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Africa: Trade Talks Background

AfricaFocus Bulletin
Jul 31, 2004 (040731)
(Reposted from sources cited below)

Editor's Note

Discussions continued beyond Friday's midnight deadline in world trade talks in Geneva, as major countries pressed for wording compromises that would avoid an obvious breakdown. West African cotton-producing countries reportedly accepted a U.S. pledge to deal with the issue of cotton subsidies expeditiously within the wider agriculture negotiations. Even if disagreements are papered over, however, fair trade campaigners note that the text remains deeply unbalanced in favor of rich countries, with their commitments under the framework text still vague and ambiguous in comparison with concessions exacted from developing countries.

Observers agree that even if a compromise declaration is achieved this weekend, the hardest bargaining is still ahead. Any real shift in the negotiating balance to produce benefits for developing countries is still a distant prospect.

This AfricaFocus Bulletin contains a background note by Third World Network from earlier this week on the cotton issue, and several recent statements on the talks released by Oxfam. For additional bulletins with background on this and related issues, visit http://www.africafocus.org/econexp.php

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

West African countries insist on urgent action on cotton

By Tetteh Hormeku

Geneva, 28 July 2004

TWN Info Service on WTO Issues (July04/22)

29 July 2004

Third World Network
http://www.twnside.org.sg

[Note: Additional briefings from Third World Network, available on the TWN website, regularly provide comprehensive coverage and of these complex negotiations. For additional background on the cotton issue in particular, see AfricaFocus Bulletin for May 14 at http://www.africafocus.org/docs04/cot0405.php]

The West African cotton producing countries have insisted that they were willing to show flexibility and allow the cotton issue to be addressed in the context of the agriculture negotiations on the condition that the cotton subsidies and other trade distorting practices applied by cotton producing developed countries were removed on an urgent and fast-track basis. Speaking at a press briefing on Wednesday 28 July on behalf of the West African cotton countries, the trade Ministers of Benin and Senegal attending this week's General Council meeting of the WTO explained that the West African countries expected the final July package to provide clear and unequivocal measures to deal with the cotton issue "ambitiously and expeditiously".

In response to questions from journalists as to whether they were prepared to reject a final July package that did not reflect their concerns, the Ministers explained that they were in Geneva to participate in the negotiations in a positive spirit, but this did not mean that they were willing to swallow anything that was handed down to them.

They said that in the course of the visit of representatives of the West African countries to Washington prior to the General Council meeting, they had had comprehensive discussions with United States Trade Representative, Bob Zoellick on both the development and trade aspects of the cotton issue. They added that they listened to Ambassador Zoellick explain the difficulties and constraints faced by the US in relation to the cotton issue, and in exchange explained to Zoellick their own difficulties and limits as well as how far they were prepared to go, with each side promising to maintain dialogue on the issue.

Opening the press briefing, Benin's permanent representative in Geneva, Ambassador Samuel Amehou recalled the evolution of the cotton issue from last year when four West African Heads of State addressed the General Council in Geneva, through the various meetings of groupings of both developed countries, such as the G8, as well as of developing countries including the LDC meeting in Dakar this year, the Kigali meeting of the African ministers of trade, and the recent meetings in Mauritius of the ACP group and the G90. He reminded that throughout this period, the cotton issue had been understood on all sides as a specific problem which required urgent, specific attention, an understanding which before and at Cancun was expressed in a decision to treat cotton as a separate issue.

Amb. Amehou said that since Cancun however, difficulties began to be expressed on the cotton issue being addressed on a separate basis, which led to the June meetings of ACP and G90 ministers to affirm a demand to treat the question on a stand-alone basis. This notwithstanding, pressure to subsume the cotton issue in the general agriculture negotiations had been relentless. In view of this pressure, and in the spirit of showing flexibility to move the negotiations forward, the West African cotton producing countries had now agreed to include the issue within the agriculture negotiations.

According to Amb. Mehou, a paper to this effect has been tabled in the WTO outlining the three concerns which need to be addressed in order that the issue was not marginalised and forgotten within the main agriculture negotiations. These concerns included a concrete commitment to resolve the cotton issue on an urgent and fast track basis; a precise calendar for dismantling the cotton subsidies provided by developed countries; and the establishment of a fund and other effective measures to fully take into account the developmental aspects of the cotton problem.

He added, in coming forward with this approach, the West African cotton countries had shown a high level flexibility, and expected their partners to respond in kind. Unfortunately, however, no response had been forthcoming so far from the partners.

In the view of the Amb. Mehou, far from any positive response to their proposals, the progress of the negotiations so seemed to confirm the fears at the basis of their earlier insistence of the cotton being treated on a stand-alone basis. In apparent reference to the discussions earlier in the day during the Heads of Delegations meeting, the Ambassador stated that with the mainstreaming of cotton in agriculture, the risk was materialising of the issue being diluted and forgotten, together with the fate of the millions of small peasant producers whose livelihood depended upon a just resolution of the issue. At the meeting of the HOD, there was hardly any mention of the fate of cotton in all reports presented on progress of negotiations so far, and it was left to Amb. Mehou to remind the gathering that the issue was still outstanding.

The Trade Minister of Benin, Fatiou Akplogan made it clear that the proposal submitted by the Cotton countries on how to deal with the issue in the context of the agriculture negotiations should be understood as a proposal for negotiation, rather than as a unequivocal commitment. He explained that this was in response to concerns raised by the developed country cotton subsidisers to the effect that they faced internal constraints which prevented from dealing with the cotton issue outside the agriculture negotiations.

Minister Akplogan stated further that this meant that the West African cotton countries, together with countries of Sub-Saharan Africa as a whole, as well as their allies, expected a meaningful response from the other side. Such a response should state unambiguously that issue would be dealt with in an "ambitious and swift" manner, recalling the phrase used by the Heads of States at the recent G8 meeting. However, that this response had so far not been forthcoming. The Minister further stated that he had, together with colleagues from Chad, and Mali, met with Tim Grosser, the Chair of the Agriculture negotiating group on June 27, prior to Grosser issuing his agriculture text, and had envisaged a commitment in the text in line with their demands, but were disappointed.

The Senegalese Trade Minister, Mr Ousmane Ngong, stressed that the position on cotton reflected political will and corresponding decision at the highest political level of the Heads of State these countries with the solidarity of their counterparts, and that the cotton problem was not unique to the four West African countries alone. He said the situation of cotton producers in Africa had worsened from last year when the issue first came to prominence, with the cotton production in the United States having multiplied two-fold, with equally multiplying consequences for the depression of world prices for cotton, and making the situation of poor cotton even more precarious. In this context, it was difficult for the countries to accept the cotton issue being subsumed in the agriculture negotiations if the proposals put forward were not met.

As to whether the West African countries would refuse to sign to a July package that did not satisfy their demands, Beninois trade Minister Akplogan stated that they were open to negotiate but were not prepared to accept the death of thousands of peasants as the price of a deal.


Oxfam Briefing Paper

One Minute to Midnight

July 2004

Will WTO negotiations in July deliver a meaningful agreement?

[For the full report and related press releases, see http://www.oxfam.org.uk/what_we_do/issues/trade/bp65_wto.htm]

One week away from a crucial meeting of the General Council of the World Trade Organisation, time is running out for the Doha round. Almost a year after the ministerial conference in Cancun and three years after the Doha round, negotiations have gone in circles because of the continuing deadlock on key issues such as agricultural reform. The July framework negotiations represent a crucial juncture for rich and poor countries alike. Any dilution of the Doha development objectives to accommodate developed countries' self-interested mercantilism would damage the prospects of poor countries of the South. On the other hand, a failure would further weaken the multilateral trading system. Oxfam calls on WTO members to agree to a meaningful, pro-development framework by the end of July 2004.

Introduction

Almost three years after the mandate of Doha was signed, members of the World Trade Organisation are at a crossroads. The completion of a meaningful development round is an essential condition for the survival of a rules-based multilateral trading system. In the past, the major trading nations, such as the United States, the European Union, Japan, Canada, and Australia controlled the WTO to their own advantage. Today, they are facing an increasing challenge from the majority of the member states: developing countries, whose interests have been ignored or damaged by previous agreements.

For the past three years, despite promises made at Doha, developed countries have not provided the political vision and leadership that would create the conditions for a transition to a fairer and more sustainable trading system, and a set of rules that would favour equitable development. Old-style mercantilism still prevails, in complete contradiction to the international community's commitment to use trade as a lever to reduce poverty and achieve the UN Millennium Development Goals.

After the failure of the Ministerial Conference in Cancun in September 2003, developing countries were accused of making 'unreasonable' demands on developed countries to fulfil the commitments that they had made as part of the Doha mandate. Now, in advance of the July meeting of the General Council, the blame game has begun again. Developing countries are being put in the unfair position of having to accept a modified framework or take the blame for the collapse of the round. Such an interpretation completely ignores the main factors that have been blocking progress in the round so far:

  • an overloaded, complex negotiation agenda, including new topics such as 'the Singapore issues' (investment, government procurement, competition, and trade facilitation);
  • the intransigence of the United States, delaying reform of the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) until August 2003, and insisting on the freedom to continue subsidising its domestic cotton production;
  • the lengthy CAP reform process, which resulted in a modest reform package by June 2003, and the U-turn represented by the US Farm Act, which was enacted a few months after the Doha ministerial conference both domestic developments contradicted commitments made at the WTO to substantial agricultural reform;
  • non-transparent, chaotic processes, which contributed to the failure of the Cancun conference.

The Doha round has now reached a critical point. The WTO negotiations on a framework must remain true to the letter and spirit of the Doha mandate. Fairer trade rules would not only allow developing countries to use trade to achieve sustainable development, but would also strengthen the rules-based multilateral trading system, which benefits all countries.


Oxfam Press Release - 28 July 2004

US blocking trade deal at WTO

Geneva: International agency Oxfam today accused the United States of blocking progress on reform of global trade rules. US participation in the negotiations was characterised by intransigence and the pursuit of short term self interest, which could cause the current round to collapse, said Oxfam.

World Trade Organisation (WTO) members are meeting this week in Geneva in an attempt to move forward the talks that stalled last year in Cancun. As the end of week deadline looms, the chances of a successful outcome are dwindling.

"The US is repeatedly violating the spirit and the letter of the Doha Development Round. Their refusal to reform their harmful cotton regime recently ruled illegal at the WTO demonstrates a wilful disregard for multilateralism and the needs of developing countries," said Phil Bloomer, Head of Oxfam International's Make Trade Fair campaign

"Their aggressive insistence on obtaining maximum access to developing country markets flies in the face of agreements that poor countries should be allowed to protect vulnerable farmers and industries," added Bloomer.

Oxfam highlighted five areas in which US behaviour was threatening to derail the round:

Cotton: The US gives subsidies to its 25,000 cotton producers of up to $3.9bn annually, more than three times US foreign assistance to Africa. The WTO recently ruled that most of these payments were illegal but the US is refusing to change. This is despite the concession made by the West Africans to include cotton in the agriculture negotiations.

Subsidy definition: the US is seeking to broaden the definition of non-trade distorting subsidies i.e. the so called "blue box". With a broadening of the blue box, the United States could reclassify up to $10 billion in trade distorting support, including countercyclical payments, which were challenged in the US-Brazil cotton dispute because of their damaging impact for other agricultural exporters. Rather than agreeing to reduce subsidies the US is looking for loopholes to hide export subsidies and dumping.

Market Access: The US is pushing for increased access into developing country markets, both for agricultural and industrial products, and refusing to allow poor countries to protect vulnerable or fledgling industries, despite the fact that a guarantee of this protection was part of the Doha declaration.

Export Credits: The US has the biggest export credit programme in the world covering an average of $3.4bn in exports per year. The recent cotton panel at the WTO ruled that these export credits were in fact trade distorting and should be reformed. Despite this, and despite recent EU offers to eliminate their own export subsidies, the US is refusing to reciprocate.
Food Aid: The US is the world's largest provider of food aid, accounting for some two thirds of the total and amounting to an average of $2bn a year (1992-2002). While food aid plays a vital role in humanitarian emergencies, some US food aid is not used in this way but is used to break into new markets. The US sends more food to countries like Indonesia and Peru than Ethiopia. This undermines local farmers and amounts to disguised export dumping.

Bloomer: "It is extraordinary that the US seems ready to sacrifice its share of the $3 trillion that might be generated by successful completion of the Doha round for the sake of a handful of very rich farmers and other vested interests. If rich countries do not start to face the facts and work to make this a true development round they will be responsible for its failure and for the huge attendant losses."


Oxfam Press Release - 30 July 2004

Oxfam condemns proposed trade deal for failing poor countries

International agency Oxfam today described a new draft declaration issued by the WTO as deeply disappointing and not sufficient to meet the needs of developing countries. The proposed deal would put the talks on the wrong track if accepted and could even cause them to collapse, warned Oxfam.

Celine Charveriat, Head of Oxfam International's Geneva office said: "The draft released this morning is unacceptable because it fails to meet the needs of developing countries. Presented as a breakthrough, the text on agriculture does little to address the problem of export dumping, instead introducing dangerous loopholes for yet more subsidies especially from the US."

The text released earlier this morning is very unbalanced, delivering detail on issues of importance to developed countries like market access for industrial products but failing to address agricultural issues of key concern to developing countries.

Charveriat: "After days of closed door negotiations, rich countries have delivered a deeply unbalanced text as a take or leave it option. This puts developing countries in the unfair position of having to accept a bad deal or reject and get blamed by the US and EU for failure."

The draft fails adequately to address the issue of US cotton subsidies recently ruled illegal at the WTO. Cotton is to be folded into the overall agriculture negotiations and there are no specific commitments to eliminate trade distorting support or to fast track implementation of reform.

Charveriat: "Failure to address the cotton issue is a serious betrayal of developing countries and will have massive implications for the 10 million West African cotton farmers whose livelihoods are currently undermined by US export dumping. If these talks fail the responsibility will lie squarely with those who ignored the lessons of Cancun: namely the US and EU."


AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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