Today, the World Trade Organization (WTO) ruled that Brazil could set $295 million in annual sanctions against American goods entering that country in retaliation for the United States’ failure to eliminate illegal subsidies to the cotton industry. This could be good news for U.S. patent and copyright holders as Brazil had hoped to suspend their intellectual property rights at the cost of $2.5 billion.
Brazil, the world’s fifth largest cotton producer, claims the United States, the world’s third largest cotton producer, is able to control global cotton prices and stay at or near the top of production through its agricultural subsidies, and for the past seven years the WTO has agreed.
The United States pays farmers roughly $3 billion annually to grow and market cotton, robbing Joe Consumer, to pay Joe Farmer. American farmers are helped, but only at the expense of the rest of the American population, as the government must tax its citizens more in order to subsidize farmers. This cotton baron welfare program also has implications beyond our border; artificially boosting the cotton supply, driving down the price and forcing cotton farmers in developing nations out of business.
The United States must realize free trade is a two-way street. The U.S. needs to adhere to its international treaty obligations and if not done, has no leg to stand on when other countries follow the same protectionist path. When states pick and choose which goods they will freely trade, its not really free trade.