HONG KONG – The National Cotton Council, representing the U.S. cotton industry, issued a statement today on the industry’s perspectives of the World Trade Organization ministerial meeting.
The U.S. cotton industry fully expected cotton to be a contentious issue, and unfortunately, those expectations have been realized. The industry’s primary message, though, remains that agriculture should be negotiated as a single undertaking, and cotton should not be singled out for a separate negotiation with different results.
NCC Vice President Gary Adams said this also has been the view of the U.S. negotiators and “I want to thank Ambassador Portman for the strong stance that he continues to take in that regard. It is also clear that a few cotton-producing countries in West Africa remain steadfast in their criticisms of U.S. cotton and continue their unsubstantiated claims that U.S. cotton subsidies are responsible for poverty in those countries. We certainly understand the economic hardships faced by their growers, but we also understand that the U.S. program is not the cause.”
Recent studies from the International Monetary Fund and the Food and Agricultural Organization of the United Nations have concluded that the cumulative effect of cotton subsidies by all countries amounts to only 2 to 4 percent price suppression in the world market. Additionally, these studies note that improved market access is the vehicle for significant economic gains.
The NCC believes the greater concern to West African producers is the internal challenges they face in their production and marketing systems. Over the past decade, yields in West Africa have not kept pace with the rest of the world, and are now at just half the level of the average in all other countries, as compared to 70 percent a decade ago. It is also the case that lack of competition in their marketing system means their growers receive a substantially smaller proportion of the world market price for their cotton than a grower in Brazil or China would for the same piece of cotton. Both of these factors mean reduced competitiveness and reduced returns, and will not be solved by eliminating the U.S. cotton program.
Adams said the United States is to be commended for the efforts it has taken to address the conditions facing the West African producer. The West Africa Cotton Improvement Program is a practical plan that can make a real difference. In addition, just this week, the U.S. announced additional Aid-for-Trade funding. The NCC has been an active participant with USDA and US-AID in projects in West Africa, with future efforts planned.
As a final thought on the challenges facing not only West African producers, but all cotton producers, Adams said “we must see greater resources devoted to the promotion of cotton demand. A producer-financed promotion program has boosted per-capita cotton consumption in the United States from 23 to 35 pounds since 1990. Over that same time, per-capita consumption outside the United States fell. More promotion is needed in key retail markets such as Japan, the EU and China.”
Regarding events of this past week, the NCC is concerned over the U.S. offer to allow West African cotton to enter the United States duty and quota free. This appears to be unilateral action by the United States in what should be multi-lateral negotiations. If improved market access for cotton produced in the truly least developed countries will provide meaningful economic gains, then all cotton importing countries should be expected to match the U.S. proposal.Finally, the United States has tabled an aggressive, comprehensive proposal that significantly reduces trade distorting domestic support while opening world markets. Recent analysis by the Food and Agriculture Policy Research Institute has shown that the U.S. proposal likely will mean changes to our current program and reduced support. Now, the U.S proposal has been supplemented by a unilateral offer of market access unmatched by any other cotton importing country. If the developing world wants to see progress in agricultural markets, it should support the U.S. efforts in the WTO.