WTO Ministerial Section • Volume 9 • Number 40 • 23rd November 2005

West Africans, EU Make Proposals For Hong Kong Deal On Cotton

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At the 18 November meeting of the WTO Sub-Committee on Cotton, the EU and a group of four West African countries described plans for cutting subsidies and tariffs on cotton more quickly and deeply than other farm products, urging Members to adopt them at the Hong Kong Ministerial Conference in December. Notably, the EU offered to unilaterally implement its own proposal from 2006. A number of Members have been pushing for an agreement on cotton trade at the WTO’s Hong Kong summit, since they have largely given up hopes of striking a comprehensive deal on most aspects of the negotiations there.

Benin, Burkina Faso, Chad, and Mali, the prime advocates of the WTO’s special work programme on cotton, called for the elimination of cotton export subsidies by the end of 2005. They also called for trade-distorting domestic support to be eliminated by 1 January 2009 — 80 percent by the end of 2006, with the remaining cuts to be evenly divided between 2007 and 2008 — accompanied by rules prohibiting the reclassification of unauthorised subsidies as permitted ones. The four countries urged Members to agree to improved market access, with duty- and quota-free access to developed country markets for least-developed country (LDC) exports. They also called for the creation of an emergency fund to help governments cope with deficits resulting from the decline in the price of cotton, and other technical and financial assistance to develop the cotton sector in Africa. Notably, a 16 November declaration in N’Djamena, Chad signed by senior representatives from the four governments emphasised that they would be unable to sign on to a Hong Kong consensus that did not address these concerns.

The EU proposes that the Doha Round outcomes on cotton "will be more ambitious and farther reaching than those that will be achieved for the agriculture sector as a whole." Referring to the 2004 July Package (WT/L/579) mandate to address cotton "ambitiously, expeditiously, and specifically, within the agriculture negotiations," the EU’s informal paper indicated that it was prepared to eliminate all tariffs and quotas on cotton imports from all WTO Members as well as all cotton export subsidies, "from day one of the implementation period of the results of the round." With regard to domestic subsidies, the EU proclaimed its willingness to eliminate ‘Amber Box’ trade-distorting support and apply all new rules on ‘Blue Box’ support. Furthermore, it announced that it was ready to implement these commitments "on an autonomous basis" from 2006. The EU urged Members to agree at the Ministerial Conference to substantial reductions in tariffs and domestic support, as well as the elimination of export subsidies in a manner that is "fast-tracked and front-loaded in comparison with the implementation schedule applicable for other sectors covered by the agriculture negotiations."

During the meeting, the G-20 developing countries, Cuba, and the group of African WTO Members expressed support for the four West African countries’ proposal.

The US agreed that disciplines on cotton should go further than the overall results of the farm trade negotiations, but said that an ambitious agreement on agriculture was necessary for any package on cotton to have a significant effect. The US doles out far more in cotton subsidies to its farmers than the EU; Washington would thus likely to encounter far more political difficulty in eliminating them than Brussels. The EU, on the other hand, has been pushing for far smaller tariff cuts in the overall agriculture talks than the US.

Agriculture Chair Ambassador Crawford Falconer of New Zealand, who also heads up the Cotton Sub-Committee, mentioned cotton in the "least-developed countries" section of his report on the talks for the Trade Negotiations Committee. The report says that Members "remain at this point short of concrete and specific achievement" on cotton, with no agreement on the timeline or extent of other liberalisation commitments, as well as their relationship to the overall agriculture negotiations. During an informal agriculture meeting on 22 November, hours after the report was circulated to Members, the four West African countries said that the report should create a special section for cotton. Paraguay and Pakistan echoed this, pointing out that some non-LDCs also had an interest in the matter. Falconer, who will make some modifications to his text, said that he had taken their views into consideration.

ICTSD reporting.