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The Absurdity of International Trade
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The Absurdity of International Trade http://www.npr.org/blogs/money/
At the above website your will be able to read a story about the absurdity of international trade. Here is the gist of the story. I suppose everyone has heard of the WTO (World Trade Organization) which “regulates” international trade among its members. Most countries including the US and China are members and are supposed to obey rules of trade agreed upon by all members. The US for the longest time is the world’s largest exporter of cotton. Brazil also a large exporter complained for years that the US unfairly subsidizes its farmer (which is forbidden by WTO rules). In 2004 the WTO ruled against the US who immediately appealed the decision. Subsequently, the US also lost her appeal. But WTO has no real power to force its member to obey its rules and the US continues the subsidy to its farmers. Brazil in desperation resorts to another rule of WTO, namely, a country is allowed to retaliate against another if it cannot obtain satisfaction from a WTO ruling. Thus, Brazil informed about 120 trade associations in the US, from computer makers to luxury goods, that she will start in 30 days to impose an import tariff on all the US goods these associations represent. This brought immediate action/protest from these powerful trade associations to the US congress claiming they are innocent victims of the cotton trade war between the US and Brazil. So what did the US government do? A delegation was sent to Brazil to negotiate a solution. The delegation upon landing in Brazil immediate laid down a precondition saying that due to internal politics, the government cannot eliminate the cotton subsidy. However, the US government is willing also to subsidize the Brazilian cotton farmers to the tune of 150 million dollars/year so that they can compete with the US farmers on an equal footing. This made everyone happy; Brazil withdrew her threat of retailiation and the WTO dispute was resolved. The US tax payers are now paying part of the cost of everyone who buys cotton on the world market. Thus, next time you hear the US complaining about China subsidizing her steel export, the real situation is probably lot more complex than what appears on the surface and when you wear a cotton T-shirt remember the US taxpayers paid for part of it.
https://blog.sciencenet.cn/blog-1565-382302.html
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