The latest proposal from the C-4 West African countries for “reforming” the U.S. cotton program is only serving to undermine what little confidence U.S. farm groups have left in the World Trade Organization, the National Cotton Council says.
The proposal submitted by the trade ministers of Benin, Burkina Faso, Chad and Mali calls for even deeper cuts in farm program payments to cotton producers than those tabled by U.S. Trade Representative Rob Portman at the WTO meetings last fall.
For National Cotton Council leaders already concerned about the movement away from market access and domestic support measures in the WTO's Doha Round negotiations, the C-4 proposal is more bad news, says NCC Chairman Allen Helms.
Speaking at the Mid-South Farm and Gin Show in Memphis Tenn., Helms noted that WTO ministers have set a date of April 30 to finalize modalities and July 31 for submitting tariff reduction schedules, signaling an intense period of further negotiations.
“Cotton is already being asked to give up more than others, and we anticipate pressure for further concessions,” said Helms. “Part of that pressure for further concessions came with the recent release in Geneva of a proposal from the C-4 West African countries.
“We believe this proposal is an unfortunate diversion from the important work of the world's trade ministers. This continued insistence by some for unfair treatment of cotton only serves to erode U.S. agriculture's confidence in the WTO, which can have important political ramifications.”
He said the text produced by the WTO Ministerial in Hong Kong in December contains very little on market access and domestic support measures specific to agriculture, areas that are key issues for U.S. farm groups.
Focus on cotton
“The European Union and other countries were unable to offer increased market access for agriculture but as the pressure mounted on the EU, it maneuvered other issues to the forefront, including a focus on cotton and the plight of poor countries,” said Helms.
Cotton is listed in the sub-section of the agricultural text and is singled out for special treatment, he noted. Three specific objectives are listed for cotton.
First, all forms of export subsidies for cotton are to be eliminated by developed countries in 2006.
Second, on market access, developed countries will give duty and quota free access for cotton exports from least developed countries at the commencement of the implementation period.
The third objective is for reducing trade distorting domestic subsidies for cotton more ambitiously than for other crops and to implement this over a shorter period than generally applicable to other crops.
“The council is deeply concerned with the ramifications for this text and believes it is also an ominous warning to other commodities,” says Helms, a producer from Clarkedale, Ark. “Despite our best efforts, the WTO is attempting to move away from a single undertaking for all of agriculture to deal with one commodity separately.”
He said the council will continue to work very closely with USTR, USDA and Congress to counter any efforts to further isolate and discipline cotton.
“We are also working with other agricultural groups to insist on the necessary gains in market access that must arise in order to sustain any commitments for reductions in overall domestic support that do not isolate cotton,” he said.
The council has already had several meetings in Washington with USTR and USDA and participated in commodity roundtable discussions with the other commodities. Leaders of the major commodity organizations were scheduled to receive another update from USDA on the WTO situation March 6.
Helms says the council is also concerned about what he termed a “very severe budget proposal” that is “almost identical” to the plan that called for nearly $9 billion in savings that the administration submitted this time last year. Some of the reactions to the proposal were as expected.
“The administration's proposed payment limitation cap has already received a strong endorsement from Senator Grassley,” he said, referring to the Iowa senator who has championed tighter payment limit rules for the last five years.”
The administration proposal calls for reducing the payment limit cap for individuals to $250,000 for all commodity payments, including all types of marketing loans gains. It also would remove the three-entity rule and make marketing loans recourse above the payment limit.
The proposal would also reduce funding for cotton research conducted by the Agricultural Research Service at locations across the Belt by $8.5 million or 15 percent. The plan would result in the closure of the ginning laboratories in Lubbock, Texas, and Las Cruces, N.M.
“The council is working with other agricultural groups and our friends in Congress to protect producer eligibility of farm program benefits and deliver the message that the farm bill is a multi-year contract that provides the necessary stability for U.S. agriculture and U.S. consumers.”