The WTO is targeting subsidised farmers in rich countries, but especially the cotton-growing corporations of the US southern states, writes Jay Hancock
Is King Cotton, oppressor of the poor and striving, scheduled for the guillotine?
It kind of looks that way. Last weekend's World Trade Organisation agreement mentions the crop 11 times, which is extraordinary.
Trade communiques are usually vague, designed to offend as few special interests as possible. Yet the Geneva WTO accord, intended to help impoverished nations by cutting farm subsidies in rich countries, names names and levels threats.
The WTO "recognises the importance of cotton for a certain number of countries and its vital importance for developing countries", says the agreement. "It will be addressed ambitiously, expeditiously, and specifically, within the agriculture negotiations."
And why shouldn't it be?
"Cotton is a poster child for what's wrong with US farm policy," says Daniel T. Griswold, a trade analyst at the libertarian Cato Institute.
"This one is especially galling because it hurts some of the poorest countries in the world and benefits some of the richest farmers. The (anti)-egalitarian impact of this programme is especially expensive."
Look at cotton if you want to understand the WTO negotiations making headlines last week. Or to check out an amazing example of corporate welfare. Or to see how US farm supports harm the developing world.
Oxfam International has this to say about how US taxpayers subsidise "the fabric of our lives": "To paraphrase Winston Churchill, nowhere in the entire field of human trade is so much damage inflicted on so many vulnerable people by so few wealthy farm corporations."
Scattered across the south from Virginia to California, US cotton growers got $2.2 billion in taxpayer subsidies for the 2002-2003 season, says Gerald Estur, statistician for the International Cotton Advisory Committee in Washington.
And that was an off year. The previous year cotton welfare came to $3.9 billion, according to Oxfam - more than the $3 billion value of the entire US cotton crop. It would have been cheaper to plow up the plants and give farmers cash.
US cotton subsidies, refined under the egregious "Farm Security and Rural Investment Act of 2002", are almost too big and complex to track. Cotton growers get federal payments based on previous production. Two more programmes boost payments if cotton prices fall. Growers get insurance against bad weather and taxpayer help for irrigation.
Two other deals funnel hundreds of millions of dollars to exporters who buy US cotton. What's more, quotas limit cotton imports that might compete with US producers. And countless government bureaucrats are required to administer the programmes.
Most of the subsidy money goes to a few mega-growers. The richest 10 per cent of US cotton farmers get 73 per cent of the payments, according to Oxfam. The top 1 per cent get a quarter of the payments, and 10 farms got an average of almost $1.7 million apiece in 2001-2002.
The WTO declared the whole arrangement illegal a few weeks ago under litigation filed by Brazil, but Washington is appealing.
While US cotton growers thrive at taxpayer expense, Third World farmers struggle. The US is the second-biggest cotton producer, after China, and the biggest cotton exporter.
Without artificial government support, US production would fall, cotton prices would rise and some of the world's more desperate places might gain a foothold in the international economy.
Much of west Africa is ideal for growing cotton. But Oxfam estimates US cotton subsidies effectively subtract at least 1 per cent from the gross domestic product and some 10 per cent of the export earnings of Burkina Faso, Mali and Benin, among the poorest nations in the world.
Ironically, west Africa was the source of slaves who enriched US cotton barons in the early 1800s. Disagreement over extending slavery and cotton cultivation westward helped cause the US civil war.
"No, you dare not make war on cotton," South Carolina Senator James H. Hammond, who favoured the death penalty for abolitionists, said in 1858. "No power on Earth dares to make war upon it. Cotton is king."
It'll be a long process in the WTO, but dethroning the king could help West Africans and US taxpayers alike. -(LA Times-Washington Post Service)
Jay Hancock is a financial columnist for the Baltimore Sun.