When National Cotton Council President Mark Lange told a group of cotton producers a few months ago that he feared “nothing good would come out of the Doha Round,” some may have thought he was being overly pessimistic.
But now that the World Trade Organization has completed the Hong Kong Ministerial Conference on the Doha Development Agreement, Lange is looking more and more prescient. That's because very little good came out of the Ministerial for the U.S. cotton industry, according to most observers.
The negotiations, in fact, appeared to make a reality of Council leaders’ worst nightmare – that cotton might be singled out for “special treatment” rather than being included in a single undertaking for reforming the world’s agricultural trading system.
NCC Chairman Woods Eastland said the Council was “extremely disappointed” in the final Declaration approved at the conclusion of the Ministerial Conference in Hong Kong on Dec. 18. Officials said the Declaration’s text was “bracketed,” meaning it did not represent a complete consensus of the WTO’s 149 members.
“The text suggests the European Union and the United States will be asked to take larger cuts quicker, to give preferred access to products produced by the Least Developed Countries with nothing in return, and to end export subsidies for cotton before the implementation period of the agreement is likely to begin,” Eastland said.
“The text is not a single undertaking approach to the negotiations; it clearly singles out cotton.”
Eastland said the Council appreciated the efforts of U.S. Trade Representative Rob Portman and Agriculture Secretary Mike Johanns to try to keep the focus on the single undertaking of agricultural reform.
“But this bracketed text offers very little to the U.S. cotton industry and requires significant, unilateral concessions in return,” he noted. “Throughout the cotton discussion we have documented reliable economic studies published by prestigious international and academic organizations, which conclude that the U.S. cotton program is not responsible for poverty in Africa.
“Further, the parties continue to ignore the realities of the complicated world markets for fibers and textiles and the importance of increasing domestic consumption in developed and newly developed countries.”
A clearly disappointed Johanns said the Hong Kong Ministerial “left the hard work for 2006” rather than reaching the final agreement that many WTO members had hoped the Hong Kong meeting would bring.
“Let’s just be blunt about it,” he told reporters. “We can score some things that are positive in terms of developing countries. We got some things done that we had to address at some point, but the hard work really exists for 2006.”
Johanns said he believed U.S. negotiators had “laid the groundwork to boost the global economy and help lift millions out of poverty. Least developed countries now know they have a stake in the success of the round. There is consensus among virtually all countries that more open trade is to key to increased prosperity.”
Acknowledging that cotton was a major issue in Hong Kong, Johanns said U.S. officials had productive discussions with the C-4 (Benin, Burkina Faso, Chad and Mali) and other African countries that have complained the U.S. cotton program is harming their farmers. Portman also announced least developed countries would receive duty and quota-free access for cotton to the U.S. market when the Doha Agreement is implemented.
In the months ahead, he said, WTO members must work to reform subsidies while at the same time reforming market access to open the world’s markets.
“When subsidies are reduced and access is increased, we are on a pathway that has the potential to be good for U.S. agriculture while also profoundly impacting the well-being and prosperity of the world, especially the developing and the least-developed countries.
But cotton industry leaders voiced grave concerns about the four-year-old Doha Development Agreement talks are headed, given the repeated attacks on the U.S. cotton program throughout the six-day Ministerial.
“Apparently, emotion has over-ruled fact. U.S. cotton producers should not be asked to accept unfair, unequal treatment in the Doha Round,” Eastland said. “We call on all parties to work to return the negotiations to a single undertaking so that Round can be successfully completed and implemented to the benefit of all farmers.”
Eastland also said the text abandons West African cotton producers by failing to require the largest cotton importers – primarily China and India – to provide greater, more predictable access to their markets.
“This is concrete evidence that the controversy has not been about helping African farmers, but has been a concerted attack on U.S. cotton,” he noted. “The text provides the Least Developed Countries access to U.S. spinners, a market of 6 million bales annually while ignoring access to China, India and Pakistan spinning mills that consume a combined total of 70 million bales annually.
“Finally, the text contains no specific provisions to improve market access for U.S. cotton as the text implies that China, the largest cotton producer and importer in the world, will receive special dispensation as a recently acceded member of the WTO.”
Senate Agriculture Committee Chairman Saxby Chambliss, who has frequently reminded WTO leaders that the U.S. Congress must approve any Doha Agreement, also expressed his displeasure with the Hong Kong Declaration.
“Before Hong Kong, I said the negotiations should proceed as a single undertaking and not isolate any particular commodity,” Chambliss said. “The text under consideration in Hong Kong includes three paragraphs that specifically target cotton for special treatment in the negotiations. Pointedly, the draft calls for the elimination of export subsidies in 2006 and reductions in trade-distorting domestic support more quickly than that generally applicable for agriculture.”
The Georgia senator said he understands the need to help developing countries reduce poverty and spur economic development. “But that cannot and should not happen by singling out cotton growers in the United States and placing their futures in jeopardy.”
Although they have represented the United States ably in Hong Kong, Chambliss said Portman and Johanns “must redouble their efforts in the agriculture negotiations to reach a balanced agreement that substantially reduces tariff barriers.”
The NCC wasn’t the only U.S. farm organization unhappy with the Hong Kong Declaration.
“The American Farm Bureau is disappointed that minimal progress was made in Hong Kong during the Doha Development Round of negotiations,” said AFBF President Bob Stallman. “It is frustrating that the European Union and other countries, unwilling to advance meaningful agricultural reform, have delayed negotiations.”
Stallman said Farm Bureau remains committed to achieving increased market access in the EU and other countries with protectionist tariffs. “We further oppose any effort to single out cotton on domestic supports,” he said. “Instead, cotton must be treated in the same realm and timeframe as all other commodities.”
The American Soybean Association said its leaders were frustrated at the lack of progress on issues of importance to U.S. soybean growers, particularly in the area of reducing tariffs and non-tariff barriers.
“Unfortunately, the focus of the Ministerial was diverted away from the core issue of expanding real market access,” said Ron Heck, past chairman of the ASA who participated in the Hong Kong meeting. “Instead, the European Union managed to shift attention away from its failure to offer meaningful market access that is key to unlocking the negotiations, and developing countries were allowed to pursue a one-way trade liberalization agenda.”
He said the ASA and other U.S. farm groups were concerned about the lack of tangible progress on expanding access to developing country markets, which comprise 81 percent of the world’s population.
In the final Declaration, ministers agreed to:
-- Eliminate all export subsidies by 2013
-- Provide least developed countries improved duty-free and quota-free access for agricultural exports
-- A general framework on negotiating disciplines for global food aid
-- An April 30 deadline for negotiating the framework for the three major areas of the agricultural trade talks: market access, trade-distorting domestic supports and export competition.
“With no progress on commitments to expand market access and little discussion about trade-distorting domestic support reduction, those two negotiation pillars will need to be central to the next phase of the talks running through April 30 if an overall agriculture agreement is to be achieved, a USA Rice Federation spokesman said.
He said U.S. negotiators also discussed a series of trade issues in bilateral talks with other WTO members including Korean officials on rice market access. Korea is just now putting in place an agreement signed last year that will greatly expand market access for U.S. rice.
The USA Rice delegation encouraged the administration to press Korea for specific details on implementation. Korean rice farmers were some of the most visible protesters in Hong Kong and are placing tremendous protectionist pressure on their government, the spokesman said.