American goods will face about $295 million in annual sanctions as a result of the United States’ failure to eliminate illegal subsidies to domestic cotton growers, the World Trade Organization ruled on Monday.
The size of the penalty was disappointing for Brazil, which had sought $2.5 billion worth of economic retaliation against American goods and drug patents.
The W.T.O. ruled that the sanctions should vary depending on American payments each year. Arbitrators used 2006 as a base year for the ruling, and said United States payments would have to increase significantly for Brazil to be allowed to punish American drug patents.
It cannot be said often enough: the Farm Bill makes the poor poorer to benefit a very small slice of the U.S. population, and should be done away with as quickly as possible. This is a common theme here. The U.S. has been somewhat sensitive to W.T.O. rulings in the past, and hopefully it will be again:
It is the fifth major decision since the Brazilian government brought the case in 2002, claiming that the United States was able to retain its place as the world’s second-largest cotton producer by paying out some $3 billion to American farmers each year. China is the largest exporter of cotton, while Brazil is fifth. ...
In response to the legal defeats, Congress has scrapped some export credits and in 2006 repealed the “Step 2” cotton-marketing program that made payments to exporters and domestic mill users as compensation for buying higher-priced American cotton.
But last year it approved a farm bill worth nearly $300 billion that left a number of other contentious cotton programs intact.
Then again, $300mn is only 0.1% of $300bn, so my hopes for the repeal of the Farm Bill aren't very high.