Case Analysis: Brazil’s Wto Cotton Case: Negotiation Through Litigation

Unfortunately, there has been poor progress in reducing agricultural protection in recent years. In fact, if global trade liberalisation was achieved by the WTO 's Doha Round, it could have boosted Australia 's agricultural exports by US$9 billion by 2020; thus displaying how highly protectionist economies and trade blocs adversely affect the Australian economy.

The economy of Brazil is in the top ten largest economies along with the United States. It is the biggest in Latin America. Actually it is the seventh largest in the world. Brazil has used its newly found economic mechanism to syndicate its outcome in South America and show more of a role in the Global Businesses. The Obama Administration’s National Security Strategy recognizes Brazil as a developing center of effect, and greets the management of the country’s joint and global issues. The United States and Brazil associations mostly have been good in the recent years. But Brazil has other strengthening relations with neighboring countries and expanding ties with nontraditional partners in the South that’s developing.

If China is able to prove that domestic soybean producers are not able to survive because of low cost imports from Brazil, the WTO ruling would be in favor of China and such measures would be upheld. However, if such measures were used as retaliation to Brazilian ban on Chinese toys, the WTO ruling would be in favor of Brazil and China would not be able to restrict import of Soybean from Brazil.

In this paper, I will summarize the banana trade war between the European Union and the United States. I will examine the information, explain the argument, and explain the affects this banana war has had on economies and laborers. I will also investigate Chiquita’s role, the US’s retaliation, examine the rules and regulations of the World Trade Organization (WTO) and explain their role in the dispute. Lastly, I will provide my assessment of the dispute and how I would resolve it acting as a representative of the WTO. This paper is outlined to answer each task to ensure evidence is provided to support my findings regarding the banana trade war.

Globalization is a predominant term in global politics today, but it is a more complex issue than some may perceive it to be. While it has enabled a remarkably integrated global political landscape and fast-tracked the international economy, these new global networks also exposed the full extent of economic and power imbalances between states. Powerful western states and corporations have used global integration to exploit states that are rich in highly sought-after resources, but not strong or secure enough to protect these resources from external actors. The worldwide cocoa industry has expanded profoundly since its emergence in Mesoamerican culture in the 15th century, and this industry has become a microcosm of western dominance in the global economy. The exploitation of Latin American and African countries at the hands of western corporate enterprises is an ongoing trend in cocoa production; however, hope rests in corporate social responsibility and the fair trade movement to dramatically alter the global production network of cocoa going forward.

From the 1500’s to the 1930’s the Brazilian economy relied on the production of primary products for exports. For three centuries Brazil’s economy was heavily curbed because since Portugal discovered Brazil, they subjected it’s economy to an imperial mercantile policy or a strictly enforced colonial pact. Even though Brazil received its independence in 1822, Portugal’s phase of decisions left a lasting, powerful imprint on Brazil’s economy and society. In the late eighteenth century, when wage labor was adopted and slavery was eliminated considerable changes finally began to occur. Only starting in the 1930’s were the first steps taken to convert key structural changes by changing Brazil into a

to sell products in Cuba, and that it would no longer penalize other nations for

agribusiness.’” (washingtonpost.com) Along with their letter of discontent to the president Rep. Ron Kind (D-WI) proposed an amendment “that would have prevented payments from the Commodity Conservation Corporation (CCC) to the Brazilian Cotton Institute.”[5] This amendment however, has been defeated in the House of Representatives. Passing of this “amendment would have violated a condition of the agreement and jeopardized the suspension of trade retaliation by Brazil”(fibre2fashion.com). Basically, the deal America struck with Brazil, to avoid Brazilian relation would have been made void with the passing of this amendment.

