US as individual African countries over the cotton subsidy dispute might not hurt American producers very much.
The truth is that it takes united countries to really make the developed countries comply, because the market has to be big enough to compel them to think twice, and probably stop further subsidization of their cotton producers.
|
