Much of the western world advocates free trade but they rarely seem to practice it. The WTO ruled against the United States providing subsidies for cotton farmers, saying the system violated international trade rules by giving massive financial backing that supports the higher prices of the U.S. cotton industry.
Subsidies are also a hot commodity in much of the rest of the world. The EU battles over subsidies as about 40% of the EU budget is dedicated to propping up the western European agriculture industry and most of that is in France.
Most economists don’t like subsidies and feel that government subsidized agriculture remains one the largest single hindrances to wiping out global poverty. It’s one of the issues being addressed at least nominally at the G8 summit. Most feel it won’t get much traction because of Europe’s insistence on the subsidies. President Bush even levied a challenge in the name of African reform that the U.S. would drop subsidies if Europe did.
Even though the U.S. agreed to the terms of dropping cotton subsidies in theory, the measure still has to go through Congress and it’s quite unlikely it will make it through as the cotton lobby in the U.S. is quite well funded, in part do to the subsidies.
Many organizations in the U.S. work against the government subsidies as well Farm Aid being the most visible popular musicians like Willie Nelson, Neal Young, John Mellancamp and Dave Matthews put together a large concert just about every year. They claim that farm subsidies hurt small farmers in the U.S. who don’t have the land levels to compete with corporate farms and they believe this also hurts farmers in Africa as well. They believe both groups could compete much better without government support of the large corporate entities.
John Stith is a staff writer for Murdok covering technology and business.
