Compromise deal on cotton subsidies in preparation

The trade ministers of five of West Africa's largest cotton producing countries met in Burkina Faso on Tuesday to discuss a new approach to tackling the problem of US, European and Chinese cotton subsidies at world trade talks. Burkina Faso, Mali, Chad, Benin and Senegal have protested for years that these subsidies, amounting to US$4 billion a year, undermine the meagre earnings of 12 million poor people in the Sahel who depend on cotton as their main source of cash income. The issue came to a head at a meeting of the World Trade Organisation (WTO) in Cancun, Mexico last September, which hit deadlock over cotton. But Western producers now appear to be adopting a more flexible approach and the Africans are preparing their response. “The debate on cotton has evolved since Cancun and recent initiatives by the EU and the US appear encouraging – at Cancun the sort of talk we were hearing from western countries was totally different,” Shogel Maiga, Mali’s Minister for Trade and Industry told IRIN on the sidelines of the meeting in Ouagadougou. The United States recently wrote an open letter to the West African cotton producers acknowledging that their fight for fair trade was well founded, while the EU has announced a review of it’s agricultural policy with a view to sharply cutting cotton production and export subsidies. These developments have raised hopes among the African nations that a solution could yet be found. Maiga indicated that the Africans too were looking for compromise. “The damage our cotton producers have suffered must be taken into account by the EU and the US,” the Malian trade minister said. But he added that the African states may drop their earlier demands for compensation for the US$200 million of lost earnings which they suffer each year as a result of subsidies and focus instead on sustainable solutions for the future. "We are going to work out initiatives that will be presented as a compromise if the losses suffered by our cotton producers are taken into account by the US and the EU," Maiga said. A steep rise in cotton prices over the past six months fuelled by strong demand from China's booming textile industry has made it easier for western nations to contemplate a reduction in subsidies for their own farmers. The world cotton price has doubled from a low 36 US cents a pound in May 2002 and has shot up by a quarter since last August. After hitting a high of 82 cents in OCtober, the price has settled around at an average of just over 70 cents this month. Last week, West African governments, cotton processors and international donors met in Mali to consider ways of adding value to the West African crop by developing a textile industry within the region to produce thread, cloth and garments for export. “The emergence of a strong textile industry in the sub-region would create added value and would create favourable conditions for strong growth," Malian president Amadou Toumani Toure told the gathering. "Such growth that would allow us to fight effectively against the poverty which severely affects our rural areas and offer jobs to millions of our young people who are unemployed,” he told the meeting. Noting that West African cotton producers currently export 95 percent of their output in a raw state, Toure said: "In Mali, our ambition is to move on from being an exporter of primary products to become an exporter of semi-finished products.” Six West African countries - Benin, Burkina Faso, Chad, Cote d’Ivoire, Niger, Mali, Senegal and Togo - together produce over a million tonnes of cotton fibre each year - 20 percent of world production. Toure noted that in Mali, Burkina Faso and Benin, cotton, known locally as "white gold," accounts for more than half of all export earnings. The problem with previous attempts to develop a textile industry in West Africa geared to the local market was that locally produced garments were undercut by the dumping of unwanted cheap stock from other parts of the world and more particularly by the mass import of second hand clothing. About 40 textile factories operated in the Sahel states during the 1960s, but today their number has fallen by half. Nevertheless, one study presented to the Bamako meeting by the the Business Development Centre (CDE) and the West African Development Bank (BOAD) said it should be possible to divert 25 percent of the region's cotton crop into local manufacturing by 2010, creating 50,000 new jobs.