Cotton US, Africa and WTO

An African farmer How can we cope with this problem? Cotton prices are too low to keep our children in school, or to buy food and pay for health. Some farmers are already leaving. Another season like this will destroy our community. Brahima Outtara, a small cotton farmer in Logokourani village, Leraba Province, western Burkina Faso.

Production value and subsidies In 2001/02 Value of US cotton production: US$ 3 billion Subsidies: US$ 3.9 billion

Africa vs. US Farmers in Africa are among the most efficient (50 cents per lb) in the world, despite climatic uncertainties, limited infrastructure, and high levels of poverty. On a level playing field, they could compete with US cotton farms. What they cannot compete with is US cotton farms selling produce on international markets at prices that bear no relation to the costs of production, courtesy of corporate welfare cheques underwritten by the world’s most powerful treasury.

The impact of US subsidies Burkina Faso lost 1 per cent of GDP and 12 per cent of export earnings. Mali lost 1.7 per cent of GDP and 8 per cent of export earnings. Benin lost 1.4 per cent of GDP and 9 per cent of export earnings.

Why the US subsidizes cotton? Dirty politics between politicians and corporate groups. Political lobby Corporate influence The largest 10 per cent of cotton farms receive three quarters of total payments. It is believed that part of the money will return to the political parties as donation. politicians Agribusiness subsidies donation Price of cotton

Challenge at the WTO Brazilian Government is raising issues that go to the heart of inequalities in world agricultural trade. The US violates the “Peace Clause”: not exceeding the subsidies in In 2001, US doubles subsidies to cotton provided in In the recent WTO conference held in Cancún, Mexico, a lot of countries including Brazil, India, China and many African countries demanded elimination of agricultural subsidies provided by US and EU. It turned out to be collapse of this round of negotiation.

Difficulties A strong US “army” of lawyers and economists. “Creative” interpretation of WTO rules: subsidies not for dumping but making the product competitive. Threat to withdraw economic aid from the Third World countries.

Further liberalization by WTO Privatization. Pressure to reduce or even eliminate the Third World governments’ subsidies to cotton. (e.g. China)