 US–Brazilian cotton policiesStephen Devadoss and Jeff Luckstead The World Economy, 2020, vol. 43, issue 8, 2222-2236 Abstract: Brazil filed a lawsuit with the WTO against the United States for providing cotton production and export subsidies, and the WTO ruled in favour of Brazil. Brazil threatened to impose retaliatory tariffs if the United States does not comply with the WTO rulings. After a prolonged litigation stretching from 2002 to 2010, both countries agreed to a negotiated settlement wherein the United States paid Brazilian cotton producers to compensate for any adverse effects. This study develops a political economic model to theoretically analyse US cotton policies, Brazil's threat of retaliatory tariffs and the negotiated settlement between the two countries. The theoretical results show that the volume of cotton output, supply price response, politicians' apathy for the public welfare, elasticities of excess supply/demand and the magnitude of US transfers play a crucial role in determining US policies. This study contributes to the literature by being the first to model political economic aspects of the complex system of trade and domestic policies in the cotton industry using a three‐country framework, tariff retaliation and transfers between the countries. Date: 2020 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:worlde:v:43:y:2020:i:8:p:2222-2236 Ordering information: This journal article can be ordered from Access Statistics for this article The World Economy is currently edited by David Greenaway More articles in The World Economy from Wiley Blackwell |
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