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America dumping subsidized cotton into market { November 11 2005 } Original Source Link: (May no longer be active)
http://allafrica.com/stories/200511110331.htmlhttp://allafrica.com/stories/200511110331.html
US Cotton Offer Skirts 'Dumping' Controversy
Inter Press Service (Johannesburg)
November 11, 2005
Posted to the web November 11, 2005
Emad Mekay
Washington
The United States has offered poor African countries a seven-million-dollar plan to boost their cotton sales and limit the damage done to their farmers by U.S. cotton subsidies.
But independent advocacy groups say the deal will do little to help African cotton farmers, and that the United States should take far more sweeping measures ahead of an important round of multilateral trade talks in which subsidies for cotton and other farm agricultural remain a sticking point.
The crucial talks, called the "Doha Round" because they were initiated in the Qatar capital in 2001, will take place in Hong Kong in December. High on the agenda are the hefty agricultural subsidies that rich nations give to their farmers.
The World Trade Organisation (WTO) talks also aim to remove global trade barriers in goods and services, and to break an impasse created when trade diplomats met in Cancun, Mexico in 2003.
Poor nations say that the subsidies given in places like the United States, Europe and Japan allow farmers in rich nations to sell their produce at artificially low prices and depress global prices, hurting farmers in developing nations.
In March, the WTO backed a petition by Brazil, which was supported by some West African cotton-producing nations, challenging several types of U.S. agricultural support measures, including financial backing for cotton farmers.
A statement from the U.S. Trade Representative (USTR) said that Thursday's offer was part of the U.S. effort to break that deadlock, and that it was "a direct response to requests made in meetings" about cotton at the WTO in the run-up to Hong Kong.
U.S. Agriculture Secretary Mike Johanns and USTR Rob Portman announced the launch of the West Africa Cotton Improvement Programme (WACIP) during a high-level visit to Africa. Benin, Burkina Faso, Chad, Mali and Senegal are the countries that will benefit from the offer.
"We are pleased to announce the allocation of seven million dollars -- five million dollars in fresh funding -- to begin the work of this programme," said Johanns.
The programme will be finalised after the Hong Kong meetings.
"The West Africa Cotton Improvement Programme is one more way the United States is specifically addressing the needs of cotton dependent countries in Africa," said Portman, whose country is the world's largest cotton exporter.
As part of the deal, the National Cotton Council of America, an industry group, will be a key partner, providing assistance in West Africa during the cotton harvest on measures to control insects and the application of biotechnology.
To watchdog groups, however, the move falls short of addressing substantial concerns of cotton growers in West Africa who are suffering form U.S. dumping of cotton at cheap prices.
"This is the U.S. offering aid to help West African countries produce and market their cotton," said Ben Lilliston of the Minneapolis-based Institute for Agriculture and Trade Policy (IATP). "But it does nothing to address the dumping of cotton by U.S. based agribusiness firms onto the world market."
Organisations that follow the international agriculture trade have long blamed dumping, saying the practice depresses global cotton prices and makes it hard, if not impossible, for West African countries to compete.
IATP issued a report on U.S. dumping that found that in 2003, the latest year for which numbers are available, cotton was exported from the United States at 47 percent below its cost of production.
"This announcement appears to be part of a strategy to avoid making concrete changes in international trade rules at the WTO to stop dumping," Lilliston said.
According to the most recent U.S. Department of Agriculture data, between August 1999 and July 2005, U.S. cotton producers received more than 18 billion dollars in subsidies.
The international advocacy group Oxfam says West African countries lose as much as 250 million dollars in revenue each year because of U.S. cotton dumping.
Celine Charveriat of Oxfam reacted to the proposal by saying African farmers, among the world's poorest, "need genuine trade reform".
"We are disappointed," she said. "Cotton improvement efforts may help some farmers in the region but will not give them the level playing field they are looking for."
Another reason non-governmental organisations have criticised the modest proposal is that it covers only five of the 33 countries that grow cotton and are affected by U.S. subsidies and dumping.
Over the past year, the economic situation of West Africa's cotton farmers has worsened. World prices have declined, compounded by the recent movement of the dollar against the euro. Farmers purchase their input needs in euros and make sales in dollars.
For 2005, a modest decline in acreage is expected in West Africa, with production falling to 4.62 million bales.
Production had hit record levels in 2004 with China, the United States, India and Pakistan accounting for roughly 70 percent of the enormous crop, according to USDA figures.
Advocacy groups hope that the cotton issue will be addressed in coming weeks to prevent the collapse of the world trade talks again at the Hong Kong meeting.
But the USTR statement said that the West Africa Cotton Improvement Programme represents only one part of the overall U.S. response to help these countries address the development obstacles in their cotton sectors.
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