US blocking on cotton, undermining trade talks

The refusal of the US to cut cotton subsidies that hurt West African farmers is a signal that they are not serious about living up to their development promises in trade talks, said Oxfam today. The EU should also do more to reform its own subsidies.

Ahead of a meeting between the US and the four main West African cotton-producing countries, Burkina Faso, Mali, Senegal and Benin, Oxfam said that the US must act in good faith and honour its promises to treat cotton as a priority issue, given the damage it was doing to the prospects of poor farmers in Africa.

Isabel Mazzei, Head of Oxfam’s Geneva office said: “Cotton has become a symbol of the unfairness of the global trading system. In West Africa alone, ten million people depend on cotton for their livelihoods. For these households, the subsidies the US pays its farmers have a critical bearing on their ability to put food on the table, educate their children, and sustain their health.”

US cotton producers will receive about $1 billion annually in subsidies over the next five years, under the new US Farm Bill. The vast majority of these subsidies go to about 12,000 mostly large-scale cotton farms and a quarter of all subsidies go to the top one percent of recipients, who get $500,000 each on average.

This week in Geneva the US made a new offer to cap its trade distorting agricultural subsides at $15bn but Oxfam says this would not require the US to cut trade-distorting cotton subsidies by one cent.

Along with the offer the US said it wanted immunity from legal challenges at the WTO. Given that subsidy programs in the new Farm Bill are likely to run afoul of WTO rules, this seriously calls into question US willingness to effectively reduce trade-distorting subsidies.

Indeed, the Farm Bill recently passed by the US Congress reinstated cotton subsidies already ruled illegal at the WTO – the so-called ‘Step 2’ payments that were successfully challenged by Brazil in a WTO case concluded in 2005. Subsidy programs such as counter cyclical payments, confirmed by the WTO as causing serious prejudice to other exporters of cotton, have not been reformed either.

The EU also has cotton subsidies that need reforming, though not on the scale of the US. Oxfam is critical of the EU for dragging its feet on reform and not showing adequate support to the so-called ‘cotton four’ in the WTO negotiations.

Mazzei: “It has been proven time and again that cotton subsidies do significant damage to farmers in developing countries. If the US fails to shift its position on cotton and continues steadfastly to defend its illegal and immoral subsidies, then no fair development deal can be done this week in Geneva.”