Brazil vs the U.S at the WTO : The U.S -Brazil cotton subsidy dispute

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Case Study: Brazil vs. the U.S at the WTO: The U.S -Brazil cotton subsidy dispute
Introduction
The case study seeks to establish an understanding of the U.S – Brazil cotton subsidies dispute. In a heated economy, the USA fails to adhere to the WTO’s regulations about offering illegal subsidies that could compromise another nation’s, Brazil, economic performance. In all incidences, Brazil wins through appeal and with retaliation threats the USA abides by its demands.
Findings
Brazil raises a concern about the US’s illegal subsidies that they seek dropping of these subsidies by the US government. As a result of the growing reputation of Brazil to the global economy in previous two decades is assumed as its growing assertiveness on the world economy (Nelson 1-2).
After the Second World War, the globe saw the need of establishing an international trade organization majorly for solving disputes. The attempts to create a strong International Trade Organization failed to result in the formation of GATS (Nelson 2-3). The GATS saw the birth of WTO the current trade organization. Global trade disputes escalate the necessity of a trade organization.
The Brazil initiated a dispute with the US over cotton subsidies through WTO with claims that US subsidies were not compliant with the WTO compliant. Since the US failed to take immediate modifications in the subsidies after the 2004 ruling, Brazil was granted a go-ahead in retaliation (Nelson 4-5).

Discussion
The main issues are arising, in this case, is about the failure of the United States to adhere to the ruling. Even though Brazil is granted retaliation go ahead, this endangers the United States’ economy.
A solution to this would include WTO coming up with a penalty measure that a member faces when they default to meet the ruling request. Hence, this would reduce the incidences of power scrambling between countries.
Additionally, the countries should be made aware of the importance of valuing each other’s economy prowess. Therefore, this would be essential to attain the ethical conduct of the member states. However, this solution would likely be easily ignored by the superpowers like the USA.
Conclusion
As nations interact through international trade, there is the need to obey the WTO regulations for all member states. After the 2004 ruling by WTO that the US should pay Brazil annual cotton subsidies, the US defaulted the ruling. In return, Brazil was offered a retaliation go ahead that was used as a threat to have the US to respond positively.
Recommendations
WTO has a great role to play in bringing together its member states through trade interactions. However, it looks illogical to offer one member state retaliation over the other when they default to meet the stated request. Instead, WTO should coin a regulation that administers a penalty (double penalty on defaulting) to those who fails to adhere to WTO rules.
Implementation
The execution of this regulative solution would need an agreement between the member states. The cost of implementation extremely rests on on the protocol preferred by members.
Work Cited
Nelson, Roy. “Brazil Vs. The U.S At The WTO: The U.S- Brazil Cotton Subsidy Dispute”. Thunderbird School of Global Management (2016): 1-7. Print.