Cotton from LDCs will be given duty-free and quota-free access to the markets of developed countries
Global ministers have agreed a deal calling for cotton from least developed countries to be given duty-free and quota-free access to the markets of developed countries from January.
The ministerial decision, made at the annual World Trade Organization (WTO) meeting, this year held in Nairobi, stresses the vital importance of the cotton sector to least developed countries (LDCs). The decision includes three agriculture elements: market access; domestic support; and export competition.
On market access, the decision calls for cotton from LDCs to 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 2016. The domestic support part of the decision acknowledges members' reforms in their domestic cotton policies and stresses that more efforts remain to be made.
On export competition for cotton, the decision mandates that developed countries prohibit cotton export subsidies immediately and developing countries do so at a later date.
The agreement provides 2016 as the first date from which the poor countries, which include 35 LDCs and the cotton four countries in Africa – Burkina Faso, Benin, Chad and Mali – and other developing countries, can begin to export cotton duty-free.
The decision on cotton export subsidies was part of an overall agricultural commitment to eliminate subsidies for farm exports, which Director-General Roberto Azevêdo described as the "most significant outcome on agriculture" in the organisation's 20-year history. It was also the first such meeting hosted by an African nation.
"WTO members – especially developing countries – have consistently demanded action on this issue due to the enormous distorting potential of these subsidies for domestic production and trade," Azevêdo said. "Today's decision tackles the issue once and for all."
The Nairobi package also contains decisions of specific benefit to LDCs, including enhanced preferential rules of origin for LDCs and preferential treatment for LDC services providers. This builds on the 2013 Bali ministerial decision on preferential rules of origin for LDCs, which set out, for the first time, a set of multilaterally agreed guidelines to help make it easier for the country's exports to qualify for preferential market access.
The Nairobi agreement expands upon this by providing more detailed directions on specific issues such as methods for determining when a product qualifies as "made in an LDC", and when inputs from other sources can be "cumulated" – or combined together – into the consideration of origin. It calls on preference-granting members to consider allowing the use of non-originating materials up to 75% of the final value of the product.
The decision also calls on preference-granting members to consider simplifying documentary and procedural requirements related to origin.
Key beneficiaries will be sub-Saharan African countries, which make up the majority of the LDC group, the proponent for the agreement on preferential rules of origin for LDCs.
Other key outcomes of the conference included an expansion of the list of information and technology products for tariff reduction, and the accessions of Liberia and Afghanistan into the WTO.
Several ratifications for the Trade Facilitation Agreement (TFA) were also received at the meeting, from Myanmar and Norway, bringing up to 63 the number of WTO members that have formally accepted the TFA. Ratifications were also submitted this month by Vietnam, Brunei, Ukraine, and Zambia.
The agreement, which will only enter into force once it has been formally accepted by two-thirds of the WTO's 160 member countries, has the potential to increase global merchandise exports by up to US$1trn, a report published in October revealed, with developing countries set to reap significant benefits.
