top

African countries unhappy over lack of progress on cotton
Kanaga Raja

African countries have expressed strong dissatisfaction over what they viewed as a lack of progress on the cotton issue.

At the fifth meeting of the Cotton Sub-Committee, which reports to the Special Session of the Agriculture Committee, Benin, supported by Mali, Chad, Zimbabwe and Cote d'Ivoire, complained strongly about the lack of progress and the failure of other countries to respond to the African Group's paper on "Proposed Elements of Modalities in Connection with the Sectoral Initiative in Favour of Cotton, 22 April 2005" (TN/AG/SCC/GEN/2).

"We have not made any progress. There has been no advance," Benin said, adding that at the same time, prices of cotton are falling and the situation among farmers is
deteriorating.

While praising Chairperson Tim Groser's determination to achieve results in cotton, Benin said that it did not share Groser's analysis that in order to achieve those results, there would have to be results in the agriculture negotiations as a whole.

The African countries cautioned that 33 African countries that produce cotton will not allow the issue to be sidelined at the Hong Kong Ministerial Conference in December.

They said that they were looking for concrete progress beyond what was agreed in the 1 August 2004 General Council decision.

"We're not asking for the impossible," Mali said, stressing that the African countries are not trying to move the cotton issue so fast that it is "out of synch" with the agriculture negotiations.

The African Group's paper contains proposals on all three "pillars" of the agriculture negotiations, which the Group said are in line with the August 2004 framework decision and are intended to speed up the negotiations.

The Group wanted a decision on cotton by July 2005, when Groser had first aimed to produce a 'first approximation' of the modalities in agriculture.

The African Group proposed the following elements of modalities under the three pillars of the negotiations on agriculture:

* Market access for international trade in cotton shall be improved. The LDC cotton
producers and net exporters shall enjoy bound duty-free and quota-free access for
cotton and its by-products.

* Domestic support measures that distort international trade in cotton shall be
eliminated by 21 September 2005 at the latest. African countries explained at the
meeting Monday that this relates to the dates in the cotton dispute. The panel and
Appellate Body ruling in the dispute (DS267) was adopted by the Dispute Settlement Body on 24 March 2005.

Specific disciplines shall be developed to prevent box-shifting of domestic support. Ambitious cotton-specific criteria shall be developed for the measures authorized under the green and blue boxes.

* All forms of cotton export subsidies shall be eliminated by 1 July 2005 at the latest.

Other proposals include an emergency support fund, amounting to 20% of the highest value of cotton production in the last three years in each country concerned, to "contain the serious socio-economic consequences for the farming communities" of loss of revenue. The fund will be managed by representatives of donors, producers and governments. The amount would decrease proportionately as subsidies and supports are eliminated.

According to trade officials, in response to the comments made by the African countries, the EU rejected the complaint that it had not responded to the African Group proposal. It said that it had made a formal proposal to 'front load' (i.e. act quicker on) those parts of an agriculture deal that would apply to cotton.

The EU added that the "front loading" that it proposed could include binding cotton tariffs at zero, eliminating export subsidies and substantially reducing distorting domestic supports, right from the first day that the results of the current negotiations
are implemented. The EU also said that countries can act autonomously before making any commitments in the negotiations.

The US outlined the actions that it was taking to comply with the ruling in the cotton dispute. These, it said, include administrative changes to three agricultural export credit guarantee programmes (GSM-102 and 103, and the Supplier Credit Guarantee Programme - SCGP), and proposed legislation to alter these programmes and the "Step 2" cotton programme.

Brazil said that these are positive moves but added that it is watching developments and hopes that the US Congress will deliver the legislation.

Groser described all these comments as important, but stressed that progress is needed in the agriculture negotiations.

The meeting also heard a Secretariat report on an earlier consultation on the development side of the issue, i.e. development assistance provided by donor
countries and international organizations.

Groser concluded that it is clear that the cotton initiative is starting to see action, even though it is slow.

The next meeting of the Cotton Sub-Committee is scheduled for 30 September.

