WTO-CANCUN: African Countries’ Cotton Initiative Arouses Interest

By IPS Correspondents Reprint | | Print |

Ramesh Jaura

CANCUN, Sep 9 2003 (IPS) - Four African countries: Benin, Burkina Faso, Chad and Mali have launched a joint ‘cotton initiative’ in the run-up to the World Trade Organisation’s ministerial meeting this week in Cancun.

Four African countries: Benin, Burkina Faso, Chad and Mali have launched a joint ‘cotton initiative’ in the run-up to the World Trade Organisation’s ministerial meeting this week in Cancun.

Adversely affected by a decline of some 39 percent in world cotton prices between 1997 and 2002, the four African countries are asking for removal of subsidies, particularly to cotton farmers in the U.S. that they view as a major threat to their economies.

Cotton is indeed crucial to the economic development, as well as to the livelihoods of some 10 million people in western and central Africa. Cotton accounts for up to 60 percent of export revenues and 10 percent of gross domestic products of the four African countries.

In the run-up to the ministerial meeting, Monday was in fact observed as the ‘World Cotton Day’, underlining that cotton is of paramount importance to the social infrastructure in Africa and to the maintenance of its rural areas.

A staunch supporter of the ‘cotton initiative’ is Germany’s minister for economic cooperation and development, Heidemarie Wieczorek-Zeul. She travelled all the way to the Mexican spa resort Monday to discuss with ministers from the four African countries ways of making the initiative a success.

In a panel discussion with Wieczorek-Zeul, attended by several government officials and representatives of non-governmental organisations, the ministers pointed out that cotton production was seriously threatened by agricultural subsidies granted by rich countries to their cotton producers.

Along with the World Bank, France, Switzerland and the Netherlands, the German government has provided considerable assistance to the four African countries in helping them become competitive on the world cotton market.

According to the International Cotton Advisory Committee (ICAC), cotton subsidies worldwide amounted to about 5.8 billion dollars in 2001-2002. This was nearly equal to the amount of cotton trade for this same period.

In the period from 2001 to 2002, some 25,000 cotton farmers in the U.S. received more in subsidies – some 3.7 billion dollars û than the entire economic output of Burkina Faso, where 2 million people depend on cotton.

This is pointed out in a joint article in the New York Times by Amadou Toimani Touré, president of Mali, and his counterpart from Burkins Faso, Blaise Compaoré, seeking to mobilise support for the ‘cotton initiative’.

"Further, U.S. subsidies are concentrated on only 10 percent of its cotton farmers. Thus, the payments to about 25,000 relatively well-off farmers has the unintended but nevertheless real effect of impoverishing some 10 million rural poor in west and central Africa," the two presidents write.

Along with Benin and Chad, the governments of Burkina Faso and Mali have submitted a proposal to the WTO that calls for an end to "unfair subsidies" granted by developed countries to their cotton producers.

As an interim measure, the four countries have also proposed that least developed countries be granted financial compensation for lost export revenues that are due to those subsidies.

European Union (EU) Trade Commissioner Pascal Lamy and Farm Commissioner Franz Fischler have expressed sympathy with the concerns of African countries about the low cotton prices, and their impact.

In a statement Monday, they however said: "The EU is a net importer of cotton. The EU has no export subsidies for cotton. The EU has no border protection. And therefore has little or no impact on world cotton prices."

The two commissioners argue that the EU applies a zero tariff on cotton imports from African, Caribbean and Pacific countries (ACPs) as well as from the world’s 49 poorest (least developed countries û LDCs).

The EU, they say, is the world’s largest importer of cotton. Between 20 and 80 percent of cotton exports from Mali, Benin, Burkina Faso and Chad reach the EU.

EU cotton production represents less than 3 percent of world production, whereas western and central Africa account for more than 5 percent.

Lamy and Fischler assure that EU domestic subsidies for European cotton growers are subject to a production ceiling. When the quantity is exceeded, the amount of the support is decreased.

The support provided by the EU is mostly destined for small cotton growers in rural areas in Greece and Spain.

The joint statement adds "With respect to the Doha Development Agenda, the EU fully subscribes to the principle that cotton problem should be an important part of the overall negotiations."

The EU has proposed that all developed countries give duty-free and quota-free access to the world’s poorest countries, following the European Union’s ‘Everything but Arms’ initiative, which bars transactions in weapons.

Informal conversations with EU and WTO representatives indicated that the four African countries’ demand for "financial compensation for lost export revenues that are due to (U.S.) subsidies" was unlikely to be accepted.