The Impacts of U.S. Cotton Programs on the World Market: An Analysis of Brazilian WTO Petition

This manuscript analyzed the effects of the elimination of U.S. cotton subsidy programs on the world cotton market using a partial equilibrium model of the world fiber market. Removal of U.S. programs would increase world cotton prices by approximately 2% in the initial years; however, the impacts are mitigated after a few years after program elimination as the major cotton producing and exporting countries expand their production. Overall, the results indicate that U. S. cotton production and export would decline by an average of 4.5% and 5.0%, respectively. At the same time, Brazil and Australia would expand their cotton acreage and increase exports by about 2%, and 1%, respectively. Unlike Brazil and Australia, Africa is unlikely to take advantage of the reduction in U.S. cotton exports, with less than 1% increase in their exports.