[Debate] African Countries Welcome Cotton Aid, But Exploring WTO Legal Options
Riaz K Tayob
riaz.tayob at gmail.com
Wed Jan 4 09:28:16 GMT 2012
*/Inside U/**/./**/S/**/. /**/Trade /*
*December 23, 2011 21*
* African Countries Welcome Cotton Aid, But Exploring WTO Legal Options
GENEVA --- Representatives from the "Cotton 4" group of West African
cotton-producing nations last week welcomed
offers of new development assistance from the United States, European
Union and China, but expressed their
continued frustration that trade negotiations on the cotton issue remain
stalled in the World Trade Organization.
At a Dec. 16 press conference, Chadian Minister of Commerce and Industry
Mahamat Allahou Taher said the C-
4 group prefers to secure reduced U.S. cotton subsidies through the Doha
round, but would not rule out the possibility
of pursuing formal dispute settlement against countries such as the U.S.
that maintain trade-distorting cotton
"The C-4 remains confident in the mutilateral trading system, and
privileges above all a negotiated solution, without
all the while excluding the possibility of using the legal options it
has available to it within the WTO, in the case where no
solution in favor of cotton is to be found," he said through a translator.
A legal solution may become more attractive given that "certain members
may continue to send negative signals in
the negotiations at the WTO in 2012," he added, in apparent reference to
the fact that many WTO members do not
believe that the Doha round can make any substantive progress next year.
The level of frustration among C-4 countries --- Chad, Burkina Faso,
Benin and Mali --- has reached the point
that their ambassadors in Geneva are conducting a formal review of
dispute settlement options and of the successful
Brazilian challenge of U.S. cotton subsidies in the WTO, according to
Prosper Vokouma, Burkina Faso's ambassador
to the WTO.
Geneva ambassadors of the C-4 countries held three workshops this year
on the workings of the dispute settlement
body, and are preparing a "complete file that we will transmit to our
ministers, and we will see what path it is we will
follow," Vokouma said at the press conference, also speaking through a
"We have examined the Brazil cotton case against the United States,
we've studied the decision, we've asked for a
legal opinion on the decision and we have studied in detail the whole
aspect of cotton," he said. "It is something we will
be sending on to our capitals, giving them our views on the path to follow."
Vokouma emphasized that that if the C-4 were to pursue a dispute
settlement case, it would aim to have all 36
24 INSIDE U.S. TRADE - www.InsideTrade.com - December 23, 2011
African cotton-producing countries on board. "We would hope for it to be
a class action suit," he said. Vokouma said the
C-4 countries did not have any specific timeline in mind for deciding
whether to mount a legal challenge.
But one observer favoring the C-4 cause downplayed the likelihood of a
dispute settlement case at this point, noting
that high global cotton prices over the past three years would make it
difficult for African countries to show U.S. subsidies
had caused an adverse effect on their cotton industries.
By contrast, this source argued, the Brazil case benefited from a
"reference period" during which world cotton prices
were lower, making it easier to show U.S. cotton subsidies had adverse
effects on Brazilian producers. U.S. cotton policy
gives domestic producers greater subsidies when prices are lower.
At the press conference, Vokouma said the C-4 countries welcomed several
steps on cotton announced by the
Office of the U.S. Trade Representative prior to the ministerial
conference, which USTR Ron Kirk conveyed to them in a
Dec. 16 meeting requested by the United States. Vokouma said the U.S.
offer represented a "change in the atmosphere in
the discussions we've had with them," but that the C-4 countries still
wanted to know more details.
The steps announced include a new cotton-related assistance program for
the C-4 group that will be introduced when
the existing West Africa Cotton Improvement Program (WACIP) --- a trade
capacity building program for these countries
--- expires in April 2012.
USTR also committed to launch a review process on whether cotton fiber
exported by least-developed countries
(LDCs) to the United States should be eligible for duty-free entry under
the Generalized System of Preferences (GSP); to
seek legislation to allow such exports to enter independent of an
existing U.S. cotton tariff-rate quota; and to push for
passage of legislation to extend the third-country fabric provision in
the African Growth and Opportunity Act (AGOA) by
three years to 2015.
