A lottery, two Americans, and one hard-headed Brazilian farmer were the key backstage protagonists of the historic decision taken, at the end of April, by the World Trade Organization condemning the official US policy of subsidizing its cotton producers.
Hot under the collar: A 22-year-old Brazilian cotton picker in Leme, 150 kilometers north of Sao Paulo. A cash-generating raffle of cattle, agricultural equipment and cars formed the financial backbone of the campaign launched in 2002 by the Brazilian Association of Cotton Producers, or ABRAPA, to collect the $2 million needed to begin a legal action against the US government within the WTO. The action was an unprecedented joint effort between private entrepreneurs and governmental bodies in Brazil to achieve a diplomatic goal. The cotton farmers provided the money, and the trade experts at the Ministry of Foreign Affairs offered the technical advice on how to get through the trade body's labyrinth of international rules.
And all this was the result of the persistence of Pedro Camargo, a cotton farmer and former government agricultural expert who became a passionate advocate of the anti-subsidies cause. Camargo successfully persuaded the former Brazilian ambassador in Geneva, Celso Amorim, to become a partner in the effort against US agricultural protectionism.
Amorim, now Brazil's foreign minister, was then a key figure in the government of former president Fernando Henrique Cardoso, as a negotiator at the WTO trade expert meetings. The lobby of Brazilian diplomats and local cotton producers was decisive in the decision of the Cardoso government to back the ABRAPA initiative to launch a legal action against the US government, in February 2002.
Following the advice of diplomats, the Brazilian cotton producers hired the American lawyer Scott Andersen and the U.C. Davis professor Daniel Summer, an expert on agriculture econometrics. Both nosed into a little known US Department of Agriculture data bank in Kansas City containing key statistics and figures about US cotton production, the evidence needed to prove the Americans ignored the so-called peace clause, in which all WTO member countries agreed to limit subsidies to the 1992 level. The US was limited to $2.1 billion in annual subsidies, but the data showed that the help given to cotton producers reached $12.7 billion from 1999 to 2002 (an average of $3.2 billion a year).
In a 5,000-page legal action, ABRAPA asked the WTO to condemn the US government for subsidizing 25,000 local cotton farmers. The amount of government aid was almost equal to the value of cotton production in the United States, allowing American farmers to dominate more then 40 percent of world exports.
Developing countries such as Brazil, Burkina Faso, Chad, Mali and Benin were unable to get a bigger share in the international market even though their production costs are almost 50 percent lower than those in the United States. Experts in Brazil estimate that it has lost around $450 million a year since 1999 in cotton-export revenues, according to Helio Tollini, executive director of ABRAPA. UNCTAD, the UN body for trade and development issues, estimates that the African countries lose $150 million each year because of US cotton protectionism, which is also accused of making 12 million Africans jobless since 1999.
Last April 26th, the WTO issued an interim report accepting the Brazilian action in a decision called historic by The New York Times and The Wall Street Journal. The full report will be released in June, but the issue has caused shockwaves that are shaking some lasting international trade hegemonies.
Brazilian cotton producers in the state of Mato Grosso, in the southwestern plains near the border with Paraguay, have celebrated the WTO decision with fireworks, but they were very cautious about the immediate impact on the country's agricultural exports. "It's a David against Goliath fight, so we should be prepared for an even longer legal dispute," said Gilberto Goellner, a cotton farmer in Mato Grosso. He won't increase his farm production in 2004 and will wait until next year to see whether the prices of cotton go up 13 percent in the international market, in line with experts' projections at the Chicago stock exchange.
Another question mark is the reaction of the Bush government in this, an election year, when it needs the support from cotton producers in Texas and Mississippi. To Minister Celso Amorim, two factors were decisive in the cotton case: the alliance of private and government interests against foreign agricultural protectionism; and that President Lula da Silva has continued an action begun by his predecessor (who is now a fierce critic of the current Brazilian government).
The WTO decision came at a crucial moment for President Lula da Silva. He and Minister Amorim are deeply involved in an effort to set up a diplomatic alliance led by Brazil, South Africa, India and China to jointly negotiate better trade and financial agreements with the G7 countries (the group of the seven richest countries).
This alliance is strategic for the president and his left-wing Workers Party because they bet on two key foreign initiatives to leverage a domestic economic recovery, critically needed to reduce unemployment and social tensions. The first bet is on Brazilian agriculture and industrial exports, where Brazil asks for better prices for its products that would generate a better trade surplus to finance a bigger public expenditure. The second diplomatic bet is on the growing trade with South Africa, India and China, another source of critically needed hard cash. Marco Aurelio Garcia, the key presidential advisor on foreign-affairs issues, believes that the alliance with South Africa, India and China is an ideological project, too, because it may become the alternative option to other developing countries in Africa, Asia, the Middle East and Latin America for evading US and European dependence.
So far, Brazilians are quite cautious about future steps on trade issues. But more than one diplomat and government advisor has mentioned the sugar issue as the most likely next diplomatic target. Minister Celso Amorim is currently negotiating with the European Union the reduction of its sugar and milk subsidies to Old World farmers in exchange for allowing European corporations to sell goods and services to the governments of the Mercosur trade pact (Argentina, Brazil, Paraguay and Uruguay).
If the EU doesn't make substantial concessions in these two areas, Brazil and its partners, with the support of Australia, will certainly use the cotton case as a sort of springboard for another trade dispute at the WTO.The Worldpaper:
