Trade issues

Proposal from the African four. First presented by Chad at an informal meeting last week, this calls 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, with 10% each in 2007 and 2008, leaving total elimination 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 group (Benin speaking) said it hopes the EU and US will bring more to the table in Hong Kong so that the conference can produce concrete results.

EU proposal. This calls for the ministers to endorse more ambitious and faster commitments on cotton than for agriculture as a whole and describes in greater detail what the EU itself is willing to do both as part of a deal and autonomously. The proposal is spelt out under headings based on the three key words of the July 2004 framework: “ambitiously? “expeditiously? “specifically? It assumes the “recalibrated?objectives for Hong Kong mean that ministers will not be deciding on numbers. It also says how far it is willing to go, repeating what it had said in previous meetings.

The EU proposes ministers agree to larger reductions for cotton than in agriculture as a whole in all three pillars (for export subsidies, which are going to be eliminated anyway, this would be by earlier elimination). 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? “Moreover, on an autonomous basis, the [EU] is prepared to give an assurance to cotton producer countries that all these commitments will already be in place, as far as the [EU] is concerned, from 2006,?EU Ambassador Carlo Trojan told the meeting.

The discussion. The G-20 (Brazil speaking), Cuba, and the African Group (Egypt speaking) broadly supported the African Four’s statement. The US said it agrees that the outcome on cotton should be “more than the average?(i.e. the general outcome in agriculture), therefore, to be meaningful, the outcome in agriculture should also be strong. Several countries said they would study the EU’s proposal as well.

The chairperson’s summing up. Ambassador Falconer said the decision to “recalibrate?the objectives for Hong Kong without reducing the ambition for the final result of the negotiation accentuates the need for even more specific decisions on cotton at the conference. He urged members to respond and queried whether anyone would object to a clear statement committing members to more ambitious and quicker results in cotton.

He said he would be active in holding consultations to try to achieve further progress before Hong Kong.

Meanwhile, he is also drafting a report to the Trade Negotiations Committee on the agriculture negotiations, a text that will include cotton. Ambassador Falconer said that after circulating the draft and hearing comments from members next week, he will submit it to the Trade Negotiations Committee. Members will then decide what to do with the text although he hopes it can be used in some way in Hong Kong for example as an annex to a Hong Kong text or by reference, he added.