The Secretariat of the World Trade Organization in Geneva circulated the following draft declaration calling for the phasing out of all subsidies to cotton farmers within three years. These proposals were made by Benin, Burkina Faso, Chad and Mali.
The following communication, dated 21 August 2003, has been received by the Chairman of the General Council from the Permanent Mission of Benin:
I have the honour to submit to you in annex the Draft Decision Concerning Specific Measures in Favour of Cotton with a View to Poverty Alleviation.
The four countries co-sponsoring the Sectoral Initiative in Favour of Cotton, Benin, Burkina Faso, Chad and Mali, would be most grateful if this document could be circulated to Members of the World Trade Organization, and examined by the session of the General Council scheduled for 25 August 2003.
The Ministerial Conference,
Recalling the provisions of paragraphs 1 and 3 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization (the WTO Agreement) and the Decision-Making Procedures Under Article IX of the WTO Agreement agreed by the General Council (WT/L/93),
On the basis of the recommendations contained in paragraphs 13 and 14 of the Ministerial Declaration (WTO/MIN(01)/DEC/1) of the Fourth Ministerial Conference of the World Trade Organization (WTO), held in Doha (Qatar) from 9 to 14 November 2001,
Recalling the provisions of Articles 7, 8 and 9 of the Agreement on Agriculture concerning domestic support, competition and export subsidies, and anxious to ensure open, equitable and just multilateral trade and to eliminate all distortions in the production and marketing of cotton, a product for which the four co-sponsors of the Sectoral Initiative in Favour of Cotton - Benin, Burkina Faso, Chad and Mali - have a recognized comparative advantage,
Bearing in mind that, as indicated in paragraph 2 of the Doha Ministerial Declaration, "international trade can play a major role in the promotion of economic development and the alleviation of poverty",
Having examined the request of the four (4) WTO Members, Benin, Burkina Faso, Chad and Mali, that co-sponsored the Sectoral Initiative in Favour of Cotton contained in documents TN/AG/GEN/4, TN/AG/GEN/6 and WT/MIN/03/W/2,
Taking account of the strategic importance of cotton for the economies of the West and Central African Countries affected by the domestic support measures and the cotton export subsidies granted by certain countries to their cotton producers,
Concerned at the serious consequences of the domestic support measures and export subsidies in favour of cotton for the economies of the developing countries, and particularly the least-developed countries (LDCs), affected by these measures, and for the social conditions of populations in the rural cotton-producing communities in those countries,
Stressing the urgency of settling the problems faced by the countries belonging to the LDC group as a result of the domestic support measures and the subsidies granted to cotton,
Decides as follows:
1. Elimination of domestic support and cotton export subsidies
1.1 WTO Members undertake to eliminate domestic support measures and subsidies for the production and export of cotton over a period of three (3) years from 1 January 2004 to 31 December 2006.
This elimination shall take the form of a gradual decrease, in equal annual portions, i.e. a yearly decrease equal to at least one third (33.3 per cent) of the total level of subsidies granted.
2. Transitional financial compensation mechanism
2.1 WTO Members decide to establish a transitional financial compensation mechanism in favour of the cotton-exporting LDCs affected by these subsidies, for a period of three (3) years from 1 January 2004 to 31 December 2006.
2.2 Starting on 1 January 2004, and until the domestic support measures and subsidies granted to the production and export of cotton have been totally dismantled, Members that have granted these subsidies will be called upon to grant financial compensation equivalent to the amount of the loss in export revenue suffered by the LDCs affected by these subsidies, in conformity with paragraphs 2.3, 2.4, 2.5 and 2.6 of this Decision.
2.3 The annual amount of compensation to be paid shall correspond to the estimated losses suffered, calculated on the basis of the statistics supplied by the International Cotton Advisory Committee (ICAC) for the cotton seasons 1999/2000, 2000/2001 and 2001/2002.
2.4 The amount of the overall financial compensation to be paid shall be adjusted in proportion to the subsidy reduction efforts of the countries contributing to the compensation fund.
2.5 To that end, a compensation fund shall be created under the authority of a body to be determined, with responsibility for collecting and distributing the overall financial compensation mentioned in paragraph 2.4. The contributing countries shall be identified in accordance with the provisions of paragraphs 1.1, 2.2, 2.3 and 2.4 of this Decision.
2.6 The compensation granted to the LDCs shall be calculated in proportion to their respective shares in the production and export of cotton as communicated by the ICAC.
