David and Goliath in Africa
African complaints that U.S. agricultural subsidies are undermining their efforts to compete globally are beginning to find sympathetic ears in the international community.
The source: “West Africa Versus the United States on Cotton Subsidies: How, Why, and What Next?” by Elinor Lynn Heinisch, in The Journal of Modern African Studies, June 2006.
When three impoverished African countries took on American cotton producers in 2003, charging that subsidized U.S. cotton was flooding the market and reducing the price of their main export, it was a watershed event in international trade relations, according to Elinor Lynn Heinisch, a press officer with the aid organization CARE. It proved that politically and economically weak countries can effectively challenge farm subsidies in the world’s strongest nations.
Cotton is the most important export crop of Burkina Faso, Mali, and Benin, the world’s 4th-, 10th-, and 16th-poorest countries. Farmers in landlocked Burkina Faso, located to the north of Ghana, can grow cotton at a cost of 21 cents per pound, working plots of two to three acres by hand and relying on rain for irrigation. The cost of cotton production for U.S. farmers is between 68 and 80 cents per pound.
Simple arithmetic would suggest that the African farmers would put the Americans out of business, but America’s 30,000 cotton farms claim to provide some 440,000 jobs, and the cotton lobby is an important political player in Washington. The U.S. government spends $3.9 billion a year on subsidies to American cotton farmers, Heinisch writes, paying many producers the difference between the market price—currently hovering a bit above 50 cents per pound—and a “target price” of 72 cents per pound.
The Africans took their complaints about the subsidies to the World Trade Organization (WTO), piggybacking on a cotton-related unfair trade practice case brought by vastly richer Brazil. (Few developing countries have the legal or financial resources to bring a case on their own.) They contended that subsidies caused U.S. farmers to produce more cotton than they would otherwise grow, sell it at an artificially low price, and undermine the livelihoods of farmers in the three West African nations. Cotton producers there are not subsidized, and government intervention in cotton markets has been cut back, leaving farmers’ incomes to rise and fall with world prices.
The Africans became the public face of an immensely complicated world trade issue. For the first time, an African head of state testified before the U.S. House of Representatives International Relations Subcommittee on Africa. President Amadou Toumani Touré of Mali and President Blaise Compaoré of Burkina Faso published an op-ed piece in The New York Times. Officials of all three countries flew to Geneva, where the WTO was meeting, and spoke elsewhere in Europe. They enlisted allies in international agencies and charities. At one point, the WTO director-general broke from “conventional neutrality” to say that the African complaints had merit, according to Heinisch. The cotton campaign paid off in March 2005, when the WTO ruled in favor of Brazil—and its African allies—and the United States announced it would move to comply.
Brazil, seizing the possibility that a revived Doha round of trade talks might permanently level the playing field for international cotton producers, put off its demand for $3 billion in damages from the United States. Now that the trade negotiations
have collapsed, it remains to be seen whether Brazil’s African supporters will try to wrest more from the U.S. Department of Agriculture than the $7 million “cotton improvement program” offered. It is a paltry substitute, the Africans have said, for fair prices in the global free market.