Africa’s leading cotton-producing countries — Benin, Burkina Faso, Mali and Chad — are upset over Washington’s continued failure to implement the commitments it undertook at the World Trade Organisation’s (WTO) Hong Kong ministerial meeting in 2005 to address the distortions caused by the United States subsidies in the global cotton trade.
As the WTO hosts a “high-level” session on cotton on March 15 and 16 “to seek coherence on developmental aspects and trade policy issues of cotton”, the four West African countries are expected to issue a strong message that they want an immediate solution to all trade-related aspects, such as the elimination of all forms of export subsidies for cotton in the US.
“The US must implement its commitment to eliminate export subsidies for cotton that was agreed in the Hong Kong ministerial meeting,” said ambassador Samuel Amehou, Benin’s trade envoy to the WTO.
Ahead of the high-level meeting, he said: “We want to push them to honour their commitments, including the implementation of the WTO’s dispute-settlement body recommendations that comprehensively condemned the US cotton subsidies.”
He said “this is the minimum that Washington can do to alleviate the worsening conditions of the cotton farmers in Africa”.
Promises on paper
The US had agreed at the Hong Kong ministerial meeting to eliminate all export subsidies for cotton as well as expeditiously reduce its trade-distorting domestic subsidies amounting to a couple of billions of dollars. Washington had also agreed to provide duty-free and quota-free market access to all least-developed countries in 2006.
But with the failure of Doha trade negotiations last July, many of these promises remained only on paper while the conditions of farmers in the four countries rapidly worsened due to falling international prices.
During an informal ministerial meeting in Davos in January this year, Benin’s Trade Minister, Issifou Soumanou Moudjaidou, told his counterparts from more than two dozen countries that he was “wearing black as a protest for doing nothing to address the continuing cotton subsidies provided by the US government that are claiming hundreds of deaths of poor farmers in my country”.
The US, on the other hand, maintained that it is ready to provide enhanced developmental assistance to the C4 countries, as Benin, Burkina Faso, Mali and Chad are called in trade jargon. US trade representative ambassador Susan Schwab told representatives of the four countries during her visit to Geneva early this month that addressing the developmental aspects of the C4 countries is as important as dealing with the trade-related aspects of the problem.
But Benin and other African cotton producers are not convinced by the US reasoning that developmental assistance take priority over trade-related aspects. Amehou said the WTO meeting will address both issues — developmental assistance as well as trade-policy aspects — but what is important at this juncture is that the US should address its subsidies as they are at the core of the current impasse in the Doha trade negotiations.
Subsidy removal
In 2005, the WTO’s highest legal limb — the Appellate Body — had ruled unambiguously that a combination of domestic and export subsidies provided by the US in cotton had contributed to major distortions in the global trade. It had asked the US to remove these subsidies in order to comply with its WTO commitments.
The US Congress had removed some export-related programmes for cotton, but retained other domestic subsidies for the same product.
Brazil, which won the dispute against the US on cotton subsidies, recently challenged Washington to prove that it had fully implemented the recommendations of the dispute-settlement body. Brazil’s latest challenge is being current adjudicated by a specially convened compliance panel at the WTO.
In the Doha trade negotiations, which are unable to make quick progress, the US had adopted a hard-line stance on its domestic subsidies. President George Bush told journalists at a press conference in São Paulo in Brazil last week that the US is committed to reducing its subsidies but, in return, other members must open their markets for US farm products.
The US had announced that it would bring down its overall subsidies provided the European Union, Japan, Switzerland and other countries in the industrialised world, and China, India and Indonesia in the developing world, reduce barriers for US farm products.
After 10 years of reduction commitments, the US wants its key partners to agree to more than $22-billion for it to spend on its farm subsidies — notwithstanding the fact that its farm payments last year were little more than $11-billion because of high international prices (except in cotton).
Obligations
In fact, the US has not complied with its obligations to the WTO that require a member to inform year after year how much it had spent on different subsidy programmes. Since 2001, the US has not complied with this requirement, which speaks volumes about the “transparent” record of the US positions, said a trade diplomat.
At present, hectic efforts are under way among what are called the G4 — the US, the European Union, Brazil and India — to address contentious issues in the Doha agriculture package in order to arrive at a landing zone in the Doha trade talks.
The talks, which are held in a “merry-go-round” bilateral format, are focused on what ought to be the figure that the US must agree to for its overall trade-distorting support as well as the accompanying disciplines to ensure that subsidy programmes are not shuffled from one product to the other.
Although the four sides have not reached any agreement, it is becoming likely that the US might agree to about $15-billion farm subsidies with more focused disciplines unlike in the past, said a farm trade negotiator who took part in the parleys. During meetings in London and Geneva over the past fortnight, the four countries made “progress”, but they are nowhere near a breakthrough, he said.
Under the Doha mandate, which was further amplified by the July 2004 framework agreement and the Hong Kong ministerial declaration in 2005, all major farm-subsidising industrialised countries such as the EU, Japan, the US, Norway and Switzerland are required to cut down their farm subsidies drastically.
“The first major effort to address farm subsidies was undertaken during the previous Uruguay round of negotiations that led to the establishment of the WTO, but industrialised countries, especially the US and the EU, ensured that their core farm-subsidy programmes were retained through exceptions,” said Sam Laird, former head of the trade analysis division at the UN Conference on Trade and Development.
“All efforts must be made to ensure that there is significant reduction in farm subsidies as well as stringent disciplines to ensure that there is no box-shifting and product-shifting in the Doha round,” he said. — IPS