Why are U.S. Taxpayers Paying Brazilian Cotton Growers?

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by Shawn Regan

From NPR's Planet Money comes this puzzling question: why are U.S. taxpayers subsidizing Brazilian cotton growers? The answer lies in a contentious trade war that pits the U.S. — which pays out between $1.5 and $4 billion a year to U.S. cotton farmers — against the World Trade Organization, who says U.S. cotton subsidies are against global trade rules.

What happened when Brazil recently retaliated with taxes on U.S. imports illuminates the extent to which agricultural subsidies are embedded in American politics.

The American negotiators sat down in Brazil and immediately declared it impossible to get rid of the cotton subsidies right away. But the two sides came to an agreement.

The U.S. would pay Brazilian cotton farmers $147 million a year, and Brazil would drop the threat of retaliation.

To review: The United States was found to be illegally subsidizing U.S. cotton farmers. We are still subsidizing U.S. cotton farmers. Now we're paying Brazilian cotton farmers, too.

"Maybe it's a bribe," Camargo [former Brazilian trade secretary] says. "For Brazilian farmers, it's a lot of money."

For U.S. taxpayers, it's also a lot of money. In effect, they are now subsidizing cotton farmers in both America and Brazil. For more, listen to the full story here.
Shawn Regan is a research fellow at PERC and the director of outreach and publications. He holds a M.S. in Applied Economics from Montana State University and degrees in economics and environmental science from Berry College. His writing has appeared in a variety of publications, including the Wall Street Journal, Quartz, High Country News,...
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