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African trade ministers urge greater attention to cotton exports as financial crisis adds to challenges

01 December 2008

UNCTAD meeting reviews trade-distortion issues, gap between commitment and delivery of aid, upcoming Doha negotiations on agriculture

Geneva, 2 December 2008 - Six trade ministers of African countries dependent on cotton exports called today for fair play in the international trade of cotton and for rich countries to close the gap between pledges and delivery of aid to the African cotton sector while outstanding trade issues are worked out.

Trade ministers from three of the so-called African "Cotton Four" countries -- Benin, Chad, and Mali -- attended the UNCTAD Secretary-General´s Multistakeholder Meeting on Cotton. Also present were ministers from Cote d´Ivoire, Senegal, and Zimbabwe. The Cotton Four nations, which also include Burkina Faso, depend on this agricultural commodity for 30% to 60% of their exports.

UNCTAD Secretary-General Supachai Panitchpakdi told the meeting that "The phase-out of the Multifibre Agreement from 2004 led to production shifts to low-cost locations" such as Africa. That opportunity should be seized, he said. "That is why it is so important at this point in time to eliminate trade-distorting measures and market-access barriers." He said another major issue involved in boosting developing-country cotton exports is improving the competitiveness of such nations.

Ahamadou Abdoulaye Diallo, Minister of Commerce and Industry of Mali, making an opening statement on behalf of the Cotton Four, said "To maintain cotton production in low-income countries, it is necessary to find sustainable solutions in the face of unfair competition." Cotton employs some 15 million people in West Africa, Mr. Diallo noted, and plays an important role in improving health and incomes in that region. Elimination of direct, trade-distorting cotton supports by developed countries "is a work as yet in progress," he said, "and progress to date does not satisfy. . . It is critical that a solution be found, an effective and expeditious solution."

The current situation "is being made worse by the world food crisis," he added, "and could be even worse given the present financial situation, which is having a negative impact on the trade in commodities, given the recession which is upon us."

A mini-ministerial negotiating session on agricultural issues under the Doha Round of trade negotiations is expected for mid-December. At the last mini-ministerial, held in July, cotton was not discussed. It is reportedly high on the agenda for the mid-December meeting, possibly featuring a small group of "stakeholder" nations, including the Cotton Four, the United States, the European Union (EU), India, and Brazil.

Pascal Lamy, Director-General of the World Trade Organization (WTO), which is overseeing the Doha talks, attended today´s meeting and said, "Cotton needs to be treated as an example and as an engine for dealing with broader trade issues. I believe that a consensus by WTO members is necessary, and it needs to be a fair agreement, and a fair final accord that goes to the heart of what we are trying to do. I hope that we can meet at ministerial level in Geneva in around two weeks, in the hope that we can achieve concrete results in this area."

UNCTAD has long emphasized the importance of trade in commodities to developing countries -- particularly the world´s 49 least-developed countries (LDCs) -- and has called for governments, international organizations, and the private sector to work together to provide dependable finance, stable delivery of technology, and reasonable trade prospects for African cotton farmers. The "multistakeholder" meeting reflects that approach and follows up a mandate coming out of the 12th quadrennial session of the United Nations Conference on Trade and Development, held in Accra, Ghana, last April. The Accra Accord calls on the organization to continue to play a key role in addressing the trade and development problems associated with the commodity economy.

Doha Round negotiations on cotton have centred on disputed levels of direct government assistance provided by developed countries to their cotton sectors. Developing countries, including the Cotton Four, have charged that this assistance, which includes price supports and export assistance, distorts world cotton prices and production, and the result is a decline in exports from developing nations. A "sectoral initiative in favour of cotton," proposed in 2003 by the Cotton Four, called for the Doha Round to eliminate all trade-distorting cotton subsidies and for financial compensation to be provided until the subsidies are completely removed. No conclusion has been reached on the matter, but developed countries began -- and have continued -- commitments to provide aid to the cotton sectors of developing countries. According to the WTO Secretariat, these commitments recently reached US$551 million. Delivery, however, has lagged: aid disbursements under the programme have totalled some US$109 million so far. The total value of aid commitments for infrastructure related to cotton has now reached US$2 billion.

The African trade ministers expressed concern at today´s meeting that the mounting global financial crisis may reduce the money available for cotton development projects in Africa and elsewhere. They said the crisis already is making it more difficult for their farmers to obtain fertilizer and other agricultural inputs.

In addition to Minister Diallo of Mali, also attending and speaking at the meeting were Christine Ouinsavi, Minister of Trade and Industry of Benin; Ramadan Issa, Minister of Trade and Industry of Chad; Youssouf Soumahoro, Minister of Trade and Industry of Cote d´Ivoire; Mamadou Diop, Minister of Trade of Senegal; and Phineas Chiota, Deputy Minister of Trade and Industry of Zimbabwe.

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