Brussels, 09/09/2003 (Agence Europe) - On Tuesday, ahead of the opening of the Cancun Summit where the issue of cotton has been added to the agenda of the World Trade Organisation ministerial meeting to the delight of some and the embarrassment of others, the European Union officially stated: "The EU sympathises with concerns about the low cotton prices, and their impact on developing countries".
Commissioners Pascal Lamy and Franz Fischler are heading the team of European Union negotiators. In a press release, they point out: "The EU is a net importer of cotton. The EU has no export subsidies for cotton. The EU has no border protection. And therefore has little or no impact on world prices. Europe is not a price-maker, it is a price-taker." This is one way of distinguishing itself from the other lion in the system with regard for cotton, which may now become as important politically as access to basic medicine from Seattle to Cancun. While the EU can congratulate itself on it restricted and targetted domestic subsidies which do not subsidise exports or trade protection and hence have little impact on world cotton prices, the same cannot be said for the United States which is the direct target of a campaign launched in June 2003 by Mali, Chad, Benin and Burkina Faso, supported by various NGOs, with the aim of focussing on all tariff barriers and subsidies for cotton and win compensation, in other words a mechanisms for transferring funds from the richest countries to these four cotton producing countries, which are some of the poorest on the planet (see yesterday's Europe, p.13).
On the defensive because of their domestic export subsidies and import tariffs on cotton, the United States is prudently recommending that cotton is not taken separately from other sectors, since overall solutions can and should be made in the direction sought by the African countries, for cotton as for all other products, within farm negotiations by tackling the three types of protection mechanisms denounced in the campaign. The African initiative has won much sympathy at the WTO, even for the Cairns Group which has been unravelling under the offensive by some of its Latin American members led by Brazil along with China and India against the tactical alliance of the EU and the US and which hopes to find a degree of cohesion by pointing out that the trade protection measures criticised by the African countries are the object of its own traditional campaigns for a root-and-branch reform of global agriculture across the board. The chief negotiator for the European Union does not in theory have any mandate for cotton negotiations in Cancun, and the issues raised by the African cotton producers are far from simple. The European Union is a net importer of cotton and the biggest market for cotton in the world, taking textiles and clothing into account. Between 20 and 80% of the cotton exports of Mali, Benin, Burkina Faso and Chad end up in the EU, explains a Commission spokesperson. Two Member States, Spain and Greece, grow cotton, but only account for 3% of global cotton production and only 4% of global cotton exports. They get EUR 800 million in EU funding each year. This is called "domestic aid" in WTO parlance, the first pillar of the planned global farm reforms. It is the target, along with export subsidies and restrictions on market access of almost two dozen countries, led by the three big developing countries. Brussels says the subsidies are subject to production ceilings and when these are reached, aid decreases. The aid focusses on small farmers in Greece and Spain. The EU in Cancun is expected to defend the idea that cotton must be seen as a substantial issue in the overall negotiations and highlight plans to substantially cut subsidies that create an uneven playing field within the framework of the WTO farm negotiations. It will also point out its commitment to reform its own subsidy system, being far more receptive to African grievances concerning export subsidies and cotton prices.