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‘Cotton Four’ seek complete elimination of subsidies on cotton

According to Benin, Burkina Faso, Chad and Mali, also known as the ‘Cotton Four’ (C4), have asked the US and the EU to eliminate subsidies and pay compensation to cover economic losses caused by them. The issue is expected to be discussed at length at the World Trade Organisation Ministerial Conference.

It was originally raised in the General Council and Agriculture committee by the C4, who wanted the conference in Cancun, Mexico, in 2003 to insist that the developed nations eliminate subsidies and pay compensation. The countries appealed that it was difficult to compete with the subsidies of the rich nations and it is making difficult for them to be a part of the international trading system.

Their plea was supported by the WTO Director-General, Supachai Panitchpakdi, who urged the assembly of ministers to consider the proposal seriously since according to him, the C4 were seeking a solution based on a fair multilateral trading system. During the discussions, the proposal received support from Canada, Australia, Argentina, Cameroon, Guinea, South Africa, Bangladesh , Senegal and India who voted either for the whole proposal or key parts such as phasing out subsidies.

However, the US was of the opinion that imbalances in cotton are not caused by subsidies but other underlying factors such as country-specific industrial policies that support production for synthetic fibres, high tariffs on finished products and good harvests caused by favourable weather. They suggested that the distortions should be addressed through the production chain. Also the EU said that its production and exports were too small to have an impact on world cotton prices, and that it was changing its programme for cotton producers. It pledged to contribute to reaching agreement on a solution.

The issue was discussed again at the Hong Kong Ministerial Conference in 2005, where it was agreed that export subsidies on cotton would be eliminated, and that developed countries would allow cotton from least developed countries into their markets duty-free and without quotas. It was once again tabled at the Bali Conference in 2013 where the members reiterated their commitment to “on-going dialogue and engagement”, which were agreed at the Hong Kong Ministerial Conference, providing some respite to the C4 nations.

 
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