US, EU cotton-subsidy cut is only a matter of time, WTO says

by Sarah McGregor

The U.S. and European Union are likely to eventually meet African cotton producers’ demands to scale back farmer subsidies, World Trade Organization Director General Pascal Lamy said.

The U.S. and EU have committed in the Doha round of global trade negotiations to reducing levels of subsidies by 70 percent to 80 percent and to making deeper and faster cuts in programs for cotton, Lamy said today in an interview in Tanzania’s commercial capital of Dar es Salaam. The only missing item is a precise figure, he said.

Representatives of poor countries attending a meeting in Dar es Salaam on strategy for the Doha talks called on WTO member nations to allow duty-free and quota-free access for cotton and its byproducts. About 15 million farmers grow cotton in the sub-Sahara region of Africa, the world’s poorest continent, Lamy said.

“There will be no conclusion of this round without the U.S. and EU reducing cotton trade-distorting subsidies more ambitiously and more specifically” than their pledges on other products, Lamy said. “That’s already decided. What is not decided is exactly how much.”

The Doha development round of trade talks, which began in 2001, is aimed at lowering barriers to poor nations’ exports to help economies grow. The talks have been subject to delays, breaking down in July 2008 in a dispute between the U.S. and India over farm tariffs and resuming in September.

A ministerial-level WTO conference is scheduled for Geneva in late November aimed at evaluating progress on the Doha round. Lamy said yesterday that governments need to work harder to meet a treaty-signing deadline of 2010.

A resolution of U.S. cotton-subsidy policy is part of a broader agriculture program and “we’re nearly there,” Lamy said. “It’s a matter of weeks or months.”

Bloomberg

African states threaten Doha veto over cotton

Four African states threatened on October 8 to veto any accord in the Doha trade round that did not address their demands for a reduction of Western subsidies for cotton.

The negotiations on the product, a mainstay of several African economies, are seen as a touchstone of efforts to create a fairer global trading system in the Doha round, where agreement is sought in 2010.

"The negotiations on the Doha cycle are global negotiations and if even one country is not in agreement, there is no signing, there is no implementation of the accord," Mali Trade and Industry Minister Ahmadou Abdoulaye Diallo said. "So we are going to tell them that if they want us to sign the global accord, our interests, particularly regarding cotton, must be looked after," he said after a meeting with officials from Chad, Burkina Faso and Benin.

African countries want the United States to make bigger cuts in its cotton subsidies than in other agricultural products. They say that U.S. cotton subsidies make it uneconomic for their farmers to produce, and they cannot afford similar state aid.

"They (subsidies) undermine our sectors, which are suffering from it enormously. It is an injustice which must be put right," said Mamadou Sanou, trade minister for Burkina Faso.

U.S. officials have hinted that they will do something on cotton but say they cannot make an offer until they can see the overall deal in agriculture. More recently they have argued that China and India must also open their markets to U.S. cotton.

Reuters

African states seek 500 million euros in EU banana deal

by Darren Ennis and Bate Felix

Africa's top banana export countries sought in late May 500 million euros ($694 million) in compensation from the European Union as part of a deal to end the world's longest-running trade dispute.

Talks drag on at the World Trade Organisation in Geneva between the EU and Latin America's leading banana suppliers aimed at reducing import tariffs and end the "banana wars" that have dragged on since the 1990s.

As part of the pact, Brussels must find a package of financial aid for rival banana-producing African, Caribbean and Pacific (ACP) countries to compensate them for possible losses to their industry and ease any socio-economic hardships that the liberalisation would mean for some of its former colonies. But ACP producers -- which have for years enjoyed duty-free access to the lucrative European market -- told EU ministers at talks on May 29 in Brussels that the 27-nation bloc's latest offer, estimated to be around 100 million euros, is not enough.

"An update on the ACP's support needs ... indicates that an envelope of close to 500 million euros would be required to avoid social turmoil and political instability in the ACP countries concerned," a statement prepared by the ACP delegation for the ministerial meeting said.