2.7 At the national level, the management of financial compensations shall be the joint responsibility of the producers' associations in the countries affected and the competent national structures, under the supervision of institutions to be determined.
3. Management and control of the elimination of subsidies and of financial compensation
3.1 Members undertake to create, by 15 October 2003 at the latest, a mechanism for the control and elimination of domestic support measures and export subsidies in favour of cotton, which shall be operated by a committee set up to monitor the implementation of the above measures under the supervision of the WTO Committee on Agriculture (Special Session). This committee shall submit a progress report each year to the WTO General Council and the Ministerial Conference on the implementation of this Decision, and shall propose, where necessary, appropriate corrective measures.
3.2 WTO Members shall be regularly informed of the implementation of this Decision through notifications submitted by the countries contributing to and benefitting from the compensation fund in connection with the work of the Special Session of the Committee on Agriculture.
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TWN Info Service on WTO Issues
9 Sept 2003
Third World Network
http://www.twnside.org.sg
TWN Briefings
SOME KEY ISSUES IN CANCUN
By Martin Khor
[section on agriculture; for other sections of this briefing see separate e-journal posting today]
AGRICULTURE
This is expected to be Cancun's big fight. In mid-August the US and EU got together and proposed: (a) a deal in which they would not have to give up or even reduce their domestic subsidies and they can escape from the Doha goal of eliminating export subsidies and disciplining export credits; (b) a "blended" formula for cutting tariffs in which their high tariffs can escape the net whilst the developing countries would end up with deeper cuts in more products; (c) nothing substantial on S&D for developing countries.
This so outraged the developing countries that 20 of them (including Brazil, India and China) combined to come up with their own proposal that would: (a) commit the rich countries to significantly reduce their domestic subsidies of all types, and eliminate their export subsidies, whilst applying the "blended formula"; (b) provide S&D for developing countries, with less tariff reduction commitments, and the introduction of "special products" and a special safeguard mechanism (SSM) against import surges. Some developing countries want more meaningful S&D and have their own proposals. The Chairman's draft text on agriculture (especially in Annex A) has practically adopted the US-EU framework, with some weak and inadequate provisions for developing countries, some of which (like the SSM) would come with conditions and have still to be negotiated. In Cancun, a battle between the EU-US position and the Brazil-India-etc proposal can be expected. Developing countries and social movements that are really concerned with the impact of cheap imports on farmers' livelihoods and food security will not see their concerns addressed satisfactorily. For them it will be a case of how much damage will emerge.
What Should Be Done: The Cancun draft on agriculture (Annex A) should not be accepted. A new draft should be produced in the negotiations, that ensures that developed countries give up their export subsidies and domestic support measures within a short time frame, whilst strong protection is given for developing countries' small farmers and food security. If the complex issues cannot be resolved, the Ministers may just ask that further work be done in Geneva.
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Third World Network
DEVELOPING COUNTRIES PREPARE FOR AGRICULTURE BATTLE AT CANCUN MINISTERIAL
TWN Report from Cancun, 9 Sept 2003 (By Martin Khor)
[excerpts only; for full report see http://www.twnside.org.sg]
As the WTO's Fifth Ministerial Conference begins, developing countries have given notice that they will fight to the end of the meeting to ensure that their positions on the framework on modalities for agriculture negotiations will prevail over the present draft Cancun text on agriculture and the US-EU position on which it is mainly based.
On 8 Sept evening, the Group of 21 (G21) developing countries told a media conference (chaired by the Brazilian Foreign Minister) that they will insist that their framework proposal (first submitted in Geneva on 20 and 28 August, and now re-issued as a Ministerial document WT/MIN(03)/W/6 dated 4 Sept) be at the center of the agriculture negotiations in Cancun. They rejected the text submitted by the General Council chairman, Uruguay Ambassador Carlos Perez del Castillo, as the basis of negotiations.
At another media conference, chaired by the Indonesian Trade Minister, another group of 23 developing countries announced they had formed an Alliance for Strategic Products and Special Safeguard Mechanism (SSM) to fight for the interests of "small vulnerable resource-poor farmers from developing countries" through strong SP and SSM mechanisms in the Cancun outcome on agriculture.
