67th Plenary Meeting of the INTERNATIONAL COTTON ADVISORY COMMITTEE

Transcription

1 67th Plenary Meeting of the INTERNATIONAL COTTON ADVISORY COMMITTEE MINUTES FIRST PLENARY SESSION What Next for Cotton and Multilateral Trade Negotiations 15:10 hr. Tuesday November 18, 2008 Mr. Chiedu Osakwe in the Chair The CHAIR thanked the entire membership of the ICAC for their interest in the Doha Development Round (DDR) and multilateral trade. He introduced Mr. Andrei Guitchounts to present the report from the Secretariat. Mr. Guitchounts reported that all government subsidies to the cotton industry, including direct support to production, border protection, crop insurance subsidies and export subsidies declined by more than half from $5.6 billion in 2006/07 to an estimated $2.7 billion in 2007/08 (the lowest since 1997/98), due to the significant increase in cotton prices. Mr. Guitchounts provided details regarding the main countries providing support to cotton production. The amount of support to cotton declined in the United States, China (Mainland), Brazil, Mexico and Colombia, remained stable in Turkey and increased in the European Union mainly because of a depreciation of the U.S. dollar. Mr. Guitchounts presentation is a statement of the meeting. The CHAIR thanked Mr. Guitchounts and introduced the members of the panel. He said that these members would report on the progress made on cotton before responding to questions from government delegates, and that he hoped this would result in identifying main messages. The CHAIR then made a few introductory remarks relating to cotton in the Doha Development Agenda (DDA) negotiations in the context of the current global financial crisis. He explained that since 2003, cotton has been a part of the DDA thanks to the initiative of the C-4 countries (Benin, Burkina Faso, Chad and Mali). A mandate for cotton was established in 2004 and reconfirmed in the Hong Kong Ministerial in In this mandate, WTO members agreed to treat cotton ambitiously, expeditiously and specifically and agreed to treat cotton on two tracks: the Development Assistance Aspect and the Trade Policy Aspect. Regarding the Trade Policy Aspect, since 2005 much progress has been achieved on the issues of market access and export subsidies, but domestic support is an area for which WTO members have not yet reached a consensus. Regarding the Development Assistance Aspect, considerable progress has also been achieved. A number of commitments have been made by funding partners, some of which are already delivered. The remaining issues relate to the remaining large gap between commitment and delivery and the rapidity of the delivery of commitments. The Chair reminded of Pascal Lamy s conviction that the DDA cannot be completed without cotton, but that agricultural negotiations need to be completed in order to complete cotton negotiations. He noted that the final statements from the previous ICAC plenary meetings included messages that had been very helpful in the progress of DDA negotiations on cotton, and hopes that a similar message will also appear in the final statement of the 67 th Plenary Meeting of the ICAC. He said that the current global economic crisis is having a negative impact on the global cotton

2 2 market, but that the G-20 meeting in Washington, DC, last week marked an important step. In particular, the paragraph 13 of the G-20 final declaration instructs Trade Ministers to strive to agree to modalities this year and to move rapidly to conclude the DDA. The Chair expressed his hope to identify important messages in the present session. The Chair s remarks are part of the statements of the meeting. The CHAIR invited Mr. Seriba Ouattara, General Director of Commerce, from the Ministry of Commerce for Promotion of Enterprises and Craftsmanship in Burkina Faso, to speak. Mr. Ouattara reminded of the main conclusions related to cotton reached in the Hong Kong Ministerial meeting and talked about the current challenge facing the cotton dossier in the DDA, the domestic support pillar. He noted that the C-4 members had prepared a formula which would allow a more ambitious result for cotton than the rest of the agricultural sector, but that cotton was not even discussed in the July 2008 mini-ministerial meeting. He stated that the C-4 and the 36 African cotton producing countries now ask that Doha negotiations start with the cotton issue. In addition, the C-4 and its allies support the July 2008 proposal of Mr. Falconer regarding domestic support (paragraph 54), and are interested by the proposals from countries subsidizing cotton production (the United States and the European Union in particular). They also would like the cotton dossier within the DDA be solved by the end of Regarding the Development Assistance Track, they support the consultative process and congratulate the funding partners, but they note the gap between commitments and delivery. Mr. Ouattara expressed his hope that the panel discussion would be the opportunity to learn how this gap will be filled. Finally, he called for a rapid completion of the DDR negotiations regarding domestic support for cotton and called for more implementation of development commitments. Mr. Ouattara s speech is a statement of the meeting. The CHAIR thanked Mr. Ouattara and introduced Mr. Savio Rafael Pereira, General Coordinator of Fibers and Oilseeds, at the Ministry of Agriculture in Brazil. Mr. Pereira explained that Brazil, a large cotton exporter, is now facing a serious credit crisis, which affects the financing of cotton production. Cotton area is now expected to decline by 15% in 2008/09. He said that Brazil fully supports the July Draft Modalities on Agriculture, in particular for Agriculture Measure Support (AMS) reduction for cotton in accordance with the mandate for a more ambitious treatment vis-à-vis the general reduction for Amber box support. Mr. Pereira s notes are a statement of the meeting. The CHAIR thanked Mr. Pereira and introduced Mr. Singh, Joint Secretary at the Ministry of Textiles in India. Mr. Singh noted that in the current global financial crisis, cotton has become a victim. However, the G-20 summit provided some hope, in particular with the paragraph 13 of their declaration, calling for a completion of the DDA before the end of He said that India supports the spirit of Hong Kong Ministerial Declaration of 2005, especially its decision to have an explicit decision on cotton ambitiously, expeditiously and specifically on the three pillars. India also supports the C-4 initiatives regarding the reduction in the specific measure of support applicable to cotton, but insists that the United States needs to implement fully the panel ruling on cotton. Regarding the development-related aspects of the cotton initiative India stresses the need to provide urgent development assistance to the LDC countries that are net cotton producers and exporters. India is also supportive of expediting the work in the Sub- Committee on Cotton so that an early agreement can be reached on specific modalities for cotton, and he agreed that cotton issues should be discussed early in any WTO negotiations.