The European Commission -- which oversees trade policy for the EU -- has proposed gradually lowering taxes on banana imports from Latin American countries to 114 euros per tonne by 2016 from 176 euros now. But ACP producers such as Cameroon and Ivory Coast, want smaller tariff cuts over a longer period, the declaration showed.

They say Europe will become even more swamped by cheaper fruit from Latin America, which already supplies some 80 percent of EU banana imports, to the detriment of former colonies of Britain, France and Portugal.

"ACP countries will immediately suffer drastic losses which would also have to be compensated for immediately," they argued.

European Commission officials say they hope to conclude a deal with all parties soon.

"We have noted that the EU has indicated that discussions are almost at an end with the MFN suppliers (Latin American countries) and the U.S., with who it intends to sign a final deal by the end of June 2009," the ACP statement said.

Ecuador, the world's largest exporter of bananas, has led pressure from Latin America for the EU to stick to the tariff deal negotiated in July 2008 on the sidelines of a Geneva meeting seeking a breakthrough in the Doha round of wider World Trade Organisation (WTO) talks.

Two of the world's biggest distributors, Chiquita Brands International, Del Monte Foods and Dole Co., have Latin American plantations.

When the WTO talks collapsed in July 2008, the EU walked away, saying the banana deal had to be part of a general Doha agreement. But, having won a string of WTO cases on the issue against Brussels, the Latin Americans insist that bananas should be included in a separate pact.

ACP countries have argued that any agreement on bananas should form part of a wider Doha deal -- an arrangement that would give them added leverage in the discussion because they could threaten to block Doha.

Reuters

EU offers cuts to import duties on Latin American bananas

by Darren Ennis

The European Union has offered Latin America's top banana suppliers to initially cut duties on bananas to 148 euros per tonne from 176 euros now to try and end the world's longest-running trade dispute, a draft showed.

Under a draft proposal, the European Commission -- which oversees trade policy for the 27-nation bloc -- has proposed gradually lowering taxes on banana imports from Latin American countries to 114 euros per tonne by 2016.

The Commission's offer outlines possible arrangements if the stalled World Trade Organisation (WTO) Doha is not completed.

Ecuador, the world's largest exporter of bananas, has led pressure from Latin America for the EU to stick to the tariff deal negotiated in July 2008 on the sidelines of a Geneva meeting of ministers seeking a breakthrough in the WTO talks aimed at liberalising global trade.

When the WTO talks collapsed, the EU walked away, saying the banana deal had to be part of a wider Doha agreement. In the meantime Brussels has been pressing forward with talks aimed at securing free trade agreements (FTAs) with several Latin American countries. But the Latin Americans insist that bananas should be included in a separate pact.

"The initial reaction has been relatively positive from the Latin Americans. But the main stumbling block is the Doha caviat and the condition that any deal would have to be approved by the whole WTO which would give ACP (African, Caribbean and Pacific) countries a veto," a source familiar with the talks said.

The EU offers preferential access to its markets for the African, Caribbean and Pacific (ACP) countries, who are mainly former European colonies. African producers, like Cameroon, are particularly annoyed by the EU proposal. But Brussels is trying to find a package of financial aid for ACP banana producing countries to compensate them for any losses to their industry and unlock one of the barriers to a Doha deal.

Failure to resolve the banana row could block an overall Doha deal because the Doha proposals offer both slower tariff cuts on produce from poor developing countries, like the ACP states, and steeper cuts on tropical produce from countries like the Latin Americans.

The WTO has ruled that charging a tariff on Latin American bananas while letting in ACP fruit duty-free is discriminatory. It said the EU's previous regime, which admitted a quota of 2.2 million tonnes of Latin American bananas with a tariff of 75 euros a tonnes, was still in force.

In November, the WTO's top court ruled again against the EU in what has turned into the world's longest-running trade dispute. The following month, Ecuador said it could exercise its right to slap sanctions on the EU if the row was not settled.

