TWN Info Service on WTO and Trade Issues (Nov16/19)
30 November 2016
Third World Network

Cotton producers call for an outcome on cotton at MC11
Published in SUNS #8365 dated 29 November 2016

Geneva, 28 Nov (Kanaga Raja) -- The Cotton-4 grouping as well as other cotton-producing countries including India, Pakistan, Senegal and Nigeria have called on members of the World Trade Organisation (WTO) to reinforce the dynamics in the negotiations so as to come up with a "fair and balanced outcome" on cotton at the eleventh ministerial conference (MC11) in Buenos Aires December next year.

According to trade officials, the call from these countries came during the latest round of consultations on cotton held on 23 November by the Chair of the agriculture negotiations, Ambassador Vangelis Vitalis of New Zealand.

The Chair of the Negotiating Group on Market Access also reported last week on his recent consultations (see below).

The latest consultations on cotton also included the sixth dedicated discussion on trade-related developments for cotton and the 26th session of the DG's Consultative Framework Mechanism on Cotton.

According to trade officials, the Chair said that most WTO members consider an outcome on domestic support for cotton "a priority for the Buenos Aires Ministerial Conference in December 2017."

While welcoming the recent submissions and "intense debates" among the members, the Chair however said that "none of the new submissions enjoyed consensus so far".

Ambassador Vitalis reiterated that for "the overwhelming majority of WTO members," an outcome on domestic subsidies at MC11 should include a decision on cotton.

Mali, on behalf of the Cotton-4 countries (Burkina Faso, Benin, Chad and Mali), said that the Nairobi Ministerial Conference "marked an important step to arrive at a negotiated global solution for cotton."

However, it expressed regret over the lack of progress since the last session in July, especially on issues where no binding commitments were made in Nairobi.

According to trade officials, Mali said that the meeting of the Cotton-4 ministers in Bamako, Mali on 26-28 October had launched an urgent appeal to eliminate all forms of export subsidies and domestic support for the production and marketing of cotton before MC11.

The Chair, Ambassador Vitalis, welcomed the recent submissions on domestic support that were discussed at the meeting of the Special Session of the Agriculture Committee on 16-17 November (see SUNS #8361 dated 23 November 2016).

He said that these submissions "show members' willingness to take negotiations forward".

"While none of the ideas or options enjoyed consensus so far, the intensity of the debates was encouraging," he said.

The Cotton-4 had indicated earlier on 16 November that they intend to table soon a contribution on a possible outcome on domestic support for cotton at MC11.

The Cotton-4 and the least-developed countries (LDCs) also highlighted the increasing costs of cotton production in their countries, despite a global trend downward.

They said that this, together with a drop in the prices obtained by cotton producers, is a threat to all efforts made by African cotton producers in their domestic reforms to enhance their competitiveness.

Meanwhile, according to a presentation made by the Executive Director of the International Cotton Advisory Committee (ICAC), Jose Sette, over 88% of cotton production in Africa is exported.

Mr Sette said cotton exports have remained stable over recent years and direct assistance to cotton has decreased from US$10.7 billion in 2014-2015 to US$7.2 billion in 2015-2016, although this is still the third largest amount since 1997.

The ICAC said China's demand for cotton has decreased by 24% between 2013 and 2016 due to record-breaking national reserves in 2014, but demand is forecast to go back up in 2017.

According to trade officials, the Cotton-4 stressed the need to consider environmental, social and economic indicators when monitoring global trends in the cotton industry.

It called on WTO members to help small-scale cotton producers to make a living out of cotton exports.

The Cotton-4 also pointed to the importance of diversifying the group's cotton exports by transforming raw material locally.

Ambassador Eloi Laourou of Benin, a member of the Cotton-4 group, presented his country's recent initiative to incentivize public-private partnerships to this end.

According to trade officials, the Chair again voiced concerns about the "lack of critical information from key players in the cotton market" on how they support their farmers.

Ambassador Vitalis said that this is "disastrous from a systemic point of view" and "highly problematic" for the negotiations.

