The Impacts of the Textile Economic Adjustment Assistance Program on the U.S. and Global Cotton Markets

The 2008 Farm Bill implemented a 4 cent per pound subsidy to U.S. textile mills.  This paper examines the impact of that subsidy on domestic mill use, domestic farm price, world price, and trade.  While mill use and farm price increase and world trade declines, the magnitude is small.  For example, we predict this policy will reduce global cotton trade by less than 1%.  Therefore, we conclude that this policy has little impact on world cotton markets.