Trade Report to the Beltwide Cotton Conferences January 2006

Hong Kong Ministerial, Dec ‘05 Was to establish specific measures for:  Time table for elimination of export subsidies,  Reductions in tariffs and increases in TRQs,  Reductions in trade-distorting domestic support. By early November the EU and other developed countries made it clear they could not meet the proposals for increased market access.

Hong Kong Cotton Specific Text All forms of export subsidies for cotton will be eliminated by developed countries in 2006.

Hong Kong Cotton Specific Text All forms of export subsidies for cotton will be eliminated by developed countries in 2006 Developed countries will give duty and quota free access for cotton exports from least-developed countries (LDCs) from the commencement of the implementation period.

Hong Kong Cotton Specific Text Members agree that the objective is that, as an outcome for the negotiations, trade distorting domestic subsidies for cotton production be reduced more ambitiously than under whatever general formula is agreed and that it should be implemented over a shorter period of time than generally applicable. We commit ourselves to give priority in the negotiations to reach such an outcome.

Hong Kong Cotton Specific Text All forms of export subsidies for cotton will be eliminated by developed countries in 2006.

Hong Kong Cotton Specific Text All forms of export subsidies for cotton will be eliminated by developed countries in  WTO ruling that cotton GSM export credit was a prohibited subsidy  WTO ruling that upland cotton Step 2 program was a prohibited subsidy

Hong Kong Cotton Specific Text Developed countries will give duty and quota free access for cotton exports from LDCs  Developed countries account for 8% of market

Hong Kong Cotton Specific Text...domestic subsidies for cotton production be reduced more ambitiously than under whatever general formula is agreed and that it should be implemented over a shorter period of time...

Hong Kong Cotton Specific Text...domestic subsidies for cotton production be reduced more ambitiously than under whatever general formula is agreed and that it should be implemented over a shorter period of time...  West Africans and Oxfam have demanded an 80% reduction in all domestic cotton support by developed countries in 2006, with 10% in each of the next 2 years

WTO, What Is Not Happening? Failure to address disparities in developing world  China, with nuclear arms and space program still allowed to self-declare as developing,  No disciplines on monetary, financial and industrial policies of developing countries, including Brazil, China, India and Pakistan.

WTO, What Is Not Happening? China, India, Pakistan spun 44.6 million bales in 2000 Now spinning 72 million bales of cotton  High border measures,  Tax incentives and rebates,  Free capital from deliberate creation of non- performing construction loans.

WTO, What is Not Happening China$0.78$0.74 A Index$0.63$

WTO, What Is Not Happening? China produced the equivalent of 22 million bales of polyester in 2000 Now producing 45 million bales of polyester  Cotton losing market share,  Only the U.S. building a market,  Texas Tech, International Monetary Fund and FAO of UN report show market access is key.

World Turns Deaf & Blind Easy to find USDA reports of $2 to $3 billion in annual cotton spending 2001 to 2004 How much was spent in Asia to double the production capacity for polyester in 8 years? How much was spent in Asia to almost double cotton spinning capacity in 5 years? THESE EXPENDITURES AND THEIR IMPACT ON THE WORLD MARKET DWARF U.S. COTTON SUBSIDIES

WTO, What Is Next? In Hong Kong there was a commitment to finalize modalities by April 30, and Table schedules by July 1, Intense negotiations immediately ahead.

WTO, What Is Next? In Hong Kong there was a commitment to finalize modalities by April 30, and Table schedules by July 1, Intense negotiations immediately ahead.  Cotton will be asked to give more,  Some will threaten to abandon Doha,  EU will play a game of chicken.

Trade Report to the Beltwide Cotton Conferences January 2006