WTO Members Discuss Cotton Development
Assistance, Impact of COVID-19 on Cotton Trade
·
Cotton-related
development assistance activities
·
World
Cotton Day
·
Trade
negotiations and transparency
·
Information
session on COVID-19: “From facts to solutions”
At a meeting of the Director-General’s Consultative Framework
Mechanism on Cotton on 30 July, the chair Deputy Director-General Alan Wm. Wolff
reiterated the forum’s mandate to ensure transparency of development assistance
programmes for cotton and to improve the effectiveness
of cotton projects. The WTO Secretariat presented a report and video on the launch
of World Cotton Day at the WTO on 7 October 2019. At separate sessions, also held
on 30 July, members discussed the state of play in cotton negotiations and the impact
of COVID-19 on cotton trade.
The Cotton-4
(Benin, Burkina Faso, Chad and Mali) noted the importance of supporting cotton development
assistance projects designed locally, including 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. They welcomed
the fact that the cotton by-products component of the project, whereby cotton producers
seek to unlock further benefits from cotton production, was already being successfully
implemented by the WTO, the United Nations Conference on Trade and Development and
the International Trade Centre.
The International
Cotton Advisory Committee (ICAC) presented recent developments in global cotton
markets, highlighting that average regional yields for sub-Saharan Africa are around
370 kg/ha, compared with a global average of 800 kg/ha.
ICAC's
Executive Director presented new digital training tools developed with funds from
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ).
The tools aim to help farmers in developing countries tackle pests and follow good
agriculture practices through the use of virtual reality and an interactive app.
The Cotton-4 and other developing countries pointed out the hurdles that small-scale
famers face in purchasing smartphones and accessing reliable internet connection.
They drew attention to the risk of an increasing digital divide for cotton producers
in least-developed countries.
The latest
revision of the Evolving Table (WT/CFMC/6/Rev.28), the
WTO's core document on cotton development assistance, includes updates on cotton-specific
projects submitted by Australia, Brazil, the European Union, France and the Enhanced
Integrated Framework (EIF). France notified the WTO about the conclusion of five
cotton programmes while the United States provided information
about the conclusion of one programme.
Regarding
agriculture and infrastructure projects where cotton is a component, Japan notified
the WTO about 24 new projects with a total commitment of over USD 688 million benefiting
eight African countries. Japan also notified the WTO of the completion of six projects
accounting for a disbursed amount of over USD 95 million benefiting four African
countries.
The United
States notified about the completion of nine projects with a disbursed amount of
over USD 447 million.
In terms
of commitments to active projects, the latest revision of the table shows a downward
trend for both cotton-specific and agriculture and infrastructure programmes, which declined by 9 per cent and 38 per cent respectively
since the previous reporting period.
All presentations
are available here.
Presentations
prepared for the meeting by the United Nations Industrial Development Organisation, Better Cotton Initiative and Gherzi Textile Organisation Zurich
on cotton production, transformation and sustainability can be found here.
The WTO
Secretariat presented a report (TN/AG/SCC/W/33, WT/CFMC/61) on
the launch of World Cotton Day at the WTO on 7 October 2019 and a highlights video of the
event. Burkina Faso, speaking on behalf of the Cotton-4 and the
36 African cotton-producing countries, noted the importance of recognising World Cotton Day at the forthcoming September session
of the United Nations General Assembly. It said it was looking for members' support
for the Cotton-4 draft resolution to proclaim 7 October as World Cotton Day.
Ambassador
Gloria Abraham Peralta of Costa Rica chaired the 13th Dedicated Discussion on Cotton
on 30 July 2020, her first meeting since being elected chair of the special session
of the Committee on Agriculture. On the state of play in the agriculture and cotton
negotiations at the WTO, Amb. Peralta acknowledged that
“cotton is a topic of key interest” and encouraged members to engage constructively
in discussions on the global cotton market and factors affecting its efficiency.
Amb. Peralta
flagged her intention to convene informal meetings around mid-September to map out
the way forward in the run-up to the 12th Ministerial Conference. She would also
convene meetings of the Quad+ (a group of 13 members) to allow members to exchange
views on the cotton negotiations, she said. She highlighted the importance of the
Joint Statement on the Cotton Negotiations (TN/AG/SCC/GEN/21), where
co-signatories committed to “intensify” discussions on negative factors affecting
cotton trade and markets, with the aim of enhancing transparency, and called on
members to operationalize this commitment.
