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9TH WTO MINISTERIAL CONFERENCE, BALI, 2013

Briefing note: Cotton negotiations — commitment and regret in Bali

Ministers are expected to reaffirm their commitment to reform world cotton trade and to increase membersĺ work towards the reform, under a draft text prepared in the final weeks before the Bali Ministerial Conference.

Updated: 22 November 2013

THIS EXPLANATION is designed to help the public understand developments in the WTO. While every effort has been made to ensure the contents are accurate, it does not prejudice member governments’ positions.

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Ministers are expected to reaffirm their commitment to reform world cotton trade and to increase members’ work towards the reform, under a draft text prepared in the final weeks before the Bali Ministerial Conference.

The final outcomes of the reform have already been agreed, in some cases in broad terms, but when and how that would be achieved is still under negotiation and is linked to the talks on agriculture as a whole in the Doha Round.

The failure to reach agreement on a final outcome is regretted in the draft text. However, in it, ministers remain committed to the cause and agree that pursuing progress in cotton is important.

 

The latest draft

In 2005 members had already agreed that export subsidies on cotton would be eliminated, and that developed countries would allow cotton from least developed countries into their markets duty-free and without quotas.

They also agreed that domestic support for cotton of the types that distort trade (for example price support for farmers or income support linked to the amount they produce) would also be cut, by more than for other agricultural products and more quickly, but with the size of the cuts still to be negotiated.

The 2013 draft text for Bali reiterates members’ commitment to “on-going dialogue and engagement” to make progress in the negotiations on cotton according to the 2005 objectives, which were agreed at the Hong Kong Ministerial Conference. These objectives were repeated when ministers last met in 2011 in Geneva, including the commitment to make large (“ambitious”) reductions in subsidies and trade barriers, to deal with this quickly (“expeditiously”), and for these reforms to apply “specifically” to cotton.

It’s the failure to achieve those objectives that ministers in Bali are expected to say they regret. They are expected to agree to pursue those objectives, based on a number of decisions and on the work carried out so far related to the latest draft text in the agriculture negotiations (known as the 2008 draft “modalities”).

The draft text on cotton also says members will meet twice each year to study the latest information and to discuss the latest developments on market access, domestic support and export subsidies for cotton, particularly from least developed countries. These sessions will come under the agriculture negotiations.

Ministers are also expected to reaffirm the importance of development assistance in cotton, the dual track in the WTO’s work on the commodity. And they will also welcome growth and improved performance in the cotton sector, particularly in Africa.

Bali decision: here

Compromise on Cotton Four’s 2013 proposal

The draft text is a compromise. In late October, four sub-Saharan cotton producers submitted their latest proposal. With little time left before the Bali Ministerial Conference and a large amount of work in other subjects, the talks’ chairperson said members would have to work fast if an agreement is to be reached at the conference.

The “Cotton Four” — Benin, Burkina Faso, Chad and Mali — had proposed reforming cotton trade in two stages. In Bali ministers would agree to the following:

  • Market access: Cotton from least developed countries would be given duty-free and quota-free access to the markets of developed countries — and to those of developing countries declaring that they are able to do so — from 1 January 2015. Developing countries unable to do this immediately would seek ways to improve market access for exports from least developed countries.
  • Export subsidies: Any remaining export subsidies on cotton in developed countries would be eliminated immediately

After Bali (but with agreement in Bali to do this):

  • Domestic support for cotton would be negotiated intensively in 2014 in order to reach agreement by the end of the year on substantial reductions. Members have already agreed to cut distorting subsidies for cotton by more than the reductions on other agricultural products (paragraph 11 of the 2005 Hong Kong Ministerial Declaration), but have not agreed on how to achieve that. This is partly because members have not agreed on the domestic support cuts for agriculture as whole.

The proposal also envisaged strengthening development assistance for cotton (currently handled in meetings that are separate from the negotiations), including linking it with the broader Aid for Trade. And it seeks regular monitoring and other improved information on cotton.

The proposal was presented by Burkina Faso to the Trade Negotiations Committee (TNC) on 25 October 2013, also on behalf of Benin, Chad and Mali. It was also introduced in a meeting on development assistance for cotton on 30 October.

Discussions in November among members most closely involved in the issue produced the compromise draft text.

New Zealand Ambassador John Adank, who chairs the agriculture negotiations and cotton sub-committee, former Ambassador Steffen Smidt of Denmark, who chairs discussions on least developed countries (LDCs), worked with Director-General Roberto Azevêdo in the consultations.

 

Origins

The Cotton Initiative was originally raised both in the General Council and the agriculture negotiations by Benin, Burkina Faso, Chad and Mali. The proposal described the damage that the four believe has been caused to them by cotton subsidies in richer countries, called for the subsidies to be eliminated, and for compensation to be paid to the four while the subsidies remain, to cover economic losses caused by the subsidies.

The four first wrote to the then WTO Director-General, Supachai Panitchpakdi, on 30 April 2003, introducing a “Sectoral Initiative in Favour of Cotton”, which was presented on 10 June 2003 to the Trade Negotiations Committee by Burkina Faso President Blaise Compaoré.

In 2011, ministers included a section on cotton in the “Elements for political guidance“ issued at the Geneva Ministerial Conference in December 2011 (paragraph 4 under “Trade and Development”).

 

The draft text

coming soon

 

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