Source: South Asian Media Net
The key to a breakthrough on trade and poverty
Anwarul K. Chowdhury Friday March, 26 2004
Source: IHT
NEW YORK: The reopening of World Trade Organization talks on agricultural trade this week in Geneva provides an opportunity to remove an injustice against millions of people in some of the world's least developed countries - while also rationalizing economic policies in the rich countries and getting stalled trade negotiations moving again. At issue are subsidies that distort the cotton market at the expense of poor producers.
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Cotton is one of the world's most heavily subsidized crops. U.S. cotton that was exported at 37 cents a pound in 2002 cost agricultural companies 86 cents to produce, even before shipping, according to U.S. Department of Agriculture figures. The difference was made up by the U.S. government, underwritten by American taxpayers. In 2001, the payout of subsidies by the United States for cotton alone soared to $3 billion, before settling down to $1.7 billion in 2002.
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These subsidies, placed on cotton by Europe as well as the United States, form a barrier to poor countries trying to work and trade their way out of abysmal poverty.
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Cotton figures as a significant export item for at least 20 of the 50 nations designated as least developed countries by the United Nations. Most of these 20 countries - where life expectancy averages about 50 years, and most of the population is living on $1 a day or less - are in western and central Africa.
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Last year, in the run-up to the WTO ministerial meeting in Cancun, Mexico, a plea against the system of cotton subsidies was issued by Benin, Burkina Faso, Chad and Mali. These African countries are among the lowest-cost producers of cotton in the world.
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The four countries proposed that the European Union and the United States should embark on a three-year phase-out of cotton subsidies, and set up a transitional mechanism to offset the losses incurred in the meantime.
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Since the breakdown of trade talks in Cancun last September, there has been some attention but too little action directed toward the problems of cotton growers from poor countries.
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As the talks on agricultural trade issues reopen, it is time to revisit the proposal made by Benin, Burkina Faso, Chad and Mali. These countries are not asking for preferences, but for a correction of trade distortions.
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In addition, there should be assistance for the development aspects of cotton production - improving technical capacity, infrastructure and the ability to bring cotton products with greater value-added to the markets.
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In the poor and developing countries, 75 per cent of the people live in rural areas, so a full phase-out of cotton subsidies in the near term is critical to the international fight against poverty.
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Such a move would not only open up economic opportunity in some of the world's poorest countries, it might also be the confidence-building step needed to jump-start progress in other areas of agricultural trade disputes, which in turn are perhaps the single largest obstacle to progress in the current round of trade negotiations. If that happened, the whole world would benefit.
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Anwarul K. Chowdhury, a former ambassador of Bangladesh to the United Nations, is a UN undersecretary general and the UN high representative for the least developed countries.