Brazil has just won a preliminary ruling against the subsidies that the U.S. pays to agricultural special interests. From the New York Times [reg. required].
Brazil won a preliminary ruling at the World Trade Organization on Monday night that could force the United States to lower the subsidies it pays farmers to grow cotton and, eventually, most subsidized crops.
The decision supports Brazil’s contention that the subsidies paid to American cotton farmers violate international trade rules. A final ruling against the United States could lead to stiff penalties if it fails to change its practices. In another recent case involving steel, President Bush chose to remove subsidies and therefore did not have to face the penalties.
The ruling also puts the Bush administration in a tight bind in an election year, when Republicans are counting on support from the Farm Belt. The largest American farmers have grown dependent on the $19 billion they receive in annual subsidies.
It’s not just the U.S. that uses anti-competitive subsidies to the detriminent of free markets.
The $300 billion in annual farm subsidies and supports paid by the world’s wealthiest nations have been the bane of Third World farmers. The United Nations, the World Bank and charities like Oxfam have said their elimination or reduction would provide the single biggest possible benefit for the economies of poor countries with many subsistence farmers.
For all his rhetoric about the importance of freedom and free markets, Bush has increased subsidies to agribusiness.
Bush championed and signed the politically expedient but economically foolish U.S. farm bill before the 2002 mid-term elections. This legislation, favored by farm state Republicans and Democrats, increased federal subsidies by more than 80 percent. These subsidies are not aid to family farmers. They are mainly corporate welfare for agribusiness. Three quarters of the funds — at least $82 billion over 10 years — will go to only 10 percent of American producers, primarily the largest commercial farmers. Bush is using a technicality to hammer European perfidy and obscure his own. Bush called for the elimination of export subsidies, a popular and damaging European device much in need of revision, but failed to mention American production subsidies and price supports, which encourage U.S. farmers to overproduce and dump excess supply on the world market. [emphasis mine]
President Bush has greatly increased the size of government and run up a huge deficit during his first term in office. Billions of dollars are being sucked out of the pockets of American taxpayers and into corporate coffers; the war in Iraq and the subsidies to agribusiness are just two of the most glaring examples.
Actions speak louder than words. For all his rhetoric about the horrors of big government and the glories of free, competitive markets, the fact is that the Bush administration’s actions are pro big government and anti-competitive. Therefore, they are also anti-freedom.
Even more pathetic, the Democrats have little or nothing to offer as an alternative.
UPDATE 4/28/2004: The New York Times [reg. req.] had an editorial about this today. While I disagree with their basic premise that farm subsidies should be removed to benefit developing countries, I do agree that they are a violation of free trade, which is a violation of every individual’s right to choose his own values. Subsidies are distortions in the market to benefit those who receive the subsidies, financed with stolen money (taxes).
America’s lavish handouts to its farmers harvest poverty throughout the developing world. And they are illegal as well. That’s the conclusion of a World Trade Organization panel that heard Brazil’s challenge to the cotton subsidies that belie this nation’s commitment to free and fair trade.