3 3 India feels it would be helpful if the United States were to accept or come up with an acceptable counter-proposal to the Article 54 formulation regarding reduction in support of cotton as given in the Revised Draft Modalities for Agriculture. He noted that this would go a long way in expediting the DDA on cotton issues. On its part India welcomes any developing country to visit, share its experience in increasing cotton yields, reducing contamination, modernization ginneries and market yards, and farm extension works. Mr. Singh s presentation is a statement of the meeting. The CHAIR thanked Mr. Singh and called Mr. Jean-Marc Trarieux, Deputy Head of Unit (WTO), Director General for Agriculture and Rural Development, European Commission, to speak. Mr. Trarieux noted that the European Union (EU) reformed its cotton program in 2006, decoupling most of the support to production and therefore discontinuing the most tradedistorting policies. EU cotton production has since declined significantly. He noted that this reform is a testimony of the EU deep and consistent commitment to the cotton industry. He expressed regrets that the July 2008 WTO meeting did not finalize the DDA and said that they would continue to work on the DDA. However, he noted that the key parameters of the DDA were identified and he does not expect the final agreement to be very different from what was discussed in the July mini-ministerial. The EU will continue supporting a "specific, ambitious and expeditious" outcome for cotton in the Doha Round, and invites key developed countries to engage themselves on the way towards reform. He said that the EU has already implemented the Hong Kong mandate for cotton. In particular concessions made by the EU on cotton are specific and more ambitious than for other commodities and there are no duty and no export subsidies on cotton. In addition, EU concessions are certainly expeditious since they have already been implemented. He concluded that the EU has been playing and will continue to play a very active role vis-à-vis the issue of cotton in the framework of the Doha Round. It has been particularly supportive of the trade interests of developing countries and believes that a substantial outcome on cotton, in full respect of the mandate, is within reach. Mr. Trarieux s comments and report are a statement of the meeting. The CHAIR thanked Mr. Trarieux and introduced Mr. Mark Manis, Senior Trade Policy Advisor, Foreign Agricultural Service, USDA, USA, to speak. Mr. Manis first presented the global economic environment and the conclusions reached by the G-20 summit last week. He referred in particular to the G-20 call for the achievement of full modalities of the DDA with an ambitious and balanced outcome before the end of this year, and to their announcement about the impact of the current economic crisis on most vulnerable countries, where the G-20 reaffirmed the development commitments that had been made previously. Mr. Manis also confirmed the U.S. commitment to achieving the Hong Kong Ministerial mandate for cotton and their commitment to a successful outcome to the DDA. The United States recognize the importance of cotton and share the interest on cotton, and acknowledge it is not possible to wait until the last minute to solve the cotton issue. They also acknowledge the constructive atmosphere of the cotton discussion in Geneva. On the development aspects, Mr. Manis concluded by re-affirming the US development commitments related to cotton and more general commitments. The CHAIR thanked Mr. Manis and called for questions or comments from government

