‘Cotton Four’ preparing new proposal on domestic support

Trade issues 

The so-called Cotton Four (Benin, Burkina Faso, Chad and Mali), sub-committee chairperson Crawford Falconer, and some other countries said work on domestic support will be urgently needed if members are to meet the 30 April deadline for “modalities” that was agreed in Hong Kong.

The Hong Kong Ministerial Declaration (background details below) says that a priority objective is for cuts in trade-distorting domestic support on cotton to be deeper and quicker than those agreed for agriculture as a whole, but does not spell out how much deeper or faster.

With agreement for developed countries to eliminate export subsidies on cotton by the end of this year (2006), the main task is to set up a way to monitor this, Benin said on behalf of the Cotton Four. The four also welcomed the decision to give duty-free and quota-free market access to cotton exports from least-developed countries into developed countries’ markets.

Most speakers paid tribute to the efforts key ministers put into the talks in the Hong Kong Ministerial Conference, and their flexibility, so that progress could be made. Some added that the decision still leaves a lot more work to do.

The EU said it had proposed duty-free and quota-free market access for cotton exports from all developing countries, not only the least-developed.

The US stressed that the commitment is definite for cotton products even though the more general duty- and quota-free decision (for all products) allows some exceptions for 3% of products for countries facing difficulties. Following the Hong Kong decision, the real work is on “modalities” for agriculture, the US said.

“Modalities” set detailed outlines — such as formulas or approaches for tariff reductions — for final commitments.

Development issues 

On development issues, the Secretariat reported that WTO Director-General Pascal Lamy is keen to step up his efforts as instructed by the Hong Kong decision, and has already started contacts with those concerned. His special adviser on the Doha Development Agenda will call another consultation meeting on 16 February, continuing the monitoring and exchange of information on development assistance programmes and projects affecting cotton-producing developing countries, particularly in Africa.

The Cotton Four stressed the need for continuing work on this because of the “devastating” effect of depressed incomes in the sector and supported the establishment of a “follow-up and monitoring mechanism” as agreed in Hong Kong.

Future work 

Chairperson Crawford Falconer said that negotiations on the trade side of cotton, like those in agriculture as a whole, will have to take place continuously and not only in scheduled formal meetings, if the 30 April deadline for “modalities” is to be met. He said talks will have to be almost continuous following the 13-17 February “agriculture week”.

Next meetings 

28 February

Background: the Hong Kong Ministerial Declaration on cotton 

The section on cotton refers to the original July-August 2004 mandate and the three key words “ambitious”, “expeditious” and “specific” that describe the treatment to be given to agriculture. In Hong Kong, ministers agreed that:

Export subsidies: All forms of these for cotton will be eliminated by developed countries in 2006.

Market access: Developed countries will give duty- and quota-free access for cotton exports from least-developed countries from the start of the period for implementing the agreed reform in agriculture. This period will depend on the outcome of the agriculture negotiations.

Domestic support: The objective is for trade distorting domestic subsidies for cotton production to be reduced more ambitiously than for agriculture as a whole, and for this to happen over a shorter period. This will therefore depend on the general formula agreed in the agriculture negotiations for cutting trade-distorting domestic supports, and the period of time negotiated. Ministers said they committed themselves to give priority in the negotiations to reach that outcome.

Development aspects: The consultations set up by the WTO director-general on this will continue and the ministers noted positive developments. The consultations include regular meetings in the WTO as well as the director-general’s own contacts with donor countries and institutions. Ministers urged him to intensify this, emphasizing “improved coherence, coordination and enhanced implementation”, and to explore with the institutions a mechanism to deal with income declines in the cotton sector until the end of subsidies.

They also urged the donor community to increase its assistance and called for South-South cooperation, including on technology transfer. They welcomed the African cotton producers’ efforts at domestic reform. The director-general is asked to continue to produce reports, and to set up “an appropriate follow-up and monitoring mechanism”.

Progress report: Paragraph 21 (on cotton) of Annex A (agriculture) contains chairperson Falconer’s assessment of the state of negotiations before Hong Kong.