WTO members discussed the trade policies in the cotton sector that may have contributed to falling prices and shifting market shares, when they met on 26 and 27 November. African cotton-producing countries welcomed the increased disbursement of financial assistance and called for swift reforms in cotton trade policies.
Work on cotton in the WTO follows a two-track approach: discussions on trade-related aspects of cotton are part of the agriculture negotiations while development assistance is discussed separately. Discussion on the trade-related aspects are specifically mandated under a decision taken at the 2013 Bali Ministerial Conference to hold “dedicated discussions” twice a year to “enhance transparency and monitoring” of cotton trade policy.
Members discussed a background paper (TN/AG/GEN/34/Rev.3) on cotton subsidies and other trade policies, based on information provided by members. The paper highlights that only a few countries have used cotton export subsidies in recent years, although a number of countries continue to provide support to their domestic cotton sector. The paper also outlines market access for cotton exported by least-developed countries (LDCs).
Speaking for the “cotton four” countries — Burkina Faso, Benin, Chad and Mali — whose economies largely rely on cotton exports, Ambassador Thiam Diallo of Mali highlighted the importance of timely information on trade policies in the cotton sector and the need for up–to-date notifications by members. This was echoed by the Chair of the agriculture negotiations, Ambassador Vangelis Vitalis of New Zealand, and other participants.
The Chair updated members on the state of play in the agriculture negotiations. He noted that there is clear convergence among members that “cotton must be part of any outcome from the 10th Ministerial Conference — not least because of the expected benefits for least-developed country members”.
Amb. Vitalis briefed members on the latest progress on a draft text on cotton for ministers to consider at the Nairobi Ministerial Conference. He said that he intended to circulate shortly a first draft under his own responsibility, based on his consultations with members.
Members heard the latest market assessment on cotton by the International Cotton Advisory Committee (ICAC). The Executive Director of ICAC, Jose Sette, said that global cotton production had declined due to the fall in cotton prices in recent years. In 2015-16, cotton consumption would exceed production for the first time in five years. India overtook China as the leading producer in 2014-15. India is expected to produce 6.3 million tons of cotton this year, while China’s cotton production is likely to fall to 5.3 million tons.
Mr Sette noted that most cotton produced in China, India and Pakistan is processed and consumed domestically. The United States is by far the largest cotton exporter, with a market share of 32 per cent in 2014-15, but US production is expected to decline this year. The leading African cotton exporters — Burkina Faso, Mali, Cote d’Ivoire, Benin, Cameroon and Chad — have increased their exports compared with 2010-11.
In a separate meeting on 27 November, members heard an update on financial assistance provided to the cotton sector. Known formally as the “Director General’s Consultative Framework Mechanism on Cotton”, the meeting was chaired by Deputy Director-General David Shark, on behalf of Director-General Roberto Azevêdo.
“The cotton sector is of vital importance to our countries,” said Ambassador Thiam Diallo of Mali. The cotton four countries hope that members will be able to achieve a result on cotton at the Nairobi Ministerial Conference that would curb subsidies and open up the market for cotton exports from the poorest countries.
Members heard updates on financial assistance provided to the cotton sector. This information was summarized in an “evolving table”, which showed that there has been a significant reduction in the gap between commitments and disbursements regarding development assistance in the cotton sector. In his report on development assistance, DG Azevêdo notes: “Thanks to the active engagement and involvement of participants in this forum, new initiatives are being discussed aimed at reinforcing regional integration on cotton in Africa.”
The table shows that donors have committed a total of US$ 226 million in cotton-specific development assistance, and US$ 102 million of this total has been disbursed. The ratio of disbursements to commitments has improved considerably since the publication of the previous version of the table in June 2015.
The meeting heard that Australia, Canada, the European Union, Japan, Switzerland and the United States are among the donors that have provided assistance to the cotton sector in developing countries, in particular LDCs. Several developing countries — notably Brazil, China and India — have also supported the cotton sector in LDCs.
Brazil provided an update on its ongoing projects in Mali, Benin and Togo, highlighting that these have led to increased productivity for cotton and other crops as well as the elimination of cotton pests. China informed members about its technical assistance activities, which have helped to increase the yield and quality of cotton in African countries. China organized three workshops on cotton production technologies in 2015. In addition, it helped to develop infrastructure projects in Benin and Mali, facilitating the transportation of cotton.
“South-South cooperation on cotton has become the epitome of the collaborative spirit that has enabled us to forge and consolidate a strong and lasting partnership amongst WTO members and related multilateral and regional institutions,” said DDG Shark.
Source: World Trade Organization (WTO)