4 4 representatives. The delegate of POLAND said that its country fully supports the declarations of the EU representative Mr. Trarieux. He highlighted the importance of the development aspect of the DDA, the importance of achieving a multilateral trade agreement, and expressed the hope that the development aspect of the DDA was well handled. The delegate of BRAZIL commented that a great time was already lost in trying to reach a consensus on cotton in the DDA. He also asked the chair to explain his interpretation of balanced outcome for cotton. The CHAIR explained that a balance should be reached between market access and the reduction in domestic support (in both agricultural and non-agricultural sectors). The DDA negotiations will continue with the knowledge that nothing is agreed until everything is agreed. The delegate of BRAZIL asked if balance implied compromise. The CHAIR answered absolutely, when negotiating everyone has to compromise. The delegate of MALI noted that the expeditious treatment promised for cotton needed to be accelerated, otherwise cotton production in West Africa would disappear completely. The CHAIR invited Mr. Trarieux and Mr. Manis to answer this remark. Mr. Manis agreed that it has been a long time. He noted that the WTO has attempted to set deadlines since 2001, but setting hard deadlines without political will does not yield good results. He said that there is in fact no deadline. However, he repeated that the United States is committed to achieve the DDA as quickly as possible. Mr. Trarieux repeated that on the commercial aspect of the DDA, the EU has already fulfilled more than its obligations. However, he warned that even if DDA modalities are finalized by the end of 2008, the implementation of the concessions will not take place before He explained that on the development aspect, the EU has established a partnership on cotton with Africa. More than 60 million Euros out of a total of 147 million Euros have already been spent in this context. The CHAIR noted that the concern from Mali was very serious. He explained that completing the Trade Aspect of the Cotton mandate takes time, and this is one of the reasons why a Development Aspect was created, in order make an early harvest and help cotton sectors in affected countries. He said that the WTO is grateful to the ICAC and its members for their contribution to the development assistance aspect and invited the executive director of the ICAC, to talk about the development projects initiated by the ICAC. The executive director briefly listed a number of projects conducted with the assistance of the Common Fund for Commodities and the European Union. The Delegate of EGYPT, referring to the Development Aspect of the DDA, asked the Chair to explain how large the gap between commitment and disbursement was and if the

5 commitments would be implemented given the current financial crisis. 5 The CHAIR explained that the slow movement to implement the commitment was partly due to funding partners and partly due to the recipients of the assistance, but that their November 7 meeting showed a better picture of disbursement than previously. He asked the delegates of US, EU and India and other members to provide additional answers. Mr. Manis said that it was common for both parties to work together, and supported the transparency that the WTO committee was working on. He explained that a combination of factors explained the gap between commitments and disbursements, and that sometimes the nature of the commitment itself explains the gap (for example long-term commitments will be slower than short-term commitments). Mr. Trarieux said that following the November 7 meeting at the WTO, this gap was estimated at 1 to 5 (slightly more than 20% of the commitments have been disbursed). He noted that the EU did much better than the average, having disbursed more than 40% of its commitments. He also said that the EU had already allocated 260 million Euros to cotton since Mr. Singh said that he did not have the figures, but that in 2008 India had totally eliminated import duties for cotton and that they started to import cotton from Uzbekistan and West Africa. The CHAIR thanked them and noted that the good news was that the development partners reaffirmed the totality of their commitments, even during the financial crisis. The delegate of TANZANIA said that the Tanzanian delegation attached a lot of importance to this discussion and recognized the efforts of the C-4. He pointed out that the problems related to cotton are pan African and do not refer to only a few countries, and urged the speakers to look at Africa as a whole. The CHAIR thanked the delegate of Tanzania and assured that all African countries were beneficiaries. He confirmed that the language of the mandate on cotton did not refer to C-4 countries but to least-developed countries; that the C-4 countries speak on behalf of the 36 African producing countries, and that the least-developed country group at the WTO is now headed by Tanzania. The CHAIR, on an exceptional basis, invited the former WTO Director General Mr. Ablasse Ouedraogo to make a comment. Mr. Ouedraogo explained that the duration of the DDA was the main concern and that he did not believe that an agreement could be reached in 2008 and 2009, because of changes in U.S. administration at the end of 2008, changes in the WTO DG in 2009, and changes in EU commissioners in He urged orators to speak the truth and insisted that the delay in reaching an agreement was indeed the most important problem of the DDA. The CHAIR said that in the absence of other comments, he called on each of the co-panelists to take a minute to provide final thoughts.

6 6 Mr. Ouattara said he believed that modalities could be concluded before the end of 2008, because there were no major divergences between WTO members. He urged WTO members to meet soon to talk about these modalities. Mr. Pereira had no additional comments. Mr. Singh said in view of the G-20 meeting and the importance given to the current economic crisis, he also felt that WTO modalities could be concluded before the end of the year. Mr. Trarieux also said that he believed significant progress on the DDA would be achieved rapidly and that the change in the EU commission should not slow the WTO negotiations. Mr. Manis reminded that the challenge faced in the future would be to bring 153 countries to reach consensus on the full modalities, but that there was a sense of positive movement. He did not expect that the change in the US administration would cause a long gap in the WTO negotiations. The CHAIR thanked all the members of the panel and the country delegates, expressed his gratitude to the ICAC and made a few concluding remarks. He noted that several points came out of the discussion, in particular: 1) The recognition of adversity caused by the financial crisis. The Doha Round will make a contribution to alleviate difficulties of the cotton sector. 2) Progress has been made on cotton but there is still scope for additional progress. The Cotton dossier is intrinsically connected to the Doha Round and ICAC can be of great assistance. 3) The WTO members reaffirmed the importance of development and commerce tracks, and the development track does bring an early harvest to the cotton issue. 4) The acknowledgement of the critical value of the G-20 statement, in particular its paragraph 13 calling members to agree on DDA modalities this year. The Chair called ICAC members to support the call of the G-20. 5) The EU and the US are committed to work on DDA modalities for the end of this year, irrespective of the changes in their administration. The CHAIR thanked everyone and adjourned the session at 5:10 pm.

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