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Cato Daily Dispatch for April 28, 2004

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WTO Rules against U.S. Cotton Subsidies
Germany Criticizes Low Corporate Tax Rates
Specter Ekes Out Win over Toomey

WTO Rules against U.S. Cotton Subsidies

"In a decision that could have far-reaching repercussions for the American farmer, the World Trade Organization has ruled that U.S. cotton subsidies are unfair to farmers in developing nations," The Associated Press reports.

"Siding with a complaint from Brazil, the WTO said the subsidies boost U.S. production and exports while lowering world cotton prices."

In "U.S. Farm Policy: An Equal Opportunity Disaster,", Daniel Griswold, associate director of Cato's Center for Trade Policy Studies, writes: "The U.S. government subsidizes "the production of 25,000 U.S. cotton farmers with an average net worth of $800,000. Those subsidies depress the world price of cotton, driving thousands of already impoverished farmers off the land in Mali and other poor nations. According to the World Bank, U.S. cotton subsidies cost Mali and its desperately poor neighbors $250 million a year. This can only add to the frustration, despair, and anger that are rife in Muslim nations today. And we wonder why the United States has such a difficult time winning friends and influencing people in that part of the world."

Germany Criticizes Low Corporate Tax Rates

"Germany yesterday threw cold water on the festive mood ahead of this week's European Union enlargement by telling its eastern neighbours that low corporate tax rates used to attract foreign investment were unacceptable," the Financial Times reports.

"Speaking only days before 10 new member states join the EU on May 1, most of them from Eastern Europe, Chancellor Gerhard Schröder said tax rates, often less than half those in Germany, were 'not the way forward' in a united Europe."

In "Fourth Highest Corporate Tax Rate Means Time for Reform," Director of Fiscal Policy Studies Chris Edwards writes: "In the last few years, the corporate tax rate was cut in Denmark, France, Ireland, Germany, Poland, and Portugal, and in many countries outside of Europe. Europe has shifted about one-third of its overall tax burden to less distortionary consumption taxes. What the Europeans and others are realizing is that countries shoot themselves in the foot by imposing high tax rates on mobile capital."

Specter Ekes Out Win over Toomey

"U.S. Sen. Arlen Specter narrowly won the Republican nomination yesterday, beating back a surprisingly strong showing by U.S. Rep. Patrick Toomey in a race that underscored the national party's struggle to accommodate both moderates and conservatives," The Philadelphia Inquirer reports.

"Toomey conceded about 12:45 a.m., saying he was proud to talk during the campaign about limited government, personal freedom, and lower taxes."

In "Election 2002 and the Problems of American Democracy," John Samples and Patrick Basham, scholars in the Cato Institute's Center for Representative Government, argue that the lack of competition in elections has a serious negative effect on the well-being of the political system. The advantage incumbents have in elections from media exposure, pork barrel spending, free travel, and access to the public through their district offices makes it difficult for them to be defeated. The lack of term limits and a Congress full of career politicians only aggravate that problem.

Jonathan Block, editor, jblock@cato.org