The proposal became a Cancún Ministerial Conference document and an agenda item of the conference, seeking decision by the ministers. Members?views differed as to whether this should be handled as a specific question or whether it should come under the three pillars of the agriculture negotiations (market access, domestic support and export subsidies). They also differed over the question of compensation, how it should be paid, for example whether it should be development assistance, and who should handle it ?the WTO does not have development funding except for training officials in WTO affairs.

Recovering from the deadlock in Cancún, the August 2004 General Council decision says members consider the cotton initiative to be important in both of its two main points: the trade issues covered by the framework for agriculture modalities and the development issues. The two are linked.

Development

Referring to the WTO Secretariat’s 23-24 March 2004 workshop on cotton in Cotonou, Benin, and other activities, the main part of the text instructs the Secretariat and the director-general to continue to work with the development community and international organizations (World Bank, IMF, FAO, International Trade Centre), and to report regularly to the General Council. Members themselves, particularly developed countries, “should?engage in similar work.

Trade

The “framework?instructs the agriculture negotiations to ensure that the cotton issue is given “appropriate?priority, and is independent of other sectoral initiatives. It says that both the overall approach of the framework and the cotton initiative itself are the basis for ensuring that the cotton issue is handled ambitiously, quickly and specifically within the agriculture negotiations.

The Cotton Sub-Committee

It was set up under the August 2004 framework at the 19 November 2004 meeting of the agriculture negotiations. Its purpose is to focus on cotton as a specific issue in the agriculture talks. (The cotton proposal, which also includes development issues, is discussed in the General Council as well.) It normally meets close to the time of the “agriculture weeks?of negotiations.

The latest new or modified proposals were tabled in November 2005: from the four African proponents (Benin, Burkina Faso, Chad and Mali) and from the EU. They include proposed actions for ministers to take at the Hong Kong Ministerial Conference.

The four African proponents call for export subsidies on cotton to be eliminated totally by the end of this year; 80% of trade distorting domestic support to be scrapped by the end of 2006 and the remaining by 1 January 2009; disciplines to ensure only authorized domestic supports remain; substantial improvements in market access, with duty-free and quota-free access for cotton and cotton products from least-developed countries; an emergency fund to help deal with depressed international prices; and technical and financial assistance for the cotton sector in Africa.

The EU proposes ministers agree to larger or faster commitments for cotton than in agriculture as a whole in all three pillars. In addition, the EU says it is willing to eliminate all duties, quotas and other quantitative restrictions on imports from all countries, the most trade-distorting domestic supports (AMS), and all export subsidies, from “day one?(the first day that the final agreement is implemented), and to apply disciplines on Blue Box subsidies from “day one?