Communication from the Co‑Sponsors of the Sectoral Initiative in Favour of Cotton
This communication, dated 12 October 2015, is being circulated at the request of the co‑sponsors of the Sectoral Initiative in Favour of Cotton.
DRAFT DECISION ON COTTON
Stressing the vital importance of cotton to the economies of African cotton‑producing countries in general and those of the Least Developed Countries (LDCs) in particular, and noting that over the past few years cotton has been one of the most contentious issues at the WTO, both in the trade negotiations and in the framework of the dispute settlement process;
Recalling that export subsidies and domestic support for cotton by some WTO Members distort prices and disrupt the international cotton market, with severe consequences for the economy and social lives in African cotton‑producing countries, especially Least Developed Countries (LDCs);
Recalling that on several occasions, the C‑4 has stressed the need for progress as regards the commitment of WTO Trade Ministers and has shown its good will in seeking to build a credible consensus through negotiation;
Expressing their concern at the lack of progress in the cotton negotiations and the absence of clearly stated political determination in the trade component of this vital issue since 2003, when the Sectoral Initiative in Favour of Cotton was submitted to the World Trade Organization;
Referring to the Decisions adopted on cotton and contained, respectively, in the Package of July 2004 (WT/L/579 of 2 August 2004); the Hong Kong Ministerial Declaration (WT/MIN(05)/DEC of 22 December 2005), paragraphs 11 and 12 on cotton in particular; the revised draft modalities for agriculture (TN/AG/W/4/Rev.4 of 6 December 2008); and the Bali Decision (WT/MIN/(13)41, WT/L/916 of 11 December 2013);
Taking into account the context that has prevailed in recent years and of the trend in world cotton prices, which has been highly unfavourable to African cotton producers and exporters over the past two years; and
Without prejudice to the overall conclusion of the negotiations on agriculture in the framework of the Doha Development Agenda;
Decide as follows:
1 TRADE COMPONENT
1.1 MARKET ACCESS
- Developed country Members, and developing country Members in a position to do so shall grant, as from 1 January 2016, duty‑free and quota‑free market access for cotton produced and exported by Least Developed Countries (LDCs) on the markets of developed and developing importing countries.
- Developing country Members declaring themselves not in a position to grant duty‑free and quota‑free market access for exports of cotton from the cotton‑exporting LDCs shall undertake, as from 1 January 2016, to look positively at the possibilities for increased import opportunities for cotton from LDC Members.
- Developed country Members, and developing country Members in a position to do so, shall grant, as from 1 January 2016, the duty‑free and quota‑free market access for the cotton products indicated in Annex 1 to the Agreement on Agriculture and for products derived from cottonseed that are exported by Least Developed Countries (LDCs) to the markets of importing developed and developing countries.
- Developed country Members and developing country Members which grant duty‑ and quota‑free access for cotton and products derived from cotton, as defined in the lists mentioned above, are urged to review the list of products derived from cotton covered, as from 1 January 2018, on the basis of updated trade data and statistics provided by Members importing and exporting cotton and products derived from cotton.
- In the course of the meetings of the Consultative Framework Mechanism on Cotton, the WTO Director General shall review the implementation by Members of paragraphs 1 and 2 above.
- In accordance with his mandate under the Work Programme for LDCs, the Director General shall include in the work of the Consultative Framework Mechanism on Cotton the following specific elements:
- identification and examination of market access barriers, including tariff and non‑tariff barriers for the entry of cotton exported by the cotton‑producing LDCs;
- annual reviews in the Sub‑Committee of the market access improvements and of any market access measures undertaken by Members, including the identification of access barriers to cotton exported by the cotton‑producing LDCs in markets of interest to them. These reports will be on the basis of factual annual studies by the Secretariat of the WTO or any other relevant international organizations; and
- examination of possible additional measures for progressive and predictable improvements in market access, in particular the elimination of tariff and non‑tariff barriers to cotton exported by the cotton‑producing LDCs.
1.2 DOMESTIC SUPPORT
- The vital question of cotton shall be resolved while upholding the commitment made by WTO Members to address the issue ambitiously, expeditiously and specifically.
