Cotton has become a major and controversial player in world trade. The crop has been affecting the political and economic decisions of the global producers in the cotton industry.
In 2005, the WTO ruled US cotton subsidies as illegal and must be stopped. It seemed that the US government was spending billions just to subsidize cotton production. The international relief organization named Oxfam even stated that the US shells out more money to subsidize its 25,000 cotton farmers than it gives in aid to the entire African continent in one year. The WTO, the global controlling body of global free trade, stepped into the picture when Brazil complained to the WTO that massive US subsidies to its cotton growers eventually lower world cotton prices, making other cotton producers worldwide to lose dollar revenues.
From the point of view of other cotton producing countries, the US was manipulating the outcome of global free trade and free markets, since its huge production of cotton can very well be dumped in the global market at lower costs. This will make the global cotton trade imbalanced in favor of the US.
Around this time, the US cotton industry exported 6 to 9 million bales of raw cotton every year. The annual value of the cotton exceeded $3 billion. With a lessening of US subsidies to its cotton growers, American cotton exports would drop 41 percent and its production 29 percent without government support. China supports its cotton farmers that is why cotton has been a steady and strong export from the country, in spite of the fact that cotton growing in China is less sophisticated than that in the United States.
While only 25,000 farmers grow cotton in the US, China has 42 million cotton farmers farming the crop on an area of about 3 million acres. But China’s production has been slow, even given those figures. China only produces half a bale per grower, grown on one-half acre. In the US, these 25,000 cotton farmers produce about 18 million bales, or 720 bales per farmer. The result is staggering: the US produces 97 percent of all cotton grown in the world. However, China’s apparel and textiles account for about 20 percent of the US market, and China also owns the biggest plant biotechnology capacity outside of North America.
The US appealed the WTO ruling. In the same year, and two months after making subsidies to US cotton farmers illegal, the European Union, representing 25 countries, agreed to cut their cotton subsidies by 60 percent in the next few years. Today, the five leading cotton exporters are the US, Uzbekistan, India, Brazil, and Burkina Faso. It seems that the WTO ruling has given a fair chance for other cotton-growing countries to make their mark in the global cotton trade.
Cotton has proven to be a very important commodity throughout the world. The cotton crop has become too controversially sought for that Indian farmers who experienced crop failure drank pesticide to send the message that small farmers are doomed amidst the reality of mass production. However, India now belongs to the top five global cotton exporters, as much as the smaller countries of Mali and Pakistan are. Pakistan’s economy has been so dependent on cotton that the country’s lack of skilled workers and technological know-how places the country’s economy in a constant threat of collapse in the free trade regime.
To this day, the United States dominates the global cotton market. A T-shirt that says “made in China” may actually be made of cotton that was grown on a farm somewhere in the United States. Texas, as the US’ biggest producer of cotton, ultimately supplies the material for Chinese-made T-shirts. These clothing pieces, then, come back to the U.S. market for sale and reach as far as Tanzania for resale.
Via NationMaster
