WTO Director-General Pascal Lamy has decided against holding a mid-December ministerial meeting that some said would have been aimed at trying to wrap up the Doha Round before a new U.S. administration takes office.
But that doesn’t mean U.S. farmers, especially those who grow cotton, can breathe any easier over the halting of the negotiations that Lamy has been trying to revive since they collapsed because developing countries refused to increase access to their markets.
Even as WTO staff members were saying the meetings would likely not be held, officials in Brazil were calling on President-elect Barack Obama to rescue the negotiations, saying a successful conclusion to the Doha Round could offer some solutions to the global economic crisis.
“I think an encouragement from the incoming administration would be a very positive signal and would probably be what we need in this very last stretch,” Celso Amorim, Brazil’s foreign minister, told a reporter for Reuters.
Lamy’s decision came after a week of talks with officials in China, India and the United States about a set of revised draft Doha negotiating texts released on Dec. 6 by Crawford Falconer, chairman of the WTO Agriculture Negotiating Group, and Luzius Wasescha, chairman of the Non-Agricultural Market Access Committee.
Observers said the revised texts would make the increasingly protectionist stands taken by China and India at last July’s failed ministerial meeting in Geneva the starting point for future Doha Round talks. China and India have said developing countries should be able to employ special safeguard mechanisms when imports threaten sectors of their economies.
Those texts prompted the chairmen and ranking members of congressional committees to write letters to the Bush administration demanding the United States refuse to participate in a mid-December ministerial meeting.
Sens. Tom Harkin, D-Iowa, the chairman, and Saxby Chambliss, R-Ga., the ranking member of the Senate Agriculture Committee, asked the president to “reject calls being made for further U.S. concessions” on market access issues and agricultural subsidies.
“We ask you to instead insist that our trading partners meet their obligation to match our level of ambition by making offers that will produce very substantial market access gains for U.S. agriculture,” Harkin and Chambliss and 20 other members of the Agriculture Committee said.
Similar letters from House Ways and Means Chairman Charles Rangel, D-N.Y., and Senate Finance Chairman Max Baucus, D Mont., and their ranking members urged the administration to remain firmly committed to a Doha outcome that requires “developed and advanced developing countries to commit to provide meaningful new market access opportunities.”
Cotton was expected to be at the center of any negotiations that might have been held in December, a cause for concern for the National Cotton Council. More than one analyst called cotton “they key to resolving the agricultural issues in the Round,” as one put it.
Writing in an op-ed article for the Farm Presses, NCC President and CEO Mark Lange said many developed and developing countries have a variety of subsidies for their cotton industries.
“The current Doha negotiations should address these widespread distortions in a comprehensive manner,” said Lange. “Some observers have focused solely on U.S. subsidies. A quick review of the world cotton situation leads to the conclusion that a U.S. focus will fail to provide any change in the economic condition of many of the world’s cotton growers.”
Lange noted that China and India both support their cotton farmers at much higher prices (80 and 69 cents per pound) than those received by U.S. cotton producers. Those subsidies have helped India more than double its cotton production in the last five years.
“Observers watching India and China command growing stakes in the world cotton market while focusing solely on the U.S. cotton program miss the real story,” he said. “Support mechanisms can range from minimally to extensively distortive in the grower’s planting decision.”
If U.S. cotton producers have any doubt about the uphill battle they face in any revival of the Doha negotiations, they only have to look at recent statements by Lamy. Speaking to a United Nations’ Committee on Trade Development meeting earlier this month, Lamy called cotton a “litmus test” for efforts to make the Doha Round a success.
“Developed counties, the United States and the European Community, in particular, have to slash the trade-distorting subsidies that they give to their cotton producers,” said Lamy, formerly the French government’s representative at the EC.
In the negotiations draft text released by the WTO’s Crawford Falconer last July, aggregate measures of support for cotton would have to be reduced much more drastically, particularly for the developed countries, than for other crops.
Much of the credit for the latter is due to non-governmental organizations such as Oxfam International that have used cotton farmers in four African countries — Benin, Chad, Mali and Burkina Faso — as poster children for continued attacks on the U.S. cotton program.
While the world’s attention has been focused on the so-called cotton four countries — and the Brazilian government’s WTO challenge of the U.S. cotton program — China and India have taken over a lion’s share of the world’s production.
“Changes in production, use and exports in most of the world, including the United States and the cotton four countries in West Africa, have been overwhelmed by production increases in China and India,” says Ross Korves, trade policy analyst with the Truth About Trade and Technology organization.
“U.S. cotton programs also did not prevent Brazil from increasing production from 3.5 million bales in 2001/02 to 7.4 million bales in 2007/08, before pulling back to 6.3 million bales in 2008/09 on smaller area planted and a slight drop in yields. Whatever the merits of Brazil’s claims, the reality is the cotton markets have been changed by production increases in India and China that appear to be permanent.”
Korves agrees that ending U.S. cotton programs slowly or rapidly is not likely to improve market conditions for smaller producers around the world. “If those producers are to be competitive long-term, they will need to focus on increasing yields, lowering production costs and transforming marketing systems to improve efficiencies of getting products to market,” he notes.
“The United States and the rest of the world need to find a solution on U.S. domestic support programs that does not result in the United States or the cotton four countries rejecting the outcome and scuttling the entire WTO talks. This is not the time to pursue a false litmus test on economic development.