- In order to achieve the basic objective of the reforms required in order to operate on the international cotton market, the support given to cotton by developed country Members under the Amber Box shall be reduced according to the following schedule three (3) successive tranches which shall not be less than those indicated below, namely:
- 50% of the cumulative amount for such support at 1 January 2016;
- 75% of the cumulative amount of support at 1 January 2017; and
- 100% of the cumulative amount of support at 1 January 2018.
- The Blue Box limit applicable to cotton shall amount to one third of the product‑specific limit that would otherwise have been applicable for the Amber Box, according to the aforementioned schedule.
- The base value of support calculated shall be the arithmetic average of the amounts notified by Members for cotton in supporting tables DS:4 from 1995 to 2000.
1.3 SPECIAL AND DIFFERENTIAL TREATMENT
- Developing country Members with relevant AMS and Blue Box commitments for cotton otherwise applicable under the relevant provisions of this Agreement shall reduce domestic support for these two categories in five (5) successive tranches of 20% each over the period from 1 January 2017 to 31 December 2021.
- Members shall pursue their efforts to draw up criteria and disciplines, including placing a cap on Blue Box support and other provisions which will prevent the transfer of support for cotton from the Amber Box to the Blue Box, and from the Amber and Blue Boxes to the Green Box. They also undertake to ensure effective monitoring of the types of support which distort international trade in cotton.
1.4 EXPORT COMPETITION
- Export subsidies for cotton are prohibited in accordance with the mandate contained in paragraph 11 of the Hong Kong Ministerial Declaration, which calls for all forms of export subsidies for cotton to be eliminated in 2006.
- Developing country Members which have any export subsidy entitlements referred to in that paragraph shall comply with this prohibition no later than 1 January 2018.
- To the extent that new disciplines and commitments for export credits, export credit guarantees or insurance programmes, agricultural exporting state trading enterprises and international food aid create new and additional obligations for Members as regards cotton, any such obligations shall be implemented by 1 January 2016 for developed country Members, and by 1 January2018 for developing country Members.
2 "DEVELOPMENT" COMPONENT
- The necessary link will have to be established between the development aspect of cotton and the Aid‑for‑Trade (AfT) initiative in order to create, on the basis of the priorities identified by the cotton‑producing LDCs, a framework conducive to the development of subregional or regional multidimensional and integrated programmes or projects, for submission to the development partners.
- Developing countries, and in particular the LDCs having a substantial trade interest in cotton, shall prepare, for submission to the development partners, regional‑scale integrative projects, if necessary, linked to cotton or related sectors.
- Members of the WTO and the donor community are urged to continue their efforts and their contributions in favour of the promotion of production, productivity and competitiveness in the cotton sector in cotton‑producing developing countries, especially Least Developed Countries.
3 IMPLEMENTATION AND FOLLOW‑UP
- The Director General shall include in the work of the Consultative Framework Mechanism on Cotton and place on its agenda an item entitled "Follow‑up to Ministerial Decisions/Declarations" where Members will be invited to report on measures taken in fulfilment of WTO Ministerial Decisions and Declarations on cotton.
- The 10th Ministerial Conference in Nairobi instructs the General Council to conduct periodic reviews of the implementation of this Decision during its work throughout 2016, based on the reports submitted by the Trade Negotiations Committee, the Sub‑Committee on LDCs, the Special Session of the Committee on Agriculture, and the Sub‑Committee on Cotton.
- The technical and financial assistance activities and initiatives carried out for this purpose shall be followed up and evaluated periodically by the Members, in particular as part of the work of Consultative Framework Mechanism of the Director‑General of the World Trade Organization (WTO) in favour of development of the cotton sector.
 Benin, Burkina Faso, Mali and Chad.
 This submission will, where appropriate, take account, of the data, implications and economic and trade factors associated with the production and marketing of cotton on the world market and in the trade policies of Members between now and the 10th Ministerial Conference of the World Trade Organization (WTO) in Nairobi in December 2015, and beyond, where their effects or impacts have been established.
 These products include in particular: cotton husks, oil and other food products, cosmetics, pesticides and agricultural inputs.
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