14^th DEDICATED DISCUSSION OF THE RELEVANT
TRADE-RELATED DEVELOPMENTS FOR COTTON

13 november 2020

Report^[1] by the Chairperson, Ambassador Gloria ABRAHAM PERALTA

1.  Pursuant to the Bali Ministerial Decision on Cotton of 7 December 2013^[2] and the Nairobi Ministerial Decision on Cotton of 19 December 2015^[3], the 14^th Dedicated Discussion of the Relevant Trade-Related Developments for Cotton took place on 13 November 2020. The Dedicated Discussion was held back-to-back with the 34^th Round of the Director-General's Consultative Framework Mechanism on Cotton (DGCFMC) dealing with the development assistance aspects of Cotton.

2.  In my introductory remarks, I recalled the various activities held in October to celebrate the first-year anniversary of the World Cotton Day (WCD). The celebrations included stands exhibiting cotton-related artefacts and documentation sponsored by the Cotton-4 (C4), China, the International Trade Centre (ITC) and the WTO and a photo exhibition set up in the WTO, as well as on-line celebrations including a dedicated WCD webpage and social media posts. I noted that these celebrations had to be considered in the context of the initiative led by the C4 countries towards the official recognition of 7 October as WCD by the United Nations General Assembly. I also expressed the hope that the efforts made to celebrate WCD would contribute to creating an auspicious environment leading to concrete results in the Cotton negotiations, including on the outstanding issue of trade-distorting domestic support.

3.  My update on the state of play in the agriculture negotiations with a focus on cotton was brief since the last CoA Special Session meeting had been held only three days prior to this meeting. I noted the launch of a facilitators' led process on 1 October and the appointment of Sergio CARVALHO from Brazil and Emmanuel OUALI from Burkina Faso as co-Facilitators for Cotton consultations. I referred to the report by the two Facilitators during the CoA Special Session meeting and I committed to closely follow their progress and support their efforts. 

4.  Under the agenda item "General Statements from Members", Burkina Faso, on behalf of the C4, underlined how the COVID-19 pandemic had severely impacted the Cotton sector, resulting in important financial losses and increased unemployment. Cotton farmers in Africa were suffering from trade policy measures taken at the international level in this context. The C4 voiced concern regarding a possible increase of trade-distorting domestic support provided by some Members in response to the pandemic. The C4 therefore urged Members to find a solution in the negotiation on Domestic Support and noted that the reduction and, if possible, the gradual elimination of trade-distorting domestic support remained a priority for the Group.

5.  The C4 also emphasized the importance of transparency in relation to the measures taken in response to COVID-19 in the Cotton sector, as well as regarding the implementation of the Nairobi commitments on Market Access and Export Subsidies for Cotton. The C4 also stressed the importance of transparency in relation to the removal of all restrictive trade measures with a view to facilitating the supply of essential medical goods and food products, as well as the exports of agricultural commodities, in particular Cotton, which remained one of the main sources of income and employment for several LDCs.

6.  Chad stressed that Cotton had a critical role to play to increase incomes and enhance welfare of millions of poor farmers in Africa, while contributing to women empowerment, food security and agriculture modernization. Chad also echoed the C4's diagnosis regarding the COVID-19 pandemic's impact on the Cotton sector. Chad reaffirmed its commitment to the multilateral trading system and the negotiations on Cotton, and reminded Members of their obligation to find fair, balanced, substantial, measurable and lasting solutions on the issue of Domestic Support, with a view to creating a level playing field that would benefit African Cotton producers.

7.  China supported the C4's call in considering the Domestic Support pillar as a priority. China reiterated that the asymmetry in Members' AMS entitlements had to be addressed first while reaffirming its willingness to play a constructive role and work with Members to achieve an outcome on Cotton.

8.  Pakistan referred to its statement made during the 13^th Dedicated Discussion on 30 July 2020. Noting that its national reforms of the Cotton sector during the last two decades had eliminated government interventions, Pakistan regretted that the global Cotton market situation showed a different picture. Pakistan highlighted the negative effects of subsidies provided by developed countries on Cotton farmers in LDCs and many other developing countries. Such subsidies led to the decline in Cotton production and cultivation area in those countries. Pakistan reminded Members of the decision taken by Ministers in Nairobi and supported the call by the C4 to address the Cotton issue specifically, expeditiously, and ambitiously. Pakistan called for the WTO Members' swift and speedy action to address trade-distorting support to enable its Cotton farmers to fairly compete across the globe, especially in the wake of the COVID-19 pandemic.

