Market News

Our African cotton producers — Benin, Burkina Faso, Chad and Mali, known as the Cotton Four — urged WTO members to increase assistance for enhancing cotton production, improving local processing capacity and developing cotton-to-textile value chains in Africa and to curb domestic support to the cotton sector, during the latest WTO “Cotton Day” on 17 November.
The discussions included a session of the Director-General’s Consultative Framework Mechanism on Cotton, which deals with the development assistance aspects of cotton, chaired by Deputy Director-General Alan Wolff, and a dedicated meeting to review trade-related developments in the cotton sector. A new cotton portal, developed by the WTO and the International Trade Centre (ITC) and to be launched officially during the WTO's Ministerial Conference in Buenos Aires on 11 December 2017, was presented to WTO members.
Cotton roadmap
The Cotton Four (C4) presented the “ Cotton Roadmap Project”, which seeks to promote the cotton sector by improving the local processing capacity and developing cotton-to-textile value chains at the regional level. The objectives of the project, developed by the C4 in cooperation with the ITC, reach beyond the C4 region and encompass the Western and Central African sub region, Benin noted on behalf of the C4.
This new initiative includes impact indicators covering local processing capacity, aimed at creating a robust and competitive cotton-based industry in Africa. Some WTO members provided substantive feedback on the project while others promised to consult with their capitals for further analysis. The project proponents called on donors to provide more assistance to implement more ambitious cotton development strategies. They also stressed the need to attract private investment to match the provision of development assistance funds.
The Executive Director of the International Cotton Advisory Committee (ICAC), Mr Kai Hughes, gave a presentation on African cotton production and its interplay with poverty reduction strategies. He stressed the importance of increasing cotton yield in Africa: “If we want to make a difference in Africa, it boils down to how we should increase cotton yield,” he said. Mr Hughes also stressed the role of cotton as a driver of economic growth and its contribution to food security and socio-economic and environmental sustainability.
The Agriculture and Commodities Division of the WTO presented the latest “evolving table” on cotton development assistance: a unique transparency-enhancing tool used to monitor the implementation status of development assistance projects in the cotton sector and for agriculture in general.
In a cover note accompanying the evolving table, Director-General Roberto Azevêdo noted that the number of projects in the cotton-specific sector has remained stable, and that the total value of commitments stands at US$ 203.6 million, of which US$ 113.7 million has already been disbursed. The ratio of total disbursements to total commitments is at 55.8%, slightly higher than the previous period.
Agricultural trade reform
The chairperson of the agriculture negotiations, Ambassador Karau of Kenya, updated members on the state of play of the negotiations on cotton leading up to the WTO's 11th Ministerial Conference (MC11) in Buenos Aires.
“Cotton clearly remains a priority for MC11,” he told members, noting that ministers agreed 12 years ago, at the 2005 Hong Kong Ministerial Conference, that cotton will be addressed “ambitiously, expeditiously and specifically within the agriculture negotiations”.
“Each one of the words in this sentence is important. It gives cotton a special status in our negotiation,” the chair said, while noting that the negotiations on cotton do not take place in isolation from what is happening in agriculture more broadly.
Ambassador Karau noted that domestic support in cotton remains the central and most controversial issue, and the views remain far apart on what could constitute a possible outcome in this area.
The Ambassador of Mali, speaking on behalf of the C4, called on members to step up their negotiation efforts to reach an outcome on cotton at MC11. He stressed that growth in the cotton sector contributes to a number of sustainable development goals and benefits millions of poor farmers in Africa. Pointing to the trend of lower global cotton prices and the declining production in many parts of cotton-producing countries in Africa, both the C4 and Pakistan underlined the need for WTO members to curb domestic support in cotton so as to level the playing field for cotton producers.

Cotton Portal
Members benefitted from a presentation of the Cotton Portal developed by the WTO and ITC, to be launched officially in Buenos Aires on 11 December 2017.
The Cotton Portal will provide a single entry point for all cotton-specific information available in WTO and ITC databases on market access, trade statistics, country-specific business contacts and development assistance-related information as well as links to relevant documents, webpages and other organizations active in the cotton sector.
Ambassador Karau noted that the Cotton Portal project was an excellent initiative that would contribute to improving the quality and accessibility of information related to cotton market access as well as to relevant information for the cotton-related daily activities of both private operators and officials.
He also highlighted the fact that it would in particular facilitate the monitoring of the implementation by members of the market access paragraphs contained in the Nairobi Ministerial Decision on Cotton.
“We should all be proud of this Cotton Portal, which constitutes a very positive outcome resulting from our cotton-related work,” he concluded.
Cotton trade policy and market situation
Members heard a report on the latest trade policies, compiled in a WTO Secretariat background document. This document provides updated information on cotton based on new notifications, and includes new tables showing export volumes and share of world exports for major cotton exporters.
Agriculture negotiations chair, Ambassador Karau, stressed the importance of having up-to-date data on members' policies and support levels, especially in terms of domestic support. “External information is useful but these data must come first and foremost from your notifications,” he told WTO members.
In a presentation on recent developments in the cotton market, Mr Kai Hughes of ICAC noted that cotton planted areas have increased in recent years and cotton yields have also been increasing in many regions. As a result, world cotton production is slightly above cotton mill use; global stocks are therefore not likely to decline. He also noted that although the subsidies provided to cotton producers worldwide have been declining, it is still claimed that a majority of cotton production receives direct assistance.
There is a strong negative correlation between direct assistance to cotton production and prices, Mr Hughes remarked. He concluded his presentation by updating members on work related to e-Phyto – electronic phytosanitary certificates – noting its key relevance to trade in cotton and its derivative products.
Extracted from WTO