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Global Cotton Subsidies Grow in Year

Increases run counter to Doha Round effort to curb trade barriers.

GENEVA — Global support to the cotton industry, including direct subsidies, border measures, crop insurance subsidies and minimum support price regimes, more than doubled in 2008-’09 to $5.9 billion compared with $2.7 billion in 2007-’08, with more than 50 percent provided by the U.S.

This story first appeared in the November 9, 2009 issue of WWD.  Subscribe Today.

Bernard Hoekman, World Bank director of international trade, told a forum of World Trade Organization diplomats and experts last week that total U.S. support to cotton production increased to $3.1 billion in 2008-09, up from $888 million in 2007-08, or an equivalent of 50 cents per pound of production.

Hoekman said the share of global cotton production receiving subsidies increased from an average of 55 percent during 1997-’98 to 2007-’08 to an estimated 84 percent in 2008-’09. He said removal of trade-distorting support measures in cotton “is a litmus test” for developing country cotton exporters on whether the troubled Doha Round trade talks can deliver benefits for some of the world’s poorest nations.

West African cotton producers Benin, Burkina Faso, Chad and Mali have been calling for the removal of these distorting measures in the talks since 2003. New World Bank analysis, he said, suggests that the global benefits from a Doha deal to lower trade barriers could be as large as $160 billion in income gains annually.