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TRADE: “Cotton Dossier” Will Make or Break WTO’s Doha Round

Ravi Kanth Devarakonda

GENEVA, Jun 9 2010 (IPS) - The “cotton dossier” has become a litmus test for the “development dimension” of the languishing Doha Round trade negotiations, World Trade Organisation (WTO) director general Pascal Lamy admitted.

This admission came in a fax sent to trade envoys ahead of the consultative mechanism meeting on cotton on Jun 7 at the WTO headquarters in Geneva. His message encouraged envoys to work towards the successful conclusion of the Doha Round.

The “cotton dossier” refers to the trade-distorting cotton subsidies provided by rich countries, particularly the U.S., that are wreaking havoc in the cotton trade of the West African cotton-producing countries Benin, Burkina Faso, Mali and Chad (the so-called Cotton Four, or C-4).

The dossier also includes development assistance for these countries’ impoverished cotton-growing farmers.

The Jun 7 meeting, held behind closed doors, was apparently convened for some countries to convey the message that cotton development assistance is moving apace but African states still insisted that solutions are required for the problems besetting the cotton trade.

“While we appreciate the provision of technical assistance and capacity building by developed and developing countries, the continued subsidies to cotton farmers and exporters in rich countries are causing irreparable harm to African farmers,” Tanzania’s Matern Yakobo Christian Lumbanga told IPS.

Although the cotton issue, raised by African countries at the WTO ministerial meeting in Cancun in 2003, has been accorded priority status on the Doha agenda, it has nearly disappeared from the Doha radar screen — except for some progress on the cotton development assistance front.

The WTO framework agreement of July 2004 and the Hong Kong ministerial declaration of 2005 mandated WTO members to address cotton trade “ambitiously, expeditiously and specifically within the agriculture negotiations in relation to all trade-distorting policies in all three pillars of market access, domestic support and export competition”.

The mandate required developed countries to eliminate all forms of export subsidies in 2006; provide duty-free and quota-free access for cotton exports from least developed countries (LDCs); and agree to substantial cuts in their trade-distorting domestic subsidies.

“To this day, we remain far from reaching these fixed objectives. The current pace of the negotiations makes people pessimistic about the imminent conclusion of the Doha Round,” Burkina Faso’s trade minister Léonce Koné said in his address to the other WTO members at the Jun 7 meeting.

“How can we address the worries of the millions of our cotton growers and stop their financial haemorrhage which is happening because of the subsidies (of rich countries)?” he asked.

Despite the C-4’s concerted campaign an impasse has been reached, largely due to the stand adopted by the world’s largest cotton subsidiser, the U.S.. Washington is yet to offer a counter-proposal to what was suggested by the former chair of the Doha agriculture negotiations, New Zealand’s Crawford Falconer.

In the last draft text, Falconer suggested a formula to cut trade-distorting domestic subsidies in cotton. According to this formula, the U.S. would have to shrink its nearly two billion dollar cotton subsidy, given to some 2,500 farmers, by more than 75 percent.

The U.S. promised that it would submit a counter-proposal to indicate what ought to be the magnitude of the subsidy reduction commitment in cotton. Except for the U.S., almost all other members of the WTO have tentatively agreed to Falconer’s proposal.

Subsequently, Falconer held a series of meetings with the U.S., the European Union, Brazil and the C-4 to hammer out a deal. However, his consultations failed to yield significant results.

David Walker, the current chair of the agriculture negotiations and Falconer’s replacement from New Zealand, started his term last year with cotton as the priority issue. He informed members that he had received a proposal from the C-4 and suggested that it was not acceptable to some countries whose names he did not mention.

“The main stumbling block to resolving the cotton issue is the U.S., which is neither ready to accept compromise proposals nor to table its alternative offer,” said a trade envoy from a developing country who asked not to be identified due to the sensitivity of the issue.

IPS learnt reliably that, during the Jun 7 meeting, Walker candidly admitted that there has been no progress on the cotton issue and that his consultations have brought about no change. He expressed disappointment over the continued impasse.

Privately, trade negotiators familiar with the Doha agriculture negotiations have maintained that the cotton issue has been pushed to the backburner when compared to other issues.

African countries are aware that there will be no solution to the cotton dilemma as long as the U.S. sticks to its inflexible position, backed by its powerful domestic cotton farming lobby.

Despite being a party to the 2004 framework agreement and the 2005 Hong Kong ministerial declaration, the U.S. has maintained that the solution to cotton depends on progress in all areas of the Doha agriculture negotiations. This stand amounts to the U.S. turning its back on the Doha cotton mandate, some trade diplomats say.

But the C-4 has a supporter in Dr Supachai Panitchpakdi, secretary general of the United Nations Conference on Trade and Development (UNCTAD): “Cotton is the single most important issue for least developed countries in Africa,” he told IPS.

“African countries’ request for an early agreement on cotton in the Doha Round is reasonable because it is a livelihood issue.”