Joint West and Central African proposal on cotton
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CTA. 2003. Joint West and Central African proposal on cotton. Agritrade, July 2003. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52459
In the context of the Doha Development Agenda objective of establishing ...
In the context of the Doha Development Agenda objective of establishing a fair and market-oriented trading system West and Central African (WCA) cotton-producing countries have submitted to the WTO a joint proposal for reform of the cotton market. The proposal calls for 'reforms to correct and prevent restrictions and distortions in world agricultural markets', particularly as this affects the cotton sector. It argues that in the cotton sector OECD subsidies have pushed down prices and export earnings of WCA countries by at least US $ 250 million, to the acute detriment of their cotton growers. The signatory countries called for: recognition of the strategic nature of cotton for development and poverty reduction in many LDCs; the extension of the concept of 'special products' - currently restricted to defensive measures - to the offensive interests of developing countries, in other words, where export of such products is essential for agricultural development or the survival of the rural population in LDCs, as is the case for cotton; explicit recognition of cotton as a 'special product' for development and poverty reduction in LDCs and hence extension of special treatment to cotton; a complete phasing out of support measures for the production and export of cotton; the complete phasing out of border controls; the establishment at Cancun of a mechanism for the phasing out of support for cotton production with a view to its total elimination; the provision of financial compensation to cotton producers in LDCs to offset income losses until such times as subsidies have been removed from the cotton sector. The submission provides background on the importance of cotton production in WCA countries and notes that WCA countries are the second largest cotton exporters after the USA and one of the lowest cost producers. The submission notes how much public aid to cotton production has grown in recent years. In July 2002, the International Cotton Advisory Committee (ICAC) indicated that 73% of global production of cotton required direct financial support from governments up from 50% five years earlier. The USA is seen as the worst offender, providing US$2.3 billion in support in 2001/2002, while the EU provided around US$700 million in the same year. For Spanish cotton producers support represents 180% of global prices and for Greek producers 160% of global prices, the highest level of subsidies in the world in the cotton sector. The submission argues that if American domestic subsidies were eliminated cotton prices would rise from US $ 0.12 per pound to US $ 0.22 per pound. If globally all subsidies were removed the price increase could reach US $ 0.33 per pound. Comment: This situation needs to be seen against the background of the dismantling of the STABEX Facility under the Cotonou Agreement and the singular failure of the new system which was intended to replace STABEX to effectively support the income of cotton and other basic commodity (e.g. coffee) dependent ACP countries. The dismantling of the STABEX scheme based as it was on the belief that the market would best serve these countries stands in stark contrast to the domestic support extended to cotton producers in the EU. Clearly in a number of the recommendations listed in this joint submission the EU could provide an important lead.