To date, he noted, six (Brazil, Hong Kong-China, New Zealand, Norway, Russian Federation and South Africa) among the 32 WTO members identified as potential markets of interest for LDCs, have notified their domestic support measures up to at least 2014.

The chair called on members to reply to the cotton questionnaire that the WTO Secretariat circulates on a biannual basis.

According to trade officials, Benin, on behalf of the LDCs, deplored the lack of updated data on the volume of members' domestic support by category and of commitments to reduce domestic support.

It said that members' silence to the concerns of the LDCs is "worrying" because domestic support measures are distorting cotton trade.

The LDCs called on concerned members to supply the necessary information before the end of 2016.

On the issue of development assistance to cotton, the WTO Secretariat briefed members on the evolving table used to monitor the development assistance provided for cotton.

It noted that the number of committed projects and programs has increased from
46 in July to 67 presently.

According to trade officials, Japan briefed members on latest updates and support initiatives that it has extended to the African region, while Brazil and China also briefed members on their contribution to South-South cooperation in the cotton sector.

NEGOTIATING GROUP ON MARKET ACCESS

Meanwhile, at an informal meeting of the Negotiating Group on Market Access for Non-Agricultural Products (NAMA) on 25 November, the Chair, Ambassador Didier Chambovey of Switzerland, said that some interest has been expressed for negotiating the easing of non-tariff barriers (NTBs) for manufactured goods.

"I detected more movement," the Chair said, in comparing members' interest in negotiating on non-tariff barriers against interest in negotiations on tariff cuts.

According to trade officials, the Chair was reporting on his consultations with some 36 delegations over the past month.

Issues like technical barriers to trade, which include product regulations, and proposals to improve transparency of measures, could fall under these discussions based on the consultations, the Chair said.

He advised members to consider incremental steps rather than "major leaps" in the short term, similar to the sentiments expressed at the previous WTO mini-ministerial in Oslo last month.

He however said his consultations also revealed that there is no unanimity so far in support of such discussions.

Furthermore, it is difficult to foresee a binding agreement in this area, the Chair said.

As for possible negotiations on market access, which could include reductions of applied or bound tariffs on non- agricultural goods, the Chair reported that talks at this point have "no traction."

The Chair said that some members would like to focus on developing local industries, and for them, this focus would not entail tariff cuts.

Other members, meanwhile, would like to focus on reducing tariff ceilings to enhance the predictability of the trading system. They were amenable to leaving applied tariffs untouched.

Still others are willing to engage only if talks on tariff cuts went further than lowering ceilings.

The Chair said that another group of members were of the view that these talks were best lent to plurilaterals, where some - but not all - WTO members are involved.

Several members, however, believe that such plurilaterals as well as regional trade negotiations have been diverting interest from negotiations in the multilateral setting.

As such, members' positions remain difficult to reconcile, the Chair said.

Overall, said the Chair, there has been "no substantive change nor evolution" in positions. He noted that "no papers have been submitted to this negotiating group in a very long time."

According to trade officials, some members including the European Union, Singapore, Switzerland, Norway, Korea, and Mexico were in favour of discussions on non-tariff barriers.

On the other hand, some other members including China said that this should not be used as a shortcut to achieve outcomes in non-agricultural market access.

South Africa said that proposals for discussions on technical barriers to trade (TBT) should be held in the TBT Committee.

On the issue of plurilateral negotiations, the EU highlighted the track record of negotiations for market access in the plurilateral format.

It said that it was interested in similar talks for the chemical sector with a view to launching negotiations at MC11.

Japan, Mexico, Canada, Israel and Hong Kong-China said that they were open to plurilaterals.

According to trade officials, China said that it "was not in a position to support new plurilaterals or sectorals."

India said that plurilaterals should be the exception and not the rule. It added that sectorals would go against the mandate of the Doha Development Agenda, which demands comprehensive product coverage.

Several members including India, China, El Salvador, and Egypt called for the negotiations to respect special and differential treatment for developing country members.

"My recommendation to members, particularly to members who want to advance the file, is to continue in their efforts to develop new ideas and to garner support for those ideas," the Chair concluded. +