NEW DELHI: India, China and Argentina have warned that the ongoing negotiations for a global trade deal could be in trouble if the United States does not give a firm commitment to reduce its high cotton subsidies that harm poor farmers the worldover, especially in Africa.
“All three countries pointed out that if the cotton issue is not resolved, the ongoing round would not be concluded,” an official of the World Trade Organisation or the WTO official said.
The issue was discussed extensively at a agriculture committee meeting at the WTO.
The US had agreed in-principle to treat distortions in cotton trade, roughly estimated at $3 billion annually, “ambitiously, expeditiously and specifically”, at the Hong Kong meeting of trade ministers from WTO member countries in 2005.
It has now effectively reneged on the commitment saying that the issue of market access and tariff reduction in agriculture need to be settled first before it takes on commitment for reducing cotton subsidies.
The Cotton-4 group of African countries including Benin, Burkina Faso, Chad and Mali are leading the opposition to the US cotton subsidies.
These countries are most affected by the subsidy doled out by the US to its cotton growers, but India and China, too, have a lot at stake as they are the top cotton growers in the world.
“Although, India consumes most of the cotton that it grows, its domestic market gets affected by international prices which, in turn, affects farmers,” a government official said.
Interestingly, Brazil recently won a case against the US cotton subsidies at the WTO with the latter agreeing to set up a fund to compensate Brazilian farmers affected by the subsidy.
“We now want the US to spell out explicitly how it plans to reduce cotton subsidies under the WTO. The US had agreed at Hong Kong that it would reduce cotton subsidies at a higher and faster rate than other farm subsidies, and it has to respect its commitment,” the official said.
A study conducted by non-government research organisation Oxfam, with a complete removal of US cotton subsidies, the world price of cotton would increase by 6-14%, resulting in additional income that could feed an additional million children for a year or pay school fees for at least two million children living in extremely poor West African cotton growing households. “While we have not done specific research on Indian cotton farmers, they would also surely benefit from better world prices,” said Romain Benicchio, media and policy advisor, Oxfam International.
Another study commissioned by the ICTSD, an independent non-profit and non-governmental organisation, and carried out by Cornell university, points out that if African proposals that are included in the Doha draft were applied to trade flows over the ten-year period 1998-2007, US export would have dropped 16% while the average export volumes would have increased dramatically for Brazil and India by 12-14% and by a lower but still substantial amount in Uzbekistan, the ‘C-4’ West African cotton producing countries and Australia (2-2.5%).
