A major problem for negotiations by members of the World Trade Organization to expand free trade has been the issue of agricultural subsidies. U.S. government agricultural subsidies to cotton farmers have allowed them to sell cotton at lower prices than they would have otherwise accepted. This also put cotton farmers in less-developed countries out of business because their governments do not have agricultural subsidies. This has also been the case for other agricultural products produced and subsidized by the developed countries. As a result, less-developed countries have withdrawn from negotiations to lower their barriers to trade with developed countries.

Why do subsidies to U.S. cotton farmers result in lower prices for cotton?