This is an abridged version of the story that first appeared in the SUNS 6854 and is hereby reproduced with their kind permission

top__________________________________

Africa should refuse talks: UN
Tom Maliti

The United Nations' top poverty adviser said on Monday that African countries should refuse to begin negotiations on a new round of world trade talks if rich nations do not cut farm subsidies and tariffs, as they agreed.

Meetings have been taking place this year in different countries to resolve difference between negotiators before the World Trade Organization summit in December in Hong Kong.

Trade officials have warned, however, that huge efforts are needed to reach agreements on tariff and agricultural-subsidy reductions before then.

Jeffrey Sachs, a top economic adviser to U.N. Secretary General Kofi Annan, said that existing tariffs meant cocoa-producing countries such as Ghana were unable to export chocolate to Europe and had to remain exporters of cocoa, used in making chocolate. European tariffs on raw materials are lower than tariffs on final product.

He said that it was a similar case with cotton, an industry in which, for example, the United States spends $3 billion in annual subsidies to 26,000 cotton farmers.

"These farmers are averaging something like $140,000 per farmer of subsidies per year. They are growing subsidies, they are not growing cotton," Sachs told journalists.

"One of the things that needs to be done is for Africa to say 'we're not signing on to another trade round if you don't get this right,'" he said. "That's why the (WTO) meetings in Mexico stopped, because cotton subsidies played such a large part, and I think everyone has heard this now, that there needs to be a trading system that is decent and fair to agricultural production here (in Africa)."

Poor nations say subsidies in rich nations cause artificially low international prices and hurt farmers in developing countries because rich country producers are able to "dump" their cheap cotton on the world
market.

The current round of treaty talks launched in Doha, Qatar, in 2001 aims to slash subsidies, tariffs and other barriers to global commerce, and to use trade to help poor nations. The original plan was to conclude a new global trade treaty by the end of 2004, but a WTO conference in 2003 collapsed amid disagreements over agriculture and investment rules.

The WTO now hopes that an agreement at the Hong Kong conference will lead to a final treaty in 2006 or early 2007.

Sachs said that U.S. cotton farmers were subsidized because of their political muscle, not because anyone deliberately wanted to hurt African farmers.

"These are politically powerful interests in United States. They are not out to wreck Africa. That's the side effect," he said. "The core effect is politics, and these subsidies are illegal from the World Trade
Organization point of view."

In March, the WTO upheld a ruling condemning government help for cotton producers in the United States, saying that many U.S. programs included illegal export subsidies or domestic payments that were higher than the commerce body's rules allow.

The U.S. government is proposing to repeal a federal cotton subsidy in an effort to comply with the WTO ruling. The legislation would eliminate the government's cotton-marketing program, called Step-2, which makes payments to exporters and domestic mill users to compensate them for buying higher-priced U.S. cotton.

The United States has already altered three export credit guarantee programs to comply with the ruling. The alterations were intended to satisfy the WTO's finding against the guarantees, which help U.S. growers sell commodities by making financing available to foreign customers.

Tom Maliti, Washington Post, 19 July 2005
top__________________________________

Brazil seeks authorization to retaliate against US over cotton
Kanaga Raja

The WTO Dispute Settlement Body (DSB) held a meeting in July where Brazil requested authorization to take appropriate
countermeasures in the form of suspension of concessions and other obligations to the
tune of some $3 billion with respect to prohibited export subsidies provided by the US to its cotton producers and exporters.

The request by Brazil was made pursuant to Article 4.10 of the Subsidies and Countervailing Measures (SCM) Agreement and Article 22.2 of the Dispute Settlement Understanding.

The US informed the DSB that it was objecting to the appropriateness of the countermeasures and the level of suspension of concessions and other obligations proposed by Brazil.

Pursuant to Article 22.6 of the DSU, this was automatically referred to arbitration. However, both parties, in a communication to the DSB, said that they had reached an agreement to request the arbitrator to suspend its work.

Brazil and the US said that both parties had also agreed that at any moment after the DSB meeting of 15 July 2005, Brazil was entitled to request the establishment of a panel pursuant to Article 21.5 of the DSU (a compliance panel), and that the US would accept the establishment of that panel when it appears as an agenda item of the DSB.

The dispute between the US and Brazil was over certain subsidies provided by the US to its cotton producers and exporters.

