Bridges Weekly Trade News Digest • Volume 9 • Number 6 • 23rd February 2005

WTO Sub-Committee On Cotton Holds First Meeting

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The WTO Sub-committee on Cotton held its first meeting on 16 February. The gathering focused mainly on organisational issues relating to the future work of the sub-committee. Members highlighted the importance of cotton for their economies, and their desire to see speedy and substantial results from their work programme. Regarding the scope of the work, one Member suggested extending it to issues such as textiles trade. The sub-committee is chaired by Committee on Agriculture Chair Ambassador Tim Groser of New Zealand. At the first meeting, Groser warned Members that cotton was important enough to decide the fate of the Doha negotiations.

At the meeting, China effectively blocked a proposal from the International Cotton Advisory Committee (ICAC) to be an ad hoc observer in the meetings. The Chinese delegation argued that since their country was not a member of the ICAC, they would need to study ICAC’s work and consult with Beijing first. Egypt, however, supported the ICAC’s application, arguing that since WTO Members have still not agreed on observers in general, the sub-committee could follow the example of other committees by accepting ICAC as an ad hoc observer.

Members undecided about scope of work programme

The establishment of the sub-committee was mandated in the July Package (WT/L/579), which specified that its work "shall encompass all trade-distorting policies affecting the sector in all three pillars of market access, domestic support, and export competition," and that it would "meet periodically and report to the special session of the Committee on Agriculture to review progress."

Members agreed that the sub-committee’s work should focus on assessing progress in the agriculture negotiations. It should also provide regular updates on the cotton-related developmental implications of the talks, in order to support coherence between the trade and development aspects of cotton.

However, they could not agree on whether the sub-committee should address "other" subjects, including broader textile-related issues such as industrial market access and trade facilitation.

The US favoured a broader agenda, potentially covering progress in other areas of negotiations related to cotton such as industrial market access (because of textiles) and rules discussions on subsidies and trade remedies. The US suggested that the sub-committee could also study a range of trade-distorting policies affecting cotton, such as market access barriers, agricultural subsidies, and government policies that benefit synthetics.

The proposal by the US did not receive broad support from other Members, several of which opposed dealing with such subjects, arguing that the sub-committee was part of the agriculture negotiations, and should therefore remain focused on its mandate. These countries — which included Argentina, Brazil, China, Japan, Pakistan and Paraguay — were of the view that the main problems that needed to be addressed in the sub-committee were export subsidies and domestic support for cotton.

The West African proponents of the cotton initiative (Benin, Burkina Faso, and Chad), the African Group, and the least-developed countries, said they wanted to see the proposed work programme documented on paper.

Focus on cotton subsidies

Most Members who intervened highlighted the importance of tackling the cotton issue because of its impact on poor farmers, some recalling the July framework’s call to address the issue "ambitiously, expeditiously, and specifically."

China proposed that the sub-committee act quickly by declaring an immediate end to export subsidies on cotton, but did not receive any backing from other Members. The EU acknowledged that cotton growers in Spain and Greece received subsidies, but said they produced only two percent of the world total, and would produce even less as reforms reduced the level of agricultural support.

Chair Groser announced that he would distribute a draft work programme shortly, and would continue to consult with Members. The sub-committee remains on call, and could meet again soon if the consultations lead to agreement, possibly to adopt the work programme.

Background

WTO Members agreed on 19 November 2004 to establish a sub-committee under the Committee on Agriculture (CoA) special session dealing specifically with the issue of cotton, as mandated by the July Package. The cotton initiative was originally launched in 2003 by four West African countries in the run-up to the WTO Ministerial Conference in Cancun in September that year. It called for the phase-out of subsidies to developed country cotton producers and for a compensation mechanism to offset the income loss experienced by producers in least developed countries until the completion of the phase-out (for further information, see BRIDGES Weekly, 24 November 2004).

ICTSD reporting.