Download Cotton: US, Africa and WTO

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.
politicians
subsidies
 Political lobby
 Corporate influence
 The largest 10 per cent of cotton farms
Agribusiness
receive three quarters of total payments.
 It is believed that part of the money will
return to the political parties as donation.
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 1992. In 2001, US doubles subsidies to
cotton provided in 1992.
 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)