9.  Like other speakers, the European Union (EU) deplored the devastating economic crisis resulting from the COVID-19 pandemic. It had severely hit the Cotton sector and at the same time support to Cotton had increased. The EU pointed to the Joint Statement adopted at ministerial level during the WCD launch event on 7 October 2019 which called for an intensification of discussions on factors negatively impacting Cotton trade and markets, as well as enhancement of transparency and monitoring of Cotton trade-related measures. The EU stated its readiness to work with other Members in this regard and regretted Members' low record of compliance with notification obligations and low response rate to the Secretariat questionnaire including certain major players in the Cotton market. The EU urged Members to implement the Joint Statement and noted that as a first step Members should improve transparency and provide accurate notifications and replies to the Secretariat's questionnaire. The EU noted its readiness to support reasonable and balanced proposals and cautioned that unrealistic and overambitious proposals would lead to failure.

10.  India noted its support to the Hong Kong Ministerial Declaration to address Cotton ambitiously, expeditiously and specifically and viewed the commitment made by the C4 in its Koudougou Ministerial Declaration on Cotton signed on 12 February 2020 as critically important for small and marginal farmers in developing countries. On Domestic Support, India considered that addressing the existing asymmetries in the Agreement on Agriculture by capping, reducing and finally eliminating final bound AMS entitlements was the best way forward; on Market Access, India suggested to focus on the expeditious implementation of duty-free and quota-free access to Cotton imports from LDCs as mandated by the Nairobi Ministerial Decision. India noted that it had provided duty-free access to nearly all Cotton imports from LDCs and flagged the concern that several Members have not implemented the Nairobi mandate. Finally, with respect to the Cotton development assistance component, India reaffirmed its engagement to build a longstanding development partnership with Africa.

11.  The International Cotton Advisory Committee (ICAC)^[4] updated Members on the latest developments in the global Cotton market. ICAC focused its presentation on the following three aspects: (1) trends of world Cotton production, consumption, and stocks; (2) the impact of the COVID-19 pandemic on the textile and apparel sector and its impact on Cotton demand; and (3) evolution of global assistance to Cotton production.

12.  The Secretariat introduced the revised background paper^[5] and addenda^[6] focusing on the updates and highlights of the background paper. The background paper compiles up-to-date information and data from Members' notifications and other submissions on Export Subsidies, Domestic Support and Market Access, including both tariff and non-tariff measures. The background paper also captures the Members' latest responses to the questionnaire on Cotton policy developments, as well as relevant information on Cotton markets and policies included in Trade Policy Review reports.

13.  I reiterated that the quality of the background paper relied on the quality and timeliness of Members' notifications and submissions to the WTO, including replies to the questionnaire circulated by the Secretariat. I invited all Members to contribute to the document and be more forthcoming in sharing information on recent policy developments, particularly key Cotton actors.

14.  Members also heard a presentation^[7] from the Secretariat on Cotton tariffs and the Integrated Data Base. The WTO Secretariat introduced the new IDB notification obligations resulting from the IDB Decision G/MA/137 and presented summary Cotton tariff data extracted from the IDB database. It was noted that the IDB database contained MFN applied tariffs and import statistics, as well as preferential applied tariffs and import statistics for preferential regimes by developed countries to developing and least-developed countries which was particularly relevant for this Cotton monitoring.

15.  I echoed the Secretariat's call for Members to submit their applied tariff data in a complete and timely manner. I stressed that the Members' full compliance with IDB notification obligations, including the optional elements such as the applied tariffs under preferential regimes, are important to inform the discussions in many WTO fora including the Dedicated Discussions and the negotiations.

16.  The International Trade Centre (ITC) made a presentation^[8] on the Cotton Portal. ITC summarized the main features of the Portal and noted the growing number of users from across the world. ITC also introduced a new tool on market price information which provides free access to real-time data on prices and market updates from various sources for more than 300 agricultural products, including Cotton-related ones.

17.  The C4 urged Members' to step up their efforts aimed at expanding the preferential duty regime for imports of Cotton and Cotton-related products originating from LDCs. The C4 also reaffirmed its support to the Facilitators' led approach and suggested the continuation of the discussions in the Quad Plus format with a clear timetable. The C4 noted that the consultations held in 2019 could serve as a basis to identify points of convergence with a view to reaching an outcome on Cotton at MC12 on trade-distorting support.