Cotton-4 Reports on by-products Initiative, Cotton Trade and Development Issues Discussed

The “Cotton-4” (Benin, Burkina Faso, Chad, Mali) and other participants discussed updates to development assistance programmes for the cotton sector at a meeting of the Director-General’s Consultative Framework Mechanism on Cotton on 12 November, chaired by Deputy Director-General Alan Wm. Wolff. The results of the first phase of the WTO-UNCTAD-ITC initiative on cotton by-products were discussed. At the dedicated session on trade-related developments in cotton on 13 November, members were updated on the evolution of cotton markets, including the impact of COVID-19 on cotton trade and recent improvements to monitoring tools.

First anniversary of WTO launch of "World Cotton Day"

The WTO Secretariat reported on the activities organized on 7 October in celebration of the first anniversary of the World Cotton Day launch. This included the virtual activities published on the WTO website and via social media platforms and the cotton booths and exhibitions set up at the WTO premises. Several international organizations and delegations reported on their respective events on 7 October. The Cotton-4 commended the WTO for the successful activities despite the restrictions linked to the COVID-19 pandemic. It asked the Secretariat to celebrate and mark the day again in 2021.

Looking forward, the Cotton-4 asked WTO members to continue supporting its efforts to request the United Nations General Assembly (UNGA) to adopt its proposed resolution for 7 October to be recognized as World Cotton Day. The Cotton-4's previous request was not discussed at the UNGA this year due to COVID-19 crisis management at the UN and the consequent cancellation of discussion of all new resolution proposals.

The WTO Secretariat organized the launch event for World Cotton Day at the WTO on 7 October 2019 at the request of the Cotton-4, with cotton communities throughout the world participating in various online and offline events.

Progress in WTO-UNCTAD-ITC initiative on cotton by-products

Wrapping up the first phase of the WTO-UNCTAD-ITC joint initiative on cotton by-products, the Cotton-4 countries and Mozambique shared the results of individual feasibility assessment studies. These followed the multi-stakeholder validation workshops organized by the WTO Secretariat at the end of September and early October in each of these countries, thanks to the support of the Enhanced Integrated Framework (EIF).

Based on the data and survey results included in the studies, each partner country identified two to four specific cotton by-products with a strong potential to attract investments for enhanced local processing and trade, taking into consideration overall national economic development strategies.

The United Nations Conference on Trade and Development (UNCTAD) provided information on its cotton by-products projects in Tanzania, Uganda and Zambia, which started before the joint initiative was launched in November 2018. The Cotton-4 commended UNCTAD for sharing valuable lessons in developing cotton by-products projects, in particular by tackling prominent transport and logistic challenges, which are amongst the weakest links of cotton value chains in Africa.

The C-4, Brazil, China, the European Union, the EIF and several other partner countries and agencies praised the quality of the output and the progress made during the first phase of the initiative and reaffirmed their commitment to supporting phase two. DDG Wolff encouraged members to continue making progress in consolidating political will and improving the economic environment for the development of cotton by-products. He asked the participating countries to provide detailed action plans for partners to consider. The WTO will contribute to the process based on its mandate and the evolving situation, he said.

UNCTAD and the International Trade Centre (ITC) shared their plans for the second phase, i.e. the implementation stage of the joint initiative. The EIF confirmed funding for two more feasibility assessments requested by Malawi and Togo, which will bring to ten the total number of least-developed countries (LDCs) partnering in the joint initiative. The EIF said it aims to integrate the work of the joint initiative into its national structures in African countries and its overall strategy of increasing income and promoting sustainable development along the value chain. It urged participating countries to highlight their priorities and not to hesitate in asking for support.

DDG Wolff noted that the discussions pointed to the fact that "the joint initiative on cotton by-products is well integrated with poverty-reduction strategies and other development-oriented projects at the level of individual countries, so the focus should remain on interventions targeted at the specific needs of individual countries, while also taking into account the sub-regional integrative potential of this line of work".

Finally, a draft General Council Declaration was proposed by the Cotton-4 countries and other cotton-producing LDCs. The declaration aims to garner enhanced support from WTO members and encourage public and private partnership in pursuing concrete results in the development of cotton by-product industries in LDCs. Members agreed that the Cotton-4 should submit the Declaration to the General Council for consideration at its December meeting.

Cotton-related development assistance activities

The Cotton-4 reported on the state of play of the “Cotton Roadmap Project”, which seeks to promote the cotton sector by improving local processing capacity and developing cotton-to-textile value chains at the regional level.

