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 At
the Doha Round Ministerial Meeting of the World
Trade Organization (WTO) held last December in
Hong Kong, trade negotiators from 149 countries
labored to construct a new framework for
sweeping global trade liberation.
A “Draft Ministerial Declaration” emerged after
a week of deliberation with negotiators having
made significant progress on contentious issues
affecting agriculture and trade in goods and
services. The draft calls for all negotiations
to be concluded by April 30, 2006 with a final
deadline for adoption of the terms of the
declaration to be formally adopted by WTO
members by the end of 2006.
Negotiators claim that significant progress was
made over six difficult days. Negotiators not
only had to endure long hours of give and take
and political drama, but also had to contend
with thousands of anti-globalization protesters
that clogged the streets of Hong Kong during the
negotiations.
Nevertheless, tangible results were attained, as
trade ministers agreed to eliminate all farm
export subsidies by 2013 and adopted a package
of trade incentives for the poorest countries in
the world including tariff elimination on 97
percent of products imported by the developed
world (as measured in terms of tariff schedule
line items).
 More
specifically, the group agreed to end export
subsidies on cotton. As stated in the
declaration text:
" -- All forms of export subsidies for cotton
will be eliminated by developed countries in
2006.
-- On market access, developed countries will give duty free and quota
free access for cotton exports from least
developed countries (LDCs) from the commencement
of the implementation period.”
However, debate still exists in the area of
domestic cotton subsidies. In bracketed (to be
settled) text, the declaration said: ”
It is recognized that the objective is that, as
an outcome of the negotiations, trade distorting
domestic subsidies for cotton production should
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 will commit ourselves
to give priority in the negotiations to reach
such an outcome.”
It is unclear at this time how negotiators will
address this proposed language in subsequent
negotiations. The U.S. cotton industry has
vehemently resisted changes to its domestic
subsidy programs.
The U.S. had offered duty-free and quota free
access for cotton to LDC's as part of its effort
to conclude a deal on cotton. In fact, this
offer was made over the objections of some in
the U.S. cotton industry. But the agreement to
end export subsidies by the end of 2006 does not
spell out in detail what is deemed to be
included. For example, is this just Step 2?
Could AWP be included? Those details will be
determined in the coming months.
In turn, West African negotiators see the
elimination of export subsidies as a key victory
as they believe the end of such payments will
result in sharply higher prices for U.S. cotton
and thus better able their local growers to
compete. In the week leading up to the Hong Kong
meeting and all throughout the meeting, global
cotton prices were up markedly further feeding
West African perceptions that market prices will
improve once export subsidies are eliminated.
In terms of textiles, although the U.S. textile
industry was unhappy with the duty-free offer to
LDCs, it was pleased to learn of WTO plans to
hold separate sectoral negotiating groups in the
coming months. In a statement issued by Cass
Johnson, President of the National Council of
Textile Organizations (NCTO), a Washington-based
lobby, said, “The text from the Hong Kong
Ministerial contains language that appears to
obligate the United States to provide duty-free
access for at least 97 percent of its tariff
lines to least-developed countries. NCTO will be
meeting with the government in order to assess
the precise nature of this commitment, and the
impact it could have on sensitive textile and
apparel product lines. The text also includes
language authorizing the development of
sectorals, which is a positive step toward
achieving a special textile sectoral, a key
industry goal.”
The U.S. textile industry, along with textile
industries in other countries, has wanted a
separate sectoral negotiation in order to
address sector-specific trade issues without
having to take the needs of other non-related
industries into account.
Cotton, on the other hand, was singled out in
the draft text causing much anxiety in U.S.
cotton circles. U.S. cotton producers have
supported a broader approach whereby cotton
trade issues were dealt in the context of
overall agricultural trade negotiations.
The National Cotton Council (NCC) issued a
statement sharply criticizing negotiators for
not only singling out cotton in the
negotiations, but also proposing that domestic
cotton subsidies be slated for reduction at a
faster pace than that of other agricultural
products.
In its statement, the NCC said that it was
“National Cotton Council is extremely
disappointed in the draft Ministerial text.”
NCC Chairman Woods Eastland further elaborated
saying that the “draft text is not consistent
with the concept of a single undertaking for
agriculture and establishes an unwise precedent
for WTO trade negotiations.”
“The draft text could be interpreted as asking
the EU and the U.S. to take larger cuts quicker,
to give total access to Least Developed
Countries with nothing in return, and demands an
end to export subsidies for cotton before the
implementation period of the agreement is likely
to begin," Eastland said. "The [Ministerial]
text is not a single undertaking for
agriculture. Instead, it singles out cotton.”
Eastland also said, “The text also abandons West
African cotton producers by failing to seek
greater access to the markets of the largest
cotton purchasers in the world, proving this
controversy has not been about helping African
farmers, but has been a concerted attack on U.S.
Cotton.”
He concluded by saying. “The text asks all of
this from the U.S. cotton producer, yet contains
no concrete hope for improved market access for
U.S. cotton as the text implies that the largest
cotton producer and purchaser in the world will
receive special dispensation as a recently
acceded member of the WTO.”
Despite the concerns voiced about the proposed
cotton deal and reductions in import tariffs for
most manufactured products, time still remains
for further negotiation. Positioning over the
next few months will be intense as negotiators
vie for new concessions. What is clear, however,
is that negotiators appear to have avoided the
embarrassing breakdown that occurred at the
previous Ministerial meeting in Cancun two years
ago, though certainly much work remains to be
done.
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