Confronted by cotton : policy implications of Brazil's WTO dispute over U.S. cotton subsidies.
Day, David T. (David Thomas), 1987-
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Brazil's World Trade Organization dispute concerning the United States' cotton subsidy programs has many implications for the agricultural and trade policies of the U.S and developing countries, and for the WTO's role in settling trade disputes. Development of a condensed form econometric model of the world cotton price tests the accuracy of Brazil's claims and provides a measure of the impact of U.S. cotton subsidy programs. When using level values the model estimates that as U.S. subsidy payments increase by $1 Million the world price of cotton decreases by 0.01 cents. When using log values of the variables, a one percent increase in U.S. subsidy payments corresponds with a 0.27 percent decrease in the world cotton price. Numerous policy approaches exist for all parties based on the model's results, the historical and political background of the U.S. cotton industry, the WTO ruling, and the settlement between the U.S. and Brazil.