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Lamy''s plea for cuts in cotton subsidies |
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2004-7-8
Pascal Lamy, the EU Trade Commissioner announced that the World Trade Organisation (WTO) had to agree to cut the cotton subsidies of rich nations as part of a wider global accord worth as much as $500 billion (R3.75 trillion), yesterday.
Ruling in favour of Brazil, the WTO arbitrators stated that US cotton subsidies of $3 billion a year violated trade rules. The WTO, in its initial dispute ruling, said US payments to its 35 000 cotton farmers were unfair because they exceeded caps agreed to a decade ago.
This was the first case to target domestic farm aid. Brazil''s government estimates that its farmers lost more than $600 million in sales due to US cotton aid.
He said that rich nations, including the US should scrap all subsidies that compensated farmers for higher domestic prices when they sold to the world market.
Currently, $97 billion worth compensation packages are being offered to domestic farmers to offset low prices by the wealthy countries like USA, Germany and Japan, which would see a reduction in the prices soon. The conditions had depressed world commodity markets overall, too.
According to a statement issued in Brussels, Lamy told a EU-Africa forum in Paris that the cotton dispute was "another reason to find quickly an agreement in the current negotiations - this agreement must find a solution specific to cotton".
The current month end would see a draft outline being hammered out by negotiators in Geneva of a WTO agreement committing the body''s 147 members to slash farm subsidies on manufactured products ranging from cars to computers.
Without cotton aid US production would shrink by nearly 30 percent and world prices would jump by more than 12 percent, according to research done on behalf of the Brazilian government by Daniel Sumner, an economist at the University of California.
The EU was ready to drop import restrictions on cotton from the world''s poorest nations, such as Chad, Mali, Burkina Faso and Benin, he said. More than 10 million people in Western Africa rely on the crop for their livelihood.
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