The North American Free Trade Agreement (NAFTA) became effective on January 1, 1994. It involves free trade of goods, services and investment between United States, Canada, and Mexico. In this agreement the United States holds largest trading with Canada and Mexico. (Daniels, 2015, p.275). The recent biggest challenge to NAFTA is the illegal immigrants from Mexico. As stated in the text book, trade in agriculture increased with executing of NAFTA and more than a million farms jobs disappeared in Mexico due to competition with U.S. Many of these farmers moved to U.S. In 2013 out of the estimate of 11 million illegal immigrants most of them are from Mexico. The money sends by these farmers in wire transfers to Mexico is higher than what Mexico receives in the form of foreign direct investment (FDI). Therefore, illegal immigrants have become a political issue between U.S. and Mexico. (Daniels, 2015, p.277). In order to control the illegal immigrants, the U.S. government wants to place a wall on the border of U.S. and Mexico. To cover the cost for the wall U.S. government is considering imposing 20% tax on Mexican imports. (Loss Angeles Times).

China has been transforming into a rapidly growing economy ever since the trade reforms began in 1979 and upon its further entry into the World Trade Organization (WTO) on December 11, 2001 as the 143rd member, China’s trade liberalization and global trade commitments made at that time augmented the expansion in U.S.-China marketable ties (Morrison, 2015). The most significant clause of this WTO enterprise that proved to be beneficial for US was China’s unanimity to reduce the average tariff of agricultural and industrial commodities to 15% and 8.9% respectively. Furthermore, China agreed to rule out subsidies of agricultural exports and revoked few restrictions on some key agricultural products (Casey, 2012).

In 1994, the leaders of the thirty-four democratic countries of the Western Hemisphere launched the process of creating a Free Trade Area of the Americas (FTAA). The FTAA will be established by 2010 with the aim of gradually eradicating barriers to trade and investment in the region. The final characteristics of the FTAA will be determined through negotiations by government officials from the thirty-four participating countries. The trade issues that are presently under discussion are: market access; investment; services; government procurement; dispute settlement; agriculture; intellectual property; antidumping, subsidies and countervailing duties; and competition policy. Guiding principles for these negotiations

The case concerns the ECʼs preferential banana importation treatment to certain African, Caribbean and Pacific (ACP) countries. The Appellate Body upheld the panel’s ruling that the ECʼs regime for importation, sale and distribution of bananas was inconsistent with certain GATT Articles.17) Ecuador, one of the complaining countries, sought to retaliate against the EC when the latter was found, by a compliance panel under DSU Article 21.5, to have failed to implement the DSB rulings. The crucial element in Ecuador’s request was that it was the first case where a complaining party requested to retaliate under the TRIPS Agreement. The arbitration panel found that Ecuador could request authorization to suspend its concessions or other obligations in certain sectors under the TRIPS Agreement, with the level not exceeding US $201.6 million per year.

Chile has had a few difficulties in recent times. Like Chile, many countries offered startup companies money and incentives to move to Chile to start their business and now are hurting because of this. While Chile has had success with this venture and it has helped economic development of the country. Many countries in South America have concentrated their exports more on natural resources with few linkages to the rest of the economy. Central American and Caribbean countries are struggling to increase the competitive of their firms and retain more value added within value chains. South America should aim for more robust productivity rates, with the aim of making economic growth more inclusive. Many countries need to upgrade their infrastructure and logistics in order to boost competitiveness across more international markets and global value chains. Modifying rules and regulations to enable more effective use of current infrastructure is also needed. These countries need to invest more in research and development, look into start-ups and certain skills to tap into global opportunities. Government also must cater to an emerging middle class with more and better public goods and

On September 2002, Brazil, major cotton export competitor, reached out to the World Trade Organization to complain about the United States cotton subsidies. Brazil requested action against the US by filing a WTO dispute settlement case. On 2009, the WTO authorized Brazil to increase import duties on certain products imported from the US and to suspend sections of the TRIPS Agreement. To avoid these sanctions, the US accepted to pay Brazil $147.3 million annually. Starting with a brief introduction about agricultural subsidies and the cotton industry, in this paper I will discuss the issue regarding Brazil’s cotton industry, how the US and Brazil agreed to settle the dispute, who is impacted by the cotton subsidies, and what the latest arrangement means to all countries affected.

In order to substantiate the claim that Brazil’s South–South development cooperation model is merely an instantiation of retroliberalism and therefore does not seek to overturn the existing aid structures, this section will examine the extent to which the Brazilian cooperation practices in the Mozambican agricultural sector diverge from the noble rhetoric that elites involved in the programme’s formulation and implementation claim to endorse. For the purpose of this investigation, I have relied on: