DEVELOPMENT ASSISTANCE ASPECTS OF COTTON
SevenTH PERIODIC REPORT BY THE DIRECTOR-GENERAL
This document has been
prepared under the Secretariat's own responsibility and is without
prejudice to the positions of Members or to their rights and obligations
under the WTO
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TABLE
OF CONTENTS
Page
1 INTRODUCTION.. 2
2 CONTEXT. 2
3 IMPLEMENTATION.. 2
4 EVOLUTION OF COTTON DEVELOPMENT ASSISTANCE. 3
5 SOUTH-SOUTH COOPERATION ON COTTON.. 3
6 DOMESTIC COTTON SECTOR REFORMS. 3
7 Conclusion.. 3
ANNEX. 4
A. COTTON TRADE. 4
B. COTTON AREA. 5
C. COTTON PRODUCTION. 5
D. COTTON YIELDS. 6
E. COTTON PRICE. 6
1.1. Since my last Periodic Report on the Development Assistance Aspects
of Cotton to the membership in October 2013 (WT/CFMC/DG/6), four Rounds of the
Director-General's Consultative Framework Mechanism on Cotton (DGCFMC) have taken
place, bringing the total number of such rounds held since 2004 to date to 23.
The 24th Round of Consultations is scheduled for 27 November
2015. The Evolving Table on Cotton Development Assistance (ET), our well-known
tool to track developments in financial assistance to the cotton sector, has
been revised four times, including the latest update contained in document
WT/CFMC/6/Rev.19. I would like to commend Australia, Canada, the European
Union –and several of its Member States-, Japan, Switzerland and the United
States. I would also like to commend Brazil, China and India on the specific
platform of South-South Cooperation for Cotton-Sector Development. The support
and engagement of these Members in the consultative forum has contributed to enhance
the dialogue and consolidate the partnership between providers and recipients
of development assistance for cotton.
1.2. Several multilateral and regional agencies have also been actively
participating in this process, namely: the Food and Agriculture Organization
(FAO), the International Cotton Advisory Committee (ICAC), the International
Monetary Fund (IMF), the International Trade Centre (ITC), the United Nations
Conference on Trade and Development (UNCTAD), the United Nations Industrial
Development Organization (UNIDO) and the World Bank.
2.1. The world cotton market has registered major changes in respect of
global production, planted area and trade over the last two seasons. In a
difficult context, marked by dwindling cotton prices and compounded by the
persistence of sluggish world economic growth, the cotton sector of several
LDCs and, in particular, African cotton-producing countries, has managed to remain
stable. Cotton production in Africa increased by 13% in 2014/15 in relation to
last season, to reach 1.69 million tons, accounting for 6% of world
output and 14% of the global cotton area. Conversely, due to weak overseas
demand, exports from African countries decreased by 7% in the 2014/15 season, amounting
to 1.22 million tons. Exports from all major exporters, with the exception
of India and the Francophone African countries, are expected to fall in the 2015/16
season. More detailed information on developments in the cotton sector worldwide
and, more specifically, in Africa, is given in the Annex to this Report.
3.1. As Members are aware, the work on cotton in the WTO follows a two-track
approach, involving the development assistance aspects as well as the trade-related
aspects of cotton. As regards the development assistance aspects, there is
evidence of deeper consolidation of progress. The figures in the Evolving Table
on Cotton Development Assistance show that the implementation of commitments is
progressing, thereby shrinking the gap between commitments and disbursements. The
traditional bilateral donors as well as relevant multilateral institutions have
continued to be at the forefront of this process, accompanied by some
developing Members on the platform of South-South Cooperation. This positive
dynamic was complemented by the pursuit of domestic reform initiatives
undertaken by the beneficiaries of cotton development assistance, as reflected
in the tenth revision of the Table on Domestic Cotton Sector Reforms, contained
in document WT/CFMC/21/Rev.11.
3.2. The trade-related
aspects of cotton need to be assessed in the context of overall progress in the
agriculture negotiations. In relation to this track, it is worth recalling the
2013 Bali Ministerial Decision whereby Ministers reaffirmed the importance of
cotton and agreed to hold dedicated discussions on a bi-annual basis under the
aegis of the Committee on Agriculture in Special Session to examine relevant
trade-related developments across the three pillars of market access, domestic
support and export competition in relation to cotton. As per this mandate, three
such dedicated discussions have been held so far; the next one being scheduled
for 27 November 2015. In these discussions, Members have engaged in focused examination
of all forms of export subsidies, export measures and domestic support for
cotton, as well as tariff and non-tariff measures applied to cotton exports
from LDCs in markets of interest to them.
4.1. Development assistance to the cotton sector provided by Members and
relevant multilateral agencies shows a positive consolidation. The latest
information is reflected in the twentieth version of the Evolving Table
(WT/CFMC/6/Rev.19), which I forwarded to the membership on 27 October 2015. In summary, the results are as follows:
·
In Part I, on Cotton Specific Development Assistance (of active
operational activities), the number of individual beneficiaries stands at 28.
The total number of commitments is 35, and the total value of these commitments
is approximately US$226 million.
Disbursement flows reached US$102 million. The ratio of total
disbursements to total commitments is 45%.
·
In Part II, on Agriculture and Infrastructure-Related Development Assistance
(of active operational activities), the number of individual beneficiaries
stands at 32. The total number of commitments is 54, and the total value of
these commitments stands at US$4.97 billion. The disbursement flows
reached US$3.05 billion. The ratio of total disbursements to total commitments
is 61%.
4.2. Work in the Consultative Framework Mechanism continues to move
forward. A tangible proof of this progress is the increased level of reporting by
donors in all parts of the Evolving Table (ET) and the acceleration in the
implementation of activities. There has been a significant reduction in the gap
between commitments and disbursements, in particular in
Part I of the ET. Thanks to the active
engagement and involvement of participants in this forum, new initiatives are
being discussed aimed at reinforcing regional integration on cotton in Africa.
Participants are also continuing their collective monitoring and follow-up of
projects to enhance the delivery of assistance. This is work in progress and
there is still scope for further improvement. I would encourage providers of
assistance as well as beneficiaries to pursue this positive trend.
5.1. Brazil, China and India have been showing notable leadership in this
area. The important contributions and support initiatives of these Members in
favour of LDCs and African countries are duly recognized. South-South
Cooperation on cotton has become the epitome of the collaborative spirit that
enabled to forge and consolidate a strong and lasting partnership amongst WTO
Members and related multilateral and regional institutions.
6.1. I would like to commend the cotton proponents for keeping Members
regularly informed about their domestic reform priorities and action plans. The
most recent information in this regard is shown in the last version of the
Table on Domestic Cotton Sector Reforms, contained in document WT/CFMC/21/Rev.11,
which I circulated to the membership on 27 October 2015. The information
contained in this document has proved to be useful to better identify the kind
of assistance needed, promote efficiency in the utilization of resources and
foster the information exchange between providers and recipients to enhance
cotton development assistance.
7.1. I welcome the continuous progress registered in the cotton sector,
particularly in Africa. I underscore the need for continued engagement to address
all aspects of the cotton dossier. On the development assistance aspects of
cotton, sustained engagement and enhanced coordination between assistance
providers and recipients, including "in-country" focal points, can
bring positive results in the implementation of activities in support of the
cotton sector.
7.2. The vital importance of cotton to particular LDCs as well as to a
number of developing economies, especially in Africa, is continually recognized
in the WTO. As a result, the cotton dossier remains at the core of our work.
The dedicated discussions in relation to the trade-related aspects of cotton
are enhancing transparency and monitoring of trade-related developments in this
sector. I hope to see further progress in the cotton dossier in the coming
days, including in the context of MC10.
ANNEX
COTTON SECTOR
DEVELOPMENTS[1]
1.
The volume of
world cotton trade contracted significantly by 13% in 2014/15 compared to the
last season, reaching 7.6 million tons. The average price of cotton
continued its downward trend and slipped by 20% from last season to an average
of 71 US¢ per pound in the 2014/15 season. World cotton stocks increased
by 7% to a record 21.8 million tons, out of which China's share
represented 12.7 million tons. World ending stocks are projected down
by 5% next season to 20.6 million tons.
2.
In the framework of
continued sluggish world economic growth, major changes were registered in
export and import flows in 2014/15, showing a mixed picture amongst the main
players. Exports from the largest world exporter, namely the United States,
rose by 7% to 2.5 million tons, accounting for 32% of total world exports
whereas exports from African countries dropped by 7% to 1.22 million tons.
Brazil's exports jumped by 75% to 851,000 tons, while those from India and Australia
slipped by 55% and 50% to 914,000 tons and 467,000 tons, respectively. Exports
from all major exporters, with the exception of India and the Francophone
African countries, are projected to decline in the 2015/16 season.
3.
In 2014/15, imports
from China, the largest importer in the world, fell sharply by 41% to 1.8 million
tons. This decline was only partly offset by higher imports from other countries,
in particular, Bangladesh, Viet Nam and Indonesia. China's imports are forecast
to fall further in 2015/16 by 24% to 1.4 million tons.
4.
The top 10 cotton
exporters and importers in the 2014/15 season are shown in the Table below.
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TOP
10 WORLD COTTON EXPORTERS AND
IMPORTERS
2014/2015
SEASON
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Total of global cotton exports (in thousand tons): 7,701
Total of global cotton imports (in thousand tons): 7,576
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EXPORTER
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EXPORT VOLUME
(Thousand Tons)
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IMPORTER
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IMPORT VOLUME
(Thousand Tons)
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USA
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2,449
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CHINA
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1,804
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INDIA
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914
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BANGLADESH
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966
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BRAZIL
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851
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VIET NAM
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941
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UZBEKISTAN
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594
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TURKEY
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800
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AUSTRALIA
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521
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INDONESIA
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735
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TURKMENISTAN
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307
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THAILAND
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320
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GREECE
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232
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KOREA, REP.OF
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288
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MALI
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209
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INDIA
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267
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BURKINA FASO
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188
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PAKISTAN
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200
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COTE D'IVOIRE
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187
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MEXICO
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198
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5.
Focussing more
specifically on Africa, the trade performance in African countries in 2014/15 was
generally characterized by a decline in exports due to low global demand. Cotton
exports fell by 9% in Francophone African countries from the previous season.
However, a recovery is anticipated for this region in 2015/16, and the share of
CFA countries' world exports is expected to rise to 14%. A few examples of
countries whose cotton exports did increase in 2014/15 include, among others:
Egypt (+110%), Togo (+17%) and Uganda (+8%). The following Table lists the top
10 African cotton exporters in 2014/15:
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TOP 10 AFRICAN COTTON EXPORTERS
2014/15 SEASON
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Country
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EXPORT VOLUME (Thousand
Tons)
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Mali
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209
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Burkina
Faso
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188
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Côte
d'Ivoire
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187
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Cameroon
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104
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Benin
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103
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Egypt
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55
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Zimbabwe
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47
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Tanzania
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46
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Zambia
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39
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Mozambique
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31
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6.
Despite an
unfavourable macroeconomic context, the world cotton area expanded by 2% to
33.3 million hectares. India planted in 2014/15 a record area of
12.3 million hectares, the largest share of global cotton area (37%).
Africa accounted for 14% of the global cotton area. Cotton plantings decreased
by 8% in China to 4.3 million hectares; they increased by 24% in the
United States to 3.8 million hectares; expanded by 7% in francophone
Africa to 2.7 million hectares; increased by 2% in Uzbekistan to 1.3 million hectares
and dropped by 48% in Australia to 202,000 hectares in 2014/15. In the
2015/16 season, world cotton area is projected to fall by 7% to 31.2 million
hectares.
7.
In 2014/15 world
production exceeded world consumption by 1.6 million tons, resulting in a
cumulative surplus of 13.3 million tons since 2010/11. Lower prices for
competing crops made world cotton area to expand by 2% to 33.3 million
hectares in 2014/15. However, production fell by 1% to 26.1 million tons due to
a 3% decline in the world average yield to 781 kg/ha.
8.
In 2014/15 cotton
production rose in the United States (+26% to 3.6 million tons), Pakistan (+11%
to 2.3 million tons), Africa taken as a whole (+13% to 1.6 million tons)
and Turkey (+11% to 847,000 tons). In contrast, significant decreases in
production were registered in China (-6.5% to 6.5 million tons), India (-3% to
6.5 million tons), Brazil (-12% to 1.5 million tons), Uzbekistan (-6% to
885,000 tons) and Australia (-49% to 450,000 tons).
9.
Global cotton production in 2015/16 is
expected to continue its decline with a further 9% contraction to 23.9 million tons,
triggered mainly by a decline in China, Pakistan and the United States.
10.
African countries
accounted for 6% of global cotton output in 2014/15. Cotton production
increased in almost all regions in Africa. Francophone African countries recorded
significant increases in cotton production in 2014/15. Burkina Faso was again
Africa's largest cotton producer and its production posted a 4% increase from
the previous season to 285,000 tons; Mali's production grew by 26% to
233,000 tons and Cote d'Ivoire's output expanded by 11% to 193,000 tons. Cotton
production was also up in Benin (+25% to 155,000 tons), Cameroon (+16% to
116,000 tons), Chad (+75% to 58,000 tons) and Togo (+30% to 44,000 tons). In
Northern Africa, production rose in Egypt (+20% to 55,000 tons), whereas it
dropped in Sudan by 18% to 21,000 tons. Moderate growth in production was seen
in Eastern and Southern Africa. Countries that posted gains in production
include: Tanzania (+9% to 85,000 tons) Zambia (+33% to 53,000 tons) and
Uganda (+8% to 22,000 tons).
11.
The world average
cotton yield per hectare declined by 3% to 781 kg/ha in 2014/15. The following
yields of a select range of countries show that significant variations persist
across regions: Australia (2,228 kg/ha), Brazil (1,507 kg/ha), China
(1,503 kg/ha), United States (939 kg/ha), Pakistan (812 kg/ha), Egypt
(714 kg/ha), Cameroon (571 kg/ha), India (531 kg/ha), Burkina Faso
(443 kg/ha), Benin (409 kg/ha), and Mali (408 kg/ha). While the estimated average yield in Africa
of 364 kg/ha improved 12% from last season, it is only 46% of the world
average.
12.
In 2014/15 cotton
prices have been less volatile than in recent seasons. The average cotton price
in the 2014/15 season was 71 US¢ per pound. Large cotton stocks worldwide and
weak demand are likely to keep international cotton prices flat in 2015/16. However,
as world production is forecast to be down by 9%, approximately
1.1 million tons below consumption, international prices may stabilize.
13.
The following
graphic shows the evolution of cotton prices since the year 1999 to date.
WORLD COTTON PRICES
1999-2015
(US¢ per pound)
Source: ICAC.
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[1] Data source: International
Cotton Advisory Committee.