The International Cotton Advisory Committee (ICAC) examined the relationship between cotton and climate change. Highlighting cotton's role in absorbing carbon emissions, ICAC explained how cotton could make positive contributions to Africa's efforts in combating climate change and could play its part in achieving the UN Sustainable Development Goals.

The Cotton-4 reiterated the deep impact of the COVID-19 pandemic on cotton production, processing and trade, especially the disruption in logistics chains. It asked the WTO Secretariat to help assess the full impact of the pandemic on the agriculture sector in Cotton-4 countries and called on all technical partners to provide much-needed assistance to help build resilience in cotton production, processing and marketing. It said it plans to have roundtable meetings with all partners on the margins of the WTO's 12th Ministerial Conference to further discuss targeted cotton development assistance. Several developing members expressed continued support for the Cotton-4's efforts and their commitment to South-South cooperation on cotton projects.

The latest revision of the Evolving Table (WT/CFMC/6/Rev.29, 2 November), the WTO's core document on cotton development assistance, includes two new cotton-specific projects submitted by the US and France, reflecting a 6% increase in commitments in comparison to the previous Evolving Table and bringing the number of active projects to 26. Meanwhile, a 3% increase in disbursements (approximately USD 2.764 million) was reported from the US and Brazil.

Members discussed the Cotton-4's proposal to add an annex to the Evolving Table to reflect all requests for cotton development assistance projects. The Secretariat took note of members' comments and will circulate a revised conceptual note and update the Evolving Table accordingly.

Trade negotiations and transparency

Ambassador Gloria Abraham Peralta of Costa Rica, Chair of the Dedicated Discussion on Cotton on 13 November, encouraged members to continue engaging in the new facilitator-led process of the agriculture negotiations. She thanked the two facilitators for cotton (Burkina Faso and Brazil) for their diligent work and their report to the Committee on Agriculture in Special Session on 10 November.

ICAC highlighted the contraction of cotton production in most countries during the season 2020/21 in a context of growing stocks. ICAC also described the impact of the COVID-19 pandemic on the textile and apparel sector and its impact on cotton demand. Finally, ICAC provided some preliminary data on the evolution of assistance to cotton production. This confirmed a strong negative correlation between subsidies and cotton prices, with an expected level of subsidies as calculated by ICAC at around US$ 7.7 billion in 2019/20.

The Chair recalled that the report on the information session on COVID-19 and cotton, "From facts to solutions", organized by the WTO on 30 July 2020 had been circulated on 19 October 2020 (TN/AG/SCC/34).

The Cotton-4 and Chad stressed the urgent need to rebuild and relaunch the cotton sector as the COVID-19 pandemic has caused severe economic and social consequences. They urged members to improve transparency in their trade policies and work towards an outcome on trade-distorting support for cotton. They also called on members to lift all trade-restrictive measures to facilitate the supply and exports of essential medical goods and agricultural commodities, in particular cotton.

The Cotton-4 welcomed the monitoring of the implementation of the Cotton Nairobi Ministerial Decision, and invited WTO members to expand duty-free, quota-free access for exports of cotton and cotton by-products from least-developed countries.

The WTO Secretariat presented a revised “background paper” (TN/AG/GEN/34/Rev.13 and two addenda) compiling up-to-date information on cotton policies in the areas of domestic support, market access and export competition.

Updates on the Integrated Data Base and Cotton Portal

The WTO Secretariat introduced its updated Integrated Data Base (IDB), which contains tariffs applied by WTO members and acceding economies to imports from other WTO members, as well as import statistics. The Secretariat encouraged members to make timely and complete notifications as these constitute the foundation of the database.

The ITC presented the Cotton portal (launched in 2017) and introduced the new market price information platform, which provides free access to real-time data on prices for more than 300 agriculture products, including cotton products.

Background

Cotton has been a key issue in WTO agriculture negotiations and an important development-related issue since it was raised in 2003 by four African least-developed countries — Benin, Burkina Faso, Chad and Mali — known as the Cotton-4.

The decisions on cotton adopted at the 2013 Bali Ministerial Conference and at the 2015 Nairobi Ministerial Conference  have underscored the importance that WTO members attach to cotton.

The WTO organizes twice a year, since the Bali Ministerial Conference held in December 2013, dedicated discussions of trade-related developments for cotton as part of the "cotton days", which also cover the development assistance aspects of cotton.