The Appellate Body (AB) handed down a ruling on 3 March upholding most of the panel's findings that said that the US was providing subsidies to its cotton producers and exporters in violation of the SCM Agreement.

The AB upheld the panel's view that US programmes such as production flexibility contract payments and direct payments are not 'Green Box' measures and as such are not exempt from actions against subsidised exports.

The AB also upheld the panel's ruling that Step 2 payments to domestic users of US-produced cotton, the marketing loan program payments, production flexibility contract payments, market loss assistance payments, direct payments, counter-cyclical payments, crop insurance payments and cotton seed payments had granted support to a specific commodity, namely, upland cotton.

The DSB had given the US until 1 July 2005 to implement its rulings and recommendations.

In its statement at the DSB Friday, Brazil noted that on 30 June, the US announced the adoption of measures concerning its export credit guarantee programmes, namely, introducing a new risk-based fee structure for guarantees under GSM 102 and SCGP, and no longer accepting applications for guarantees under GSM 103.

However, said Brazil, no action at all was taken in relation to the Step 2 programme within the time period specified by the DSB.

Brazil added that on 5 July, the US had announced additional measures, which it was sending to Congress for approval. These measures, if approved, would result in the elimination of the Step 2 programme; the removal of the 1% cap on fees that can be charged under the export credit guarantee programmes; and the termination of the GSM 103 programme.

In light of the situation described, Brazil said that it decided to reserve its rights by requesting authorization to take appropriate countermeasures and to suspend concessions or other obligations.

It added that these countermeasures would take the form of suspension of tariff concessions and related obligations under the GATT 1994 by the means of the imposition of additional import duties on a list of products imported from the US.

The suspension of concessions and other obligations correspond to a value of approximately $3 billion wholly applied to the importation of US goods, which amounted to $11.3 billion in calendar year 2004.

Brazil however considered that it is not practicable or effective to suspend concessions or other obligations with respect to the same sector/agreement as that in which the panel and the AB have found the violations.

It explained that the imposition of additional import duties affects the costs of inputs and capital goods that are essential to the productive chain of the Brazilian industry and that the rise in import costs will inevitably have a significant negative impact on current efforts to control inflationary pressures.

Brazil also held the view that the circumstances are serious enough to justify the imposition of appropriate countermeasures under other covered agreements.

Brazil said that it may resort to the extent necessary to countermeasures in the form of suspension of obligations under several sections of the TRIPS Agreement including on copyright and related rights; trademarks; industrial designs; patents; and protection of undisclosed information.

Likewise, Brazil said that it may also suspend horizontal and/or sectoral concessions and obligations for all sectors contained in Brazil's Schedule of Specific Commitments under the GATS. These include business services; communication services; construction and related engineering services; distribution services; financial services; tourism and travel related services; and transport services.

Brazil stressed that its authorization request refers only to the prohibited subsidies found in the present case and that it does not deal with the subsidies that violate the serious prejudice provisions under the SCM Agreement, in respect of which the US still has time to - as Brazil said it expects - take the necessary steps to withdraw the illegal measures or remove their adverse effects.

In its statement at the DSB, the US said that it has taken significant steps to implement the recommendations and rulings of the DSB in this dispute.

It said that as noted in the chapeau to its understanding with Brazil, the US announced, effective 1 July, administrative changes to the three agricultural export credit guarantee programs at issue in this dispute.

On 5 July, the US Administration announced a legislative proposal to repeal the user marketing "Step 2" cotton program and to make further changes to the guarantee programs.

As stated at the 21 April DSB meeting, the US said that it fully intends to implement the recommendations and rulings of the DSB in this dispute.

"Thus, we do not believe that the Article 22.6 arbitration, once suspended, will need to be re-activated," the US concluded.

This article first appeared in the SUNS 5844 and is hereby reproduced with their kind permission
top__________________________________

The Limits of Cotton: White Gold Shows its Dark Side in Benin
Leif Brottem

According to World Bank President Paul Wolfowitz, it is an “extraordinary moment in history” for Africa. World leaders have made a big step towards debt cancellation. If celebrity involvement is any indication, this is the largest up welling of public concern in Europe and North America for African poverty in recent years.