Besides imposing trade sanctions, Ecuador could also challenge the controversial economic partnership agreements (EPAs) that Brussels is forging with developing countries to replace earlier illegal arrangements.

It could also challenge EU domestic subsidies at the WTO.

The EU's own producers in the French Caribbean and Spanish Canary Islands also objected to the July deal, but the source said Paris and Madrid "can be persuaded to get on board in return for some form of financial compensation for their producers".

Reuters

Cotton subsidies remain big hurdle in WTO Doha Round

by Ravi Kanth Devarakonda

The Doha Round was launched in 2001 in Doha, Qatar, to provide a developmental dimension to global trade by enabling developing and least developed countries to secure enhanced access for their products in rich country markets. However, there is a pronounced shift in the negotiations in the last seven years -- from developmental issues to the purely market-driven concerns of the dominant players.

The coordinators for the African, Caribbean and Pacific (ACP) group, the least developed countries (LDC) group and the Africa group are all concerned about sustained attempts to undermine the developmental components in agriculture and cotton subsidies.

The U.S., the European Union (EU), Canada and other industrialised countries are demanding a hefty payment from their developing country counterparts for the reforms they have to undertake in their agriculture. That shift led to the collapse of Doha trade talks time and again, several analysts said.

For example, the U.S. is not prepared to address its trade-distorting subsidies on cotton and other commodities until it secures enhanced market access for its farm products in developing countries. This condition puts paid to the flexibilities being envisaged for developing countries to protect their precarious farm production.

Along with Japan, Canada, Norway and Switzerland, the U.S. and the EU have repeatedly maintained that they must secure a high level of access for their industrial products in developing countries as ‘‘payment’’ for their commitment to reduce the distortions they are causing in the global farm trade.

‘‘What we are seeing now at this point is an aggressive push to lower the ambition on the developmental side with developed countries demanding special and differential treatment to protect their interests,’’ said Servansing, the ACP coordinator.

The ACP, the Africa group and the LDC group are pushing hard for simple and flexible rules for special products and a special safeguard mechanism (SSM) to protect their resource-poor subsistence farmers. These three groups have joined ranks with the G-33 coalition led by Indonesia which is demanding easy conditions to use the SSM mechanism to face unforeseen surges in imports of major food items.

The ACP wants a ‘‘special safeguard mechanism (SSM) to protect our farmers from unforeseen import surges; the reduction of cotton subsidies; and a proper mechanism to address the erosion of preferences'', explained Servansing.

But the U.S., Australia and Uruguay ''are demanding tough and burdensome conditionalities that would make these provisions redundant,'' he maintained.

The U.S., along with Australia, Canada and other farming exporting countries, want a set of tough rules for the SSM to ensure that it does not affect the normal trade in farm products. These rules suggest a high trigger for imposing special safeguard duties and low remedies with limited duration.

In July this year, the talks broke down on SSM, among other issues, when India and China refused to accept the stringent conditions demanded by the U.S..

Subsequently, there were attempts to renew these talks but there has been no progress as the leading farming exporters are not budging from their tough conditions. Recently, Indian trade minister Kamal Nath told the WTO director general Pascal Lamy that developing countries will never accept a SSM that is overly burdened with various cross-check conditions.

‘‘SSM is a very important issue for the African countries,’’ said Gauze, arguing that ‘‘we don't want an SSM that cannot preserve our agriculture and rural development’’.

Apart from the SSM, there is complete silence on how cotton -- one of the boiling issues on the Doha agenda and the most important demand for the four West African cotton producers (Benin, Burkina Faso, Mali and Chad) -- is going to be addressed in coming days. This is due to the U.S.'s decision not to come up with an alternative to what the chair for the Doha agriculture negotiations, Ambassador Crawford Falconer, had suggested.