But C-4 officials made clear during their meeting with Kirk that they
want the United States to move not only on the
technical assistance front, but also on removing the cotton subsidies
that have been at the heart of stalled Doha round
negotiations on cotton.
"So we greeted the offer that they made to us, and we reminded to them
that we hope that with the review of the U.S.
farm bill" the United States would change its cotton subsidies to comply
with WTO rules and the mandate on cotton
agreed to by WTO members at the Hong Kong ministerial, Vokouma said.
That included a pledge to ambitiously reduce trade-distorting domestic
subsidies for cotton beyond what is agreed to
for agricultural products in general and in a shorter period of time
than generally applicable, and to offer duty-free, quotafree
market access to least-developed countries (LDCs).
Vokouma said C-4 countries would have to look more closely at the
proposed market access concessions offered by
the United States in order to determine whether they would provide a
substantial benefit. He noted that Burkina Faso
currently exports about 90 percent of its cotton to Asia and only 2
percent to the United States, signaling that an ultimate
U.S. decision to offer duty-free quota-free access for LDCs would have
little impact unless C-4 countries drastically
reoriented their trade flows.
"It may represent an important possibility to us," he said. "We could
ask our ministers to reorient our trade circuits,"
he added, but first the C-4 countries would want to know whether the
proposed market access will only impact raw cotton
or whether it would more broadly cover cotton fabric, woven cotton and
If that were the case, these countries could potentially change their
cotton sectors to focus on more value-added
products, as opposed to relying mainly on raw cotton exports as they
currently do, Vokouma said.
During Kirk's Dec. 16 meeting with C-4 officials, Taher thanked the
United States for its ongoing cotton assistance
and also for the new initiatives, which the Chadian minister said would
have a very important impact on African farmers
once implemented, according to USTR.
Kirk and C-4 officials "reaffirmed their mutual commitment to working
for positive outcomes on cotton at the WTO,
and noted recent successful collaboration" on cotton language included
in the consensus statement issued as part of the
ministerial conference, USTR said in a Dec. 17 statement.
In that language, WTO ministers confirmed their commitment to addressing
the mandate of the Hong Kong Ministerial
Declaration to address cotton "ambitiously, expeditiously and
specifically" within the agriculture negotiations. They
also highlighted the value of ongoing steps being taken by the WTO
Director-General to advance "developmental
assistance aspects of cotton."
During the ministerial, China presented C-4 countries with a three-year
technical assistance package covering areas
such as production, capacity building, technology transfer and supply of
inputs including pesticides and farming equipment,
according to Vokouma. The EU also offered a new technical assistance
package during the ministerial, an EU
In a Dec. 16 statement, C-4 countries thanked the donor community for
its engagement on the development assistance
aspects of the cotton issue, but asked that "the gap between the
commitments made to date and actual disbursements
be closed as soon as possible."
The C-4 statement also called for immediate resumption of cotton
negotiations in the WTO in the wake of the
ministerial conference, and warned that the recent decline in world
cotton prices could prompt "rich countries" to again
resort to subsidizing their cotton producers.
Finally, the C-4 countries called on the United States and EU to consult
with WTO members on what their governments
are recommending to legislators regarding cotton subsidies as they craft
the new U.S. farm bill and the reformed
EU Common Agriculture Policy.
The USTR steps on cotton fall far short of an LDC package that WTO
Director-General Pascal Lamy sought
to develop for the ministerial earlier this year. That package would
have included early implementation of a long-standing
commitment to provide duty-free quota-free access for 97 percent of LDC
exports or a "step forward" on reducing U.S.
cotton subsidies (Inside U.S. Trade, July 29).
In the press conference, Taher said the U.S. was the only country that
opposed a C-4 proposal tabled in November
for a ministerial conference outcome on cotton. Among other things, the
C-4 proposal called for ministers to agree to
freeze at current levels their countries' domestic support for cotton,
but members were not able to reach consensus on this
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