One surprise theme of this movement has been cotton farming, an industry on which over 15 million Africans depend on for their livelihoods. Oxfam, a UK-based charity and development organization, has led an effective campaign to bring cotton subsidies in rich countries to the forefront of the debate on extreme poverty in Africa. Eliminating the billions of dollars in handouts to some 25,000 American cotton growers would benefit countries in West and Central Africa that depend heavily on exporting the crop. However, the belief that cotton is a panacea for rural Africans ignores a huge problem: in the regions where the crop is grown, the land is being destroyed.

In Benin, a small West African nation that receives 80% of its export revenues from cotton, life passes to the rhythm of that crop’s planting and harvest. In Benin’s largest producing region of Banikoara, decrepit trucks loaded impossibly high with white fluff rumble by every few minutes during the weeks of harvest. Just as hunting is etched into the collective identity of the local Bariba people, the community’s identity in recent times has been defined by growing “white gold”.

Banikoara’s cotton boom began long before the environmental impacts of growing the cash crop were considered. Now that most local forests have been cut down, residents point to the crop to explain why temperatures are rising, there is less rainfall than before, and all the wildlife has disappeared, including the elephants which attracted the area’s original inhabitants.

Losing the Forest

Benin loses around 100,000 hectares of forest every year, a loss that is most pronounced in cotton producing regions. In practical terms, forest loss means fewer sources of medicine, wood for fuel and construction, and livestock forage. Rapid population growth has outstripped traditional natural resource management systems. To feed their growing families and produce enough cotton to pay off debt and buy necessities, people leave less agricultural land fallow and exhaust the soil, which forces them to clear more land the following year.

“Cotton production here will have to shrink eventually because the soil is being exhausted,” reported Orou Guere, secretary of a local farmers’ cooperative. No one knows better than those who work the land but this statement is supported by recent research. A study conducted in Southern Mali, another important West African cotton belt, raised questions about the widely held belief that poverty is the main driver of environmental degradation in the region. Instead, it showed that cotton production is a more important factor in exhausting the soil.

A 2002 study conducted in Northern Benin found that 65% of farmers surveyed noticed that cotton was causing deforestation. And 75% felt that cotton was responsible for depleting the soil of nutrients. Unlike other cash crops grown in developing countries such as cacao, the raw material for chocolate, and coffee, cotton does not tolerate shade. In order to maximize production, farmers are obliged to cut down all but a few trees on their plots.

Moreover, as virtually the only source of income in rural areas, cotton farming operates to a simple logic: the more planted, the more money earned. In many localities, clearing a new field merely requires the consent of neighbours. Until recently, locals were able to freely plant cotton within Regional Park “W,” a recently designated UN World Heritage Site and one of the last contiguous wild lands in West Africa.

Adapting to the new pressure of sustainable development is extremely difficult given that cotton receipts pay for schools, clinics, and other community infrastructure. Sabi Dingui, a student who has grown cotton all his life, commented that without the crop, farmers would be "in the dark” without money to pay for school fees and medicine.

Growing Poverty

Africans currently have a more difficult time paying for such basic necessities than they did 25 years ago. In Benin, 22% of the population does not get enough to eat. As the wealth gap between Africa and the rest of the world has grown into an alarming chasm, the term “fourth world” has been broached to describe the continent’s position in the global economy. The subject was a top priority at the latest Group of Eight (G-8) summit in Gleneagles, Scotland. Concurrently, Bob Geldof organized the “Live 8” benefit concert as part of the “Make Poverty History” campaign.

West African cotton farmers have made some surprise media appearances in recent years. Countless articles have drawn a clear line between their poverty and the now infamous U.S. government handouts. “Dump poverty, not cotton” was the slogan on a flyer depicting Senegalese pop start Youssou N’Dour that Oxfam International released as part of its “Fair Trade” campaign.

Oxfam, working with other influential organizations such as CARE, has elevated trade policy to a high profile role in efforts to end poverty. As part of its mission to support “sustainable livelihoods,” Oxfam also supports work in natural resource conservation. Its involvement in small-scale organic cotton production in West Africa is a positive example of this. However, the group’s campaign to open global markets to West African cash crops will have a far greater long-term impact on the region’s landscape.

