Cotton Growers Groan Under US Obnoxious Policy

African farmers could have gained 3.5 per cent average increase in world cotton prices if the United States had moved to comply with the recommendations of an international trade panel, a new study has found.

The study commissioned by the International Centre for Trade and Sustainable Development (ICTSD) and conducted by Mario Jutes of Cornell University suggests that cotton prices would have risen  over a 1998 – 2007 period if the US had cut subsidies deemed unlawful by dispute panel at the World Trade Organization following complaint by Brazil.

A recently announced deal to resolve the dispute on the eve of punitive retaliatory trade measures that Brazil was due to impose on the US could have African countries dependent on a negotiated settlement at the WTO.

Under the bilateral accord, the US will review its export credit programme and provide $150 million in compensation to Brazilian producers, leaving cuts to the controversial “counter cycle” payments and marketing loan payment programmes to be discussed in subsequent talks.

The study by ICTSD also shows that farmers in poor and developing countries including Nigeria could have gained from an average 6 per cent increase in world cotton prices over the same period if the US had accepted proposals made by African  nations to slash the larvish subsidies enjoyed by rich country producers.

It said cotton production could have declined by as much as 15 per cent if African proposals in the draft Doha accord were applied to historical output levels even the ten year period examined the study and production in EU could have dropped by as much as 30 per cent.

However, production volumes could increase by as much as 3-5.5 per cent in Brazil, West Africa and central Asia with production value growing by up to 13 per cent.

There is an urgent need to rebalance existing trade rules that permit developing countries to highly subsidise domestic production, depress world prices, push farmers elsewhere out of production and impair prospects for economic advancement in the developing world, the study concluded.