| This week we received a very interesting (and very well documented) contribution from Jacques Berthelot on the current WTO negotiations on cotton. The document starts with an analysis of the communication by four African countries ( Benin , Burkina Faso , Mali and Chad ), co-authors of the Sectoral Initiative on cotton at the WTO. This group of countries is sometimes referred to as the C4, which explains the title of the document: The C4 must review the way it argues its case to save African cotton at the WTO. Remarks on the C4 communication to the WTO on March 1st 2006. Solidarité (http://solidarite.asso.fr) March 14 2006 The technical aspects of the document go beyond the space of a simple abc Burkina bulletin. Therefore this is a summary of the main contents. Readers who wish to know more can download the full text from the site above. After a minute analysis of the C4 communication to the WTO, the author concludes: “In order to save their cotton producers the African Member States of the WTO and their C4 spokesperson must change course and readjust their strategy. They must realise that their major trading partners – the E.U. and the U.S. and their armed wing, the IMF - will not, beyond their fine words, give away anything freely, but will pursue their egotistic interests. They must understand that the WTO agreements – the Agriculture Agreement, the Framework Agreement and the Hong Kong Declaration are riddled with loopholes. They have been conceived by these powerful members in order to perpetuate their dumping practices by transferring subsidies from one box, which supposedly creates more trade distortion, to other boxes which allegedly create less. They have been cheating massively in their notifications and have failed to comply with the rules in their agriculture policies.” The author especially stresses the importance of making a distinction not only between domestic support to cotton and export subsidies (as is now generally accepted), but also between domestic support to cotton for the home market and domestic support to cotton grown for export. (This is the core of his contention). Paragraph 11 of the Hong Kong Declaration stipulates: “In 2006 all forms of export subsidies for cotton shall be abolished by the developed countries.” What is to be understood by the words “All forms of export subsidies for cotton” ? It applies first and foremost to official export subsidies. But there is more to it than that! In the last five years there has been a more positive development in the Dispute Settlement Board of the WTO. At present, when a product is sold for export at a price below its production cost, because it has been subsidised, such support is now considered to be an export subsidy. This can be seen in the rulings of the WTO Appellate Body. For example, on December 3 2001, in the case of Canadian dairy products, it ruled the following: “The distinction between disciplines for domestic support and disciplines for export subsidies, as defined in the Agriculture Agreement, would equally be undermined, if a WTO Member State were entitled to use unlimited domestic aid to subsidise exports of agricultural products” (Paragraph 91). The potential of WTO Member States to export farm products is maintained, insofar as a producer does not sell any product for export at a price below its production cost, obtained through the financial support of a public authority.” (Paragraph 92) Its ruling of April 4, 2005 makes reference to this precedent. Since 70% of US cotton production was exported in 2005, 70% of the domestic support must also be considered as export subsidies! Expressed in financial terms the result would be: The official export subsidies amount to $ 132 million. As the total of cotton subsidies in 2005 is estimated at $4,692 billion – a record high – that would make $4,560 billion in alleged “domestic subsidies”, of which 70% (or $3,190 billion) are in actual fact export subsidies. It can therefore be estimated that in 2005 US cotton subsidies came to $3,322 billion (3,190 + 0,132 billion). Official export subsidies accounted for only 2.8 % of all subsidies, or 4% of all export subsidies (including domestic support to export cotton). Therefore it is important to point out that the Hong Kong Declaration, in accordance with the terms signed, should apply to: “All forms of export subsidies” It is on this point that the fight must now be focused. Or, in Jacques Berthelot’s words: “Since the C4 purport to argue their case on the basis of WTO rules, they must also do it on the basis of case law (= the rulings of the Dispute Settlement Board) and demand that all domestic support to export cotton be considered as export subsidies and therefore abolished this year (2006). At the very least the C4 should demand that the major part of US domestic subsidies – which mainly goes to export cotton – should undergo a much more substantial and swift reduction than the one proposed for domestic support to cotton in general on March 1st.” Jacques Berthelot’s document contains other important considerations. It is possible to download the full text by clicking here. Koudougou, March 15 2006
Maurice Oudet | 