In support of this strategy, Oxfam reported that, in one year, Mali received $37.7 million in aid from the United States but lost $43 million in potential cotton revenue due to agricultural subsidies. The organization also asserts that a 1% increase in their share of global exports would generate $70 billion for Africa alone. Such numbers are hard-hitting and direct but do not give the full picture of human development. Katherine Daniels, an Oxfam America trade policy advisor also said the organization is supporting “several initiatives to promote cleaner cotton using fewer chemical inputs, both in the U.S. and in Africa.” Organic cotton farming has great potential because it “fetches a higher price on the world market than conventional cotton, contributing to improved livelihoods for farmers,” she said.

Still, Oxfam hasn’t addressed the ecological limits of cotton as an export crop, in particular because cotton cannot grow in shade and triggers deforestation. The risk is great that expanding cotton monoculture will not only increase the strain on the local ecosystem but also on other land users, notably the large number of local pastoralists.

Cotton farmers in Banikoara must coexist on the land with the Fulani, an ethnic group that recently shared the media limelight with Wolfowitz during his trip to Nigeria. The Fulani have played an essential role in agricultural systems across West and Central Africa for centuries yet they are adversely affected by expanding cotton production. As the forests that herders rely on to feed their animals disappear, they move closer to farmers’ fields or into protected areas.

As a politically marginalized group, the herdsmen and their cattle, which number over 100,000 in the district of Banikoara alone, usually receive the blame for ensuing conflicts. Commenting on this situation, a local Fulani chief stated, "We need to live too."

Alternatives to Cotton

Alternatives such as eco-agriculture attempt to address this and other issues, through more adaptive and diversified land use systems. One of the fundamentals of eco-agriculture is the use of native plants that hold economic and ecological value. Economic incentives to exploit and conserve native vegetation are essential but in Benin’s cotton belt, such incentives are practically nonexistent. Shea butter, a valuable ingredient in cosmetics, is an indigenous product that holds such potential yet there is no infrastructure for large-scale production in Banikoara. In some cases, male farmers cut down shea butter trees, which are exploited by women, to make room for their cotton.

In light of the changing local conditions, diversification will be more important for farmers’ livelihoods than improving market conditions for one single cash crop. The recent commencement of an international effort to conserve the biodiversity of Park “W” is radically transforming access to land. The park, which includes nearly 50% of the district of Banikoara within its boundaries, previously served as an unregulated resource pool and important route for cattle migration. Bans on grazing and hunting in the park are now strictly enforced under the pain of a large fine or prison sentence. Herdsmen and farmers alike are driven even further into settled areas.

The International Union for the Conservation of Nature (IUCN), a network of scientists based in Gland, Switzerland, is addressing this and other issues by promoting ecologically sustainable livelihoods amongst people residing near the park. What is the highest priority of the project? It is to diversify away from cotton farming.

Instead of working at cross purposes with conservation groups, development agencies and G-8 governments must match the rhetoric of sustainable development with policies that integrate poverty reduction and biodiversity protection. In cotton-dependent areas such as Banikoara, farmers would conserve the forest habitat that bees require if a viable market existed for honey.

But cotton is king in this part of the world and the ambitions of the international community are not always consistent. Proposals by park officials to reduce cotton production near the park are met with hostility and accusations of “worsening the peoples’ poverty” by agricultural extension officials who are under pressure to ensure that the cotton piles high in the markets. Weeks after the park director repeated his warning to farmers that consequences of setting foot in the park would be grave, officials in the same agency arrived to tell the same farmers to double their output of cotton.

The forest that is giving way to cotton fields is also the source of traditional medicines. Such cures are still very important for rural residents who often lack the money to buy or do not have access to the modern varieties. Sitting under a mango tree in his courtyard, the chief traditional healer of Banikoara, Lotoro Theophile, described how he now must ask herdsmen to gather materials, which used to be abundant, during their trips deep into the bush.

Degradation of their local environment is not lost on those who live with it every day. Unlike policymakers in Washington and Geneva, the farmers of Banikoara know they cannot rely solely on cotton. Many are planting cashew and mango trees as alternatives. One cotton farmer stated enthusiastically: “These trees are our retirement!”

