Bridges Trade BioRes • Volume 3 • Number 10 • 2nd June 2003

AFRICAN COUNTRIES TAKE PLIGHT OF COTTON FARMERS TO WTO

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AFRICAN COUNTRIES TAKE PLIGHT OF COTTON FARMERS TO WTO

In an unprecedented move, four West and Central African (WCA) countries — Benin, Burkina Faso, Chad and Mali — have joined forces to put forward a sectoral initiative at the WTO to eliminate cotton subsidies worldwide in an effort to ensure the survival and development of the cotton sector in their region. Observers have described this issue as a potential "global deal" that could become a "make or break" issue at the next WTO Ministerial meeting in Cancun in September.

African proposal calls for both systemic and emergency solutions

The submission stresses the crucial strategic position of cotton in the development policies and poverty reduction programmes in the WCA region where cotton accounts for up to 80 percent of export earnings in some countries. Extensive cotton subsidies in rich countries, especially the US where "subsidies given to American cotton producers are 60 percent more than the total GDP of Burkina Faso", have led to an artificial increase of supplies on international markets and a fall in export prices, costing WCA countries USD 250 million in export earning in 2001/2002.

To address this, the WCA countries are calling for a "systemic solution to the cotton problem within the framework of the new Doha Round of trade negotiations". This would include an explicit recognition of cotton as a "special" product with respect to food security, rural development and/or livelihood security concerns. According to the draft modalities text produced by Stuart Harbinson, chair of the WTO agriculture negotiations, such special products would be subject to reduced tariff reduction commitments (see BRIDGES Trade BioRes, 21 March 2003). In addition, the countries are calling for the extension of the concept of "special products" from defensive to offensive measures, and for the total elimination of border measures, domestic support and all forms of subsidies for the export of cotton.

Given the urgency to ensure the survival of the cotton sector in the WCA region, the countries propose certain emergency measures to be implemented immediately. The countries propose the establishment of a mechanism to phase out support for cotton production with a view to its total elimination ("early harvest") at the Cancun Ministerial meeting, which would set a specific date for the phase-out. They also advocate the use of transitional measures for least-developed countries (LDC) in the form of financial compensation paid to cotton-producing LDCs "to offset the injury caused by support of production and export".

Members supportive, but sceptical chances for success

While the proposal has not yet been officially discussed at the WTO, informal reactions from Members indicate a mixture of support, optimism and caution. A source from the US expressed his general support for a systemic rather than a sectoral solution, noting that any special treatment given to African cotton would also benefit potentially competing cotton exporters, such as Brazil. The source added that the "early harvest" demands did not appear very realistic. An EU source remained unconvinced that the concept of "special products" should be extended to cotton as the concept applied to products that were not competitive in the international market (and therefore required special treatment), which was not the case for African cotton.

A source from Brazil described the initiative both as a positive gesture for Africa and a sign of support for Brazil’s ongoing WTO dispute with the US over its cotton subsidies. In March, the WTO Dispute Settlement Body had accepted Brazil’s request for a panel to examine the legitimacy of the subsidies granted by the US government to its cotton farmers (see BRIDGES Weekly, 2 April 2003). The source, however, was sceptical with regard to how successful a strategy would be that focused entirely on negotiations with the US on one product category, favouring instead a systemic approach. A source from Mauritius echoed the general support for the initiative, but cautioned against the assumption that subsidy reductions would benefit developing countries, citing sugar as an example where Mauritius might lose its preferential market access to the EU if Brazil succeeds with is challenge against EU sugar subsidies.

The WCA countries’ proposal is likely to be put forwards at the next meeting of the Trade Negotiations Committee on 10 June and be discussed in more detail by the Committee of Agriculture during its 26-27 June and 1 July meetings. ICTSD, together with Oxfam and the IDEAS Centre, will be holding a panel entitled "Can Negotiations on Agriculture Deliver Pro-development Reforms? The Case of West African Cotton" on 17 June at the WTO’s Public Symposium in Geneva.

Additional Resources

"Cultivating Poverty: The impact of US cotton subsidies on Africa," Oxfam Briefing Paper, September 2002.

ICTSD reporting.