COTTON IN A FREE TRADE WORLD

Abstract

Trade liberalizing reform in the world cotton market would increase world cotton traded an average 2.69% over 5 yr and increase world cotton prices to an average 10.5%. A partial equilibrium model was used to estimate the effects of removing global domestic subsidies and border tariffs for cotton. Trade flows in international markets would be affected as U.S. market share of world cotton exports decline, net cotton‐importing countries with minimum domestic and trade distortions import less because of higher cotton prices, and net cotton‐importing countries that subsidize domestic production and/or impose border tariffs significantly increase their imports. ( JEL F17, F42, F47, O2)