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G. Srinivasan

Cancun , Sept. 14

THE ongoing Fifth Ministerial Conference of the WTO saw sectoral initiative by four West and Central African (WCA) countries to address rich country subsidies that distort global cotton prices and negatively affect the livelihood of millions of farmers taking off in a positive manner.

With the WTO Director General, Dr Supachai Panitchpakdi, acting as facilitator for the talks, Benin, Mali, Chad and Burkina Faso proposed to eliminate cotton subsidies worldwide in order to ensure the survival and development of the cotton sector in WCA countries, where cotton accounts for up to 80 per cent of export earnings. Massive cotton subsidies in rich countries, especially the US, have led to an artificial spurt in supplies on global markets and a decline in export prices. The development impact on small farmers losing their market shares has been inexorable.

Interestingly, both Canada and Australia strongly backed the initiative, noting the damaging and ill effects of agricultural subsidies in general and of cotton in particular.

Argentina demanded its plea with Brazil for a WTO dispute settlement panel on US cotton subsidies must be acted upon. The Argentine delegate said adopting a decision on the initiative would provide the kick off point for the development round. South Africa too stressed the wide and systemic relevance of the issue, noting that similar problems applied for other products, such as sugar.

Bangladesh highlighted the urgency of addressing the problem, stating that agriculture provides the backbone of the economies of the least developed countries.

India hailed the proposal, noting that sugar, dairy and oilseeds sectors also confront similar problems and noted addressing cotton subsidies as a crucial first step.

However, in the interaction with facilitator, members differed on the scope and ambition of a solution to this fundamental problem plaguing the WCA countries.

In presenting the EU approach, the Trade Commissioner, Mr Pascal Lamy, said WTO members should eliminate trade-distorting domestic support, eliminate export subsidies and offer duty and quota-free market access for all cotton products from LDCs. But the EU approach did not extend to the demand by WCA countries for a transitional mechanism to compensate WCA until subsidies had been fully phased out.

The US Ambassador, Ms Josette Sheeran Shiner, said maintained that only a comprehensive initiative that tackles trade barriers and trade distorting practices along the manufacturing chain stretching from fibre to textile to clothing could improve economic prospects for farmers in Africa and elsewhere by opening export opportunities and growing local and regional markets. It was further stated that 84% of cotton products sold in the US are imported.

US consumers account for 22 per cent of all cotton textile purchases worldwide.

US cotton consumption rose 70 per cent between 1990 and 2002, while during much of this period demand was declining in the rest of the world.

Without US expansion in demand, various estimates say that cotton prices would be depressed by 11-17 per cent of the long-term average price.

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