U.S. Trade Representative Rob Portman said the United States is willing to provide duty-free and quota-free access for cotton grown in the “C4” countries of West Africa that have frequently been portrayed as victims of the U.S. cotton program.
Portman's statement came during a press conference at the WTO Ministerial Conference in Hong Kong Dec. 15. The Conference was supposed to mark the completion of a new WTO Doha Round trade agreement but became bogged down in squabbling over export subsidies and tariffs on agricultural products.
Portman was responding to a reporter's question, but reports had been circulating during the conference that the United States would table duty-free/quota-free access for cotton and textile products from least developed countries.
“I will just say that the U.S. is willing under the duty-free/quota-free commitments we will make to provide duty-free access for cotton from these West African countries,” the ambassador said during a Dec. 15 press conference.
“That's the commitment we are willing to make, and we are working with our partners in the C4, not just on that, but a whole range of issues to address their concerns. And we are hopeful to have some kind of resolution this week. If not, we will continue to work with them closely.”
Portman urged other major cotton purchasers, such as China and India, to also waive their tariffs for cotton shipments from the West African countries — Benin, Burkina Faso, Chad and Mali — and to help their farmers increase their productivity.
“India and China are the two biggest purchasers of the cotton in the world,” he said. “The United States is a purchaser of cotton, but frankly some of the larger purchasers of cotton have relatively high tariffs in place. Some tariffs, not in those two countries, but some tariffs have bound rates as high as 100 percent.”
Shortly after the press briefing, National Cotton Council Chairman Woods Eastland expressed concern about the reported U.S. offer to allow upland cotton produced in those countries to enter the United States duty and quota free.
“This appears to be unilateral by the United States in what should be multi-lateral negotiations,” said Eastland. “If improved market access for cotton produced in the truly least developed countries will provide meaningful economic gains than all importing countries should be expected to match the reported U.S. proposal.”
The jockeying for position on the West African cotton issue came as hopes for completing a new trade agreement at the Hong Kong Ministerial appeared to be fading.
U.S. trade officials have been calling for the European Union to present a broader proposal on setting a date for the elimination of export subsidies and increasing market access for agricultural products, including cotton.
But such a response has not been forthcoming apparently due to opposition within the EU to reducing its substantial tariff barriers for agricultural products grown outside the 25 member countries.
Portman has been urging WTO members to set a date for a follow-up meeting if they cannot leave Hong Kong with an agreement.
“If we cannot make all the progress we had hoped for here in Hong Kong — and I'm afraid that we won't — I feel strongly we should set a date before we leave here and put a work plan in place to be sure that we don't take the pressure off after Hong Kong,” he said.
As it has since the failed 2003 WTO Ministerial in Cancun, Mexico, cotton continued to attract a considerable amount of attention in Hong Kong. Cotton was even the subject of a special meeting — on cotton and bananas — prior to the conference opening on Dec. 14.
During the meeting, speakers from the West African countries and representatives of the OxFam charity organization berated the United States for not doing more to reduce its subsidies, which OxFam has repeatedly claimed are impoverishing African cotton producers.
Portman said the United States is working on its subsidies, but that subsidies aren't the sole reason for the economic woes of West African farmers.
“I will tell you that we can deal with the subsidy issue,” he noted. “But because I've spent a lot of time looking at this over the last few months, the more I learn, the more I'm concerned and confused. Why are we ignoring the other parts of the problem?”
The International Monetary Fund, the UN Food and Agriculture Organization and nine other global institutions have made studies of the impact of the U.S. cotton program on cotton prices for West Africa. Their estimates range from an impact of 2 percent to 12 percent.
“Again, I'm not saying we shouldn't deal with the subsidy issue,” Portman said. “But it would be irresponsible to the cotton farmers, some of whom are here tonight, to tell them that eliminating subsidies is going to solve their problem.”
One factor weighing on African producers is that their yields are about half of those in the rest of the world, he noted. “If they had the same yields as the rest of the world, the impact of that would be over 20 times the impact of subsidies.”
Eastland added another aspect of the problem that the National Cotton Council has uncovered in defending the cotton program from “unfounded” accusations such as those that recently appeared in a series of articles in its hometown newspaper, The Commercial Appeal.
“Today, a Brazilian or Australian cotton farmer can sell cotton for 50 cents per pound while the West African farmer receives 32 cents per pound,” he said. “This differential does not arise as a result of any U.S. safety net program. Rather, it exists from the vestiges of European colonial institutions that must be reformed by African leaders.
“The West African farmer has virtually no choices when acquiring inputs or selling the product of their efforts. The situation is now bearing down on West African farmers in the forms of significantly lower cotton yields, higher costs and lower returns.”
Senate Agriculture Committee Chairman Saxby Chambliss, who has been following the talks' progress from Washington, said the focus on issues such as cotton and food aid is distracting ministers from the real task at hand.
“We must eliminate export subsidies and have substantial and meaningful reductions in tariffs for both developing and developed countries alike,” he said. “I am disappointed that the European Union continues to distract the attention of this important meeting. However, I am encouraged by Ambassador Portman's statements at the opening session and his strong and courageous defense of the U.S. cotton program.”
As Congressional leaders have reminded the Bush administration, any agreement reached in Hong Kong or subsequent locations must be ratified by Congress.