Levelling the playing field of global trade is a worthy goal, particularly vis-à-vis the poor who are currently shut out of the markets for their products. However, the real potential for market-based solutions to poverty in Africa is seriously constrained by growing populations that rely on shrinking areas of land for life’s necessities.

As farmers in Banikoara harvest their cotton, the refusal of the Americans to practice what they preach and give up subsidies to their own is not the most important topic of conversation. The corn and millet crops are more likely to be on peoples’ minds. If in times past, people thought cotton was the answer, no one is kidding themselves anymore. Africa can’t escape poverty through single crop export solutions.

First published by Foreign Policy In Focus (FPIF), a joint project of the International Relations Centre (IRC, formerly the Inter-hemispheric Resource Centre, online at www.irc-online.org) and the Institute for Policy Studies (IPS, online at www.ips-dc.org). ©2005.
Recommended citation:
Leif Brottem, "The Limits of Cotton: White Gold Shows its Dark Side in Benin," (Silver City, NM & Washington, DC: Foreign Policy In Focus, June 30, 2005).
Web location:
http://www.fpif.org/fpiftxt/160

top__________________________________

Editorial: African Countries must fight hard for a positive outcome in Hong Kong
Ludwig Chizarura

The joint position adopted by the 33 African cotton producing countries to the WTO Sub-Committee on cotton is welcome news to the 15 million Africans whose livelihoods are dependent on the crop. It demonstrates concern to their subjects, unity of purpose as well as resistance to possible manipulation by the rich countries.

While appreciating the determination of the chairperson to achieve results on the cotton issue, they made it explicitly clear that they did not agree with his analysis of linking the cotton issue to the general agricultural negotiations taking place. It wants concrete progress on the cotton issue. The African block has warned that they will not allow the issue to be sidelined at the forthcoming WTO Hong Kong meeting in December. Through the African Group Paper it is demanding immediate and radical reforms on the following trade modalities;

• Elimination of domestic support measures that distort international trade in cotton.
• Elimination of all forms of cotton export subsidies by 1 July 2005.
• Improvement of market access for international cotton trade whereby African cotton will enjoy unfettered (duty free and quota free) access to rich countries markets.

In responding to the African demand, the EU rejected the complaint that it has not formally taken action on the African proposal. It has taken action to “front load” (take action quicker) on those aspects that apply to cotton. The front loading includes

• Binding cotton tariffs at zero.
• Eliminating export subsidies.
• Reducing distorting domestic support right from the first day that the results of the current negotiations are implemented.

Similarly the US announced the actions that it is taking to comply with the WTO ruling on the cotton dispute that include;

• Administrative changes to three agricultural export credit guarantee programmes and supplier credit guarantee programme and,
• Proposing changes to legislation to alter these programmes and Step 2 programme.

Brazil cautiously welcomed the changes describing them as positive moves, and hoping that Congress will deliver the legislation. A UN economic adviser concurred with the African Proposal by arguing that Africans should refuse another round of trade talks if the rich nations do not cut farm subsidies and tariffs that are compelling Africans to export raw materials instead of final products. The subsidies in rich nations cause artificially low international commodity prices that hurt farmers in the developing world. Behind the move are politically powerful interests that stand to gain from the present terms of trade.

It should also be borne in mind that the cotton issue goes beyond agreement at the Hong Kong Ministerial meeting. Assuming that the African demands are met, efforts should be turned towards improving the domestic marketing system, otherwise the gains will be reaped by the cotton lint exporting merchants with very little trickling down to the farmers. Ecologically, cotton production is blamed for accelerating environmental degradation (deforestation and soil depletion), a move that calls for diversification. Furthermore loss of livestock forage is behind the conflicts between agriculturalists and pastoralists in some African countries. These are some of the issues that need addressing in future.

While these issues require scrutiny now, it is the Hong Kong Ministerial that will benchmark progress on negotiations. Already the whole WTO work programme, particularly the Doha Round is reeling under a plethora of missed deadlines. It is the African countries which should push hard for a positive outcome in Hong Kong but this means the developed countries must great political willingness to achieve development under the Doha development Round.

*Ludwig Chizarura is a Senior Analyst with SEATINI