Cotton Subsidy Talks Suspended in Geneva

WTO trade talks on the effect of cotton subsidies on African nations were suspended after countries objected to a U.S. proposal for a broader scope.

GENEVA — The global trade talks on the role of cotton subsidies and their effect on poor African nations were suspended Wednesday after countries objected to a U.S. proposal to broaden the scope of the negotiations.

The U.S. had sought to expand the World Trade Organization’s cotton subcommittee’s agenda to encompass other textile-related issues, such as market access. That caused the poor African farming nations that have been pushing the cotton issue to pull out.

“We have to focus on cotton, the mandate is clear, and not focus on other things,” Samuel Amehou, Benin’s ambassador to the WTO, said in a phone interview.

Amehou pointed out that if the cotton talks are not fast-tracked, the problems of the poor West African exporters will be exacerbated. The African group and a number of other countries, including India, Egypt, Brazil, Pakistan, China and Japan, said the committee had agreed to discuss only agriculture issues and should remain focused on subsidies.

Since early 2003, Benin, along with Burkina Faso, Chad and Mali, have spearheaded calls for cotton subsidies to be eliminated. Those nations complain the U.S.’s payments to its farmers make it impossible for them to compete in one of the few international market segments in which they have a strong presence.

Differences over cotton subsidies contributed to the collapse of the WTO’s Cancún trade summit in September 2003. However, last July the WTO’s 148 members, as part of the framework accord that put the Doha round of talks back on track, agreed to deal with the cotton issue “ambitiously, expeditiously and specifically.”

The chairman of the subcommittee, Ambassador Tim Groser, of New Zealand, cautioned delegates that the entire Doha round would fail without a resolution on cotton.

Groser said in excess of 100 million farmers in more than 80 poor countries produce cotton. He added that the subcommittee remains on call and could meet again within days should his consultations lead to an agreement on the work program.

“It appears the U.S. idea will not fly,” said a senior Asian trade diplomat, who spoke on the condition of anonymity.

Ambassador Amina Mohamed of Kenya, the new chairwoman of the WTO’s ruling General Council, said on Wednesday that the sectoral initiative on cotton is seen by Africa and other poor regions as a “key” test of the development responsiveness of the WTO.

This story first appeared in the February 18, 2005 issue of WWD.  Subscribe Today.

“If they can’t agree, it’s not a good omen for the cotton negotiations,” said Amy Barry, trade specialist with the advocacy group Oxfam International.

Peter Allgeier, deputy U.S. trade representative, said the U.S. is trying to address many of the cotton-related development issues facing poor African nations “through our own bilateral programs and through multinational institutions.”

A report by the Rome-based Food & Agriculture Organization on agricultural commodity markets said eliminating all cotton subsidies would increase worldwide cotton prices 5 to 11 percent and “would prompt an expansion in African exports of at least 9 percent and possibly as much as 38 percent.”

But Alexander Sarris, the FAO’s director of commodities and trade, said if the U.S. and European Union dropped their subsidies, the countries that would see the greatest increase in exports would be those with more advanced developing economies, such as Brazil, Pakistan, India and Uzbekistan. He said poor West African countries such as Benin would also benefit, but “not as much.”

Separately, Allgeier addressed a call by a bipartisan group of U.S. lawmakers to repeal China’s permanent normal trade relations status. He said taking away PNTR for China would disrupt U.S. efforts to deal with problems related to Chinese trade through the World Trade Organization.

“We think that the best way actually to deal with any country is within the system of rules and dispute settlement and nondiscrimination that we have here in the WTO,” he said.

Taking away China’s trade status would disrupt dealings at the global trade forum.

“We just don’t think that’s the most productive way to go forward,” Allgeier added.