Penetrating globalization has influenced the development of world market in many commodities, and sets rule based economic trade behaviour of nations. Cotton is one of the richest commodities and also one of the most common commodities to be traded globally between developed and developing nations. The US and India are strong trading nations, in which cotton is an important contributor to the rising trade numbers. There are specific international rules which are not able to penetrate domestic rules which are constitutionally bound and depend on the nation’s ability to keep it from declining (Smith, 2014). Subsidies have been a very old instrument of encouraging exports which has a direct implication on the pricing of the commodity (Zahariadis, 2008). When a developed nation provides subsidies for cotton, the cotton farmers are able to sell it globally at cheaper prices and thus keep penetrating global markets. This automatically depresses the domestic cotton producers of developing countries where the subsidised cotton makes a strong foothold (Greenaway, 2013). This particular act, although regarded as of a global nature and encourage an industry or a sector, ends up damaging the entire process of equalising its pricing in global nations and creates an uneven situation of polarisation.
This essay argues very strongly that the US continuing to provide subsidies to its cotton producers has had a devastating impact on cotton prices in India and their cotton farmers’ ability to compete with cheaper imports, and the act itself is unethical and immoral in practice.
US subsidies to its cotton farmers is an act of protecting and advancing its self-interest and not paying heed to the discriminatory impacts on Indian farmers and their ability to sustain a dignified life. The subsidy, despite creating tensions within the market and distorting the market with protectionist and discriminatory trade practices, continues to be an instrument of fulfilling self-interests. The US subsidies and WTO rules fail the test of humanitarianism and Kantian ethics of categorical imperative, as they polarise wealth creation and rights and entitlements. When an act fails the test of ethical analysis, it is to be abandoned and abolished and replaced with an act that is rational in its intent and consequences.