The Cotton-4
echoed the chair’s call and urged members to fully implement the Cotton Nairobi Ministerial
Decision, eliminate cotton export subsidies and grant duty-free quota-free
access for cotton exports from least-developed countries.
The International
Cotton Advisory Committee (ICAC) indicated the strong negative correlation between
subsidies and cotton prices. Considering the exceptional measures adopted in response
to the COVID-19 pandemic, the Cotton-4 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 products.
The European
Union underscored the importance of transparency in the negotiations and urged members
to step up efforts to comply with notification obligations and provide voluntary
replies to the questionnaire about cotton policies. Pakistan called for a speedy
outcome in the negotiations on cotton, especially in the wake of the COVID-19 pandemic.
Brazil noted that tackling cotton domestic support remained a priority. China stressed
that the elimination of all product-specific support and non-product-specific support
beyond a minor percentage of support allowed on an annual basis (de minimis) should be a first step in the negotiations.
Due to
time constraints, the chair noted that the WTO Secretariat's presentation on the
revised “background paper” (TN/AG/GEN/34/Rev.12
and two addendums) would be posted online. The document compiles
up-to-date information on cotton policies in the three pillars of domestic support,
market access and export competition.
The chair
noted the decline in the responses to the Secretariat's questionnaire about cotton
policies, possibly as a result of the pandemic, and encouraged members to continue
engaging in the exercise.
The agenda
of the meeting is available here
At the
request of the Cotton-4, the WTO Secretariat organized an information session on
the impact of COVID-19 on cotton trade back to back with the 13th Dedicated Discussion
on Cotton. The purpose of the session was to ensure a common understanding of the
facts and figures about the impact of the COVID-19 pandemic on cotton value chains
and to initiate a dialogue on possible solutions.
DDG Wolff,
who chaired the session, highlighted the importance of turning the quest for immediate
solutions to the short-term impacts of the pandemic into an opportunity for long-term
improvements which would be to the benefit of the whole cotton industry, particularly
the most vulnerable cotton-producing countries.
A presentation
by Mr Kai Hughes of ICAC opened the discussion, providing
global figures on cotton trade and the impact of COVID-19, noting that the downward
pressure on international prices caused by the fall in demand for cotton would have
lasting effects. A joint presentation by Dr Heike Ostermann (GIZ) and Belinda Edmonds (African Cotton Foundation)
focused on the issues faced by small-holders and the solutions offered by intra-African
cooperation, value addition activities and trade preferences included in legislation
such as the African Growth and Opportunity Act, which seeks to assist the economies
of sub-Saharan Africa and to improve economic relations between the United States
and the region.
The session
closed with interventions by Professor Idrissa Ouedraogo (FORGE-Afrique), Mr Marco Mtunga (President of the
African Cotton Association) and Mr Charles Jannet (Head of Cotton Trade, Ecom
Agroindustrial Corporation Ltd and Vice-President of Afcot), who respectively provided information specific to West
Africa, Eastern and Southern Africa and private sector buyers with integrated operations
in West Africa.
Professor
Ouedraogo highlighted the negative impacts experienced
in West Africa, taking Mali as an example, where only 20 per cent of the cotton
harvest had been sold by mid-June 2020. Mr Mutunga stressed the need to improve extension services, which
provide guidance to cotton farmers about best practice, throughout Africa.
Mr Jannet noted that an increase in cotton demand from Bangladesh
represented an opportunity for African cotton exports although the price remained
low. Even though purchases were affected by COVID-19, the certified supply chain
allowed companies to respect purchase commitments.
Participants,
both in the meeting room and those connected remotely, highlighted specific hurdles
faced by cotton businesses, particularly in Africa. These hurdles include the urgency
of honouring contracts and finding solutions to save the
African cotton lint production for the 2019-2020 season, which was stuck in ports
and transport hubs and which represented 70 per cent of total production. They stressed
that, in the absence of support and long-term strategies to revive cotton value
chain operations in Africa in a comprehensive manner, millions of people across
Africa would fall below the poverty line.