The G21 media conference, held after a Ministerial meeting of the group during which a Ministerial Communique was adopted, was addressed by the Ministers of Brazil, India, China, South Africa, Argentina and Costa Rica. Brazilian Foreign Minister Celso Amorin said the meeting was a historic event in that so many developing countries which represented over half the world population were able to come together.
He said the Ministers agreed it is key to keep their unity which will be tested throughout the Conference, and questions that may appear secondary or procedural will be important. Amorin said the G21 Ministers agreed that the Castillo draft does not respond to their countries' needs and is not the basis for negotiations. It is essential that the G21 paper is also taken as a basis and this can be easily done as it follows the same format as the Castillo paper. Added Amorin: "Ours is a good cause, we have the support of our population and a large proportion of world opinion, this is a chance for the WTO to show it cares for the poor."
India's Commerce Minister Arun Jaitley said the group's formation was a very important ocassion as it marked an important point where developing countries representing 65% of the world's population of farmers, are attempting to put forward their own case. "our document is not adequately addressed in the draft text and we will work together to ensure our points are addressed."
South African Trade Minister Alec Erwin said it was historic the Ministers could unify positions across such major agricultural economies and exporters. They were fighting for a balance that meets the requirements of a fair agriculture trading system with the main adjustment burden lying with industrial countries that are the main subsidizers.
The Chinese Trade Minister said the G21 proposal involves developing countries' interests as the 21 countries represent 51% of world population and over 60% of the of the rural population of the world live in these countries. He hoped the Ministers would consider the G21 text even as they are considering the Chairman's draft. Cancun could only be a success if it fully takes account of developing countries' interests.
The Argentinian Minister said the G21 proposal is both balanced and professionally well done and when the Conference starts the following day this paper must be accorded the same basis as the Chair's text, and this was not just a procedural issue but part of a constructive approach.
The Costa Rica Minister said it was very hard for Third World farmers to compete not only with farmers from other countries, but also with Finance Ministries of the rich countries. If Cancun is to make progress on other issues, such as non-agriculture products, we must have progress in agriculture too. ...
Jaitley stressed two points in the alliance — it had numerical backing (representing over half of humanity) and it is based on fairness in addressing agriculturaql trade distortions. It would thus attract others too. The Chinese Minister added that Cancun's success depends on whether it follows the fair competition principle and provides S and D for developing countries. The G21 proposal reflects this spirit and Cancun will succeed only if it heeds this. ...
Ending the media conference, Amorin said in the past there was an impression that fighting for social justice took place outside the hall. But now the fight for social justice is also inside the WTO and this is part of the historic moment. ...
Meanwhile, another meeting was held by 23 developing countries that formed an Alliance for Strategic Products and Special Safeguard Mechanism. Members include Barbados, Dominican Republic, Honduras, Indonesia, Jamaica, Kenya, Mnongolia, Nicaragua, Nigeria, Pakistan, Panama, Peru, Philippines, Trinidad and Tobago, Turkey, Uganda, Venezuela, Zambia, Zimbabwe, Tanzania, Ecuador.
In a Ministerial Communique, the countries said the Alliance represents the interests of a majority of the world's small, vulnerable, resource-poor farmers from developing countries across the continents. Their countries suffer undue stress imposed by the inequalities of the trading environment. Even on their own markets, producers of developing countries face increasingly difficult circumstances and impoverishment.
The Ministes reiterated the need for fundamental reform, including reducing and phasing out export subsidies, substantial reductions in trade distorting domestic support, and substantial improvements in market access. For any reforms to be successful, S and D treatment must be an integral part of all elements so they can take account of development needs including food and livelihood security and rural development.
While welcoming the Cancun draft's reflection of some developing country concerns, the Ministers stressed the S and D component falls far short. The Alliance proposal for an SP and SSM mechanism must thus be an integral part of S and D. The Alliance proposal is that:
1. Developing countries shall have the flexibility to self designate a ( ) percent of tariff lines as special products (SPs) which shall not be subject to tariff reductions and no new commitments on tariff rate quota.
2. A special safeguard mechanism (SSM) shall be established for use by developing countries as a mechanism to protect their domestic markets against cheap and subsidized imports.
3. Products designated as SP shall also have access to the SSM.
At the conference, the Indonesian Trade Minister said the 23 countries met to form the Alliance earlier today following their earlier work in Geneva, aimed at having strong SP and SM mechanisms in the agriculture outcome.
The Philippines Minister added it was very important that these mechanisms be available to protect the local agriculture sector from unfair competition from outside. ...
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