The chair indicated in his last draft text issued in the month of July that cotton subsidies should be reduced over 80 percent, a suggestion that was rejected by the U.S.. ‘‘Nothing is happening on cotton and we are worried,’’ said Servansing, while Lesotho's trade envoy Maruping warned that without an early outcome on cotton, the negotiations will not progress well. In a nutshell, the African countries are eager to conclude the Doha modalities agreement by the end of this year but they continue to face several hurdles to their developmental demands. ‘‘We are fighting a lot on these issues and it is important that they are addressed adequately,’’ said Gauze.

Oxfam, the developmental pressure group, cautioned the African countries about rushing into an agreement without addressing their concerns on special farm products and the special safeguard mechanism. ‘‘We don't see the need to conclude the modalities agreement if the developmental issues in agriculture, that are most important for African countries, are not sufficiently addressed,’’ said Isabel Mazzei, head of Oxfam in Geneva.

IPS

Local food security concerns explain Chana's tough stance at failed WTO talks

China's tough stance at the 'Doha' trade talks in Geneva has less to do with political posturing than with the country's long-standing obsession with food security, experts have suggested.

Jettisoning a long period of silence at the Doha rounds, China joined hands with developing nations and let disagreement over agricultural tariffs derail the dialogue.

"Recent food riots in several countries have made Chinese leaders realise even more than before that food security must be resolved internally," Meng Zhou, a Beijing-based independent researcher suggested in a column in the Xinjingbao newspaper. "If food supply is dependent on imports then you can never guarantee social stability and even national sovereignty can be jeopardised. It serves to explain the much harder line taken by China at the trade negotiations this time."

Chen Taifeng, China studies scholar at Qinghua University, concurred. "Skyrocketing food prices have made developing countries very nervous," he said. "Before it opens its agricultural markets entirely, China needs guarantees that it can rely on safeguard mechanisms to protect its own farm produce.''

The Geneva talks broke down in late July after member countries could not agree on a proposal to allow developing nations to use special safeguard tariffs to shield their farmers from floods of cheap imports.

With its huge exports, China has benefited generously from liberalised trade, which has delivered markets for its cheap manufactured goods. At previous talks of the so-called Doha development round Beijing had chosen to remain a low-profile participant if not a silent observer of the bargaining between rich nations and the developing world.

But in a sign of deep anxiety over food security, this time around China shared India’s opposition to a Doha deal that New Delhi had argued would hurt its millions of poor farmers. The move comes amid mounting challenges for Beijing to feed its 1.3 billion people against shrinking arable land and water shortage.

Wealthy nations led by the United States have blamed India and China for not ceding enough ground at the trade liberalisation talks and thus blocking solutions to recent food shortages and a continuing spiral of soaring food prices. The U.S. trade representative, Susan Schwab, said it was "unconscionable" that developing countries were clinging to such protectionist attitudes.

"In the face of the food price crisis, it is ironic that the debate came down to how much and how fast nations could raise their barriers to imports of food," she was quoted as saying.

But China has pointed a finger at developed countries for killing the talks, saying it is unfairly maligned by the West. Commerce minister Chen Deming told the official newspaper of the communist party, the People’s Daily, that China should not be blamed for the failure of the WTO talks.

"We are a new member of the WTO, and must still enjoy treatment as a new member," he said. "The collapse of the talks has nothing to do with China". Chen, who represented China at the Geneva talks, described the failure of the negotiations as a "heavy blow." In his initial statements after the foundering of the talks, Chen had blamed the U.S. saying that "after satisfying its own demands the U.S. had demanded from the developing world a price as high as heaven."

The U.S. had objected to the details of a "special safeguard mechanism", designed to protect farmers in the developing world against temporary surges in cut-price imports of cotton, rice and sugar.

China has long insisted on protecting the livelihoods of its subsistence farmers. The country has between 750 and 800 million farmers -- nearly double the entire population of the European Union. The majority survive on two dollars a day.

"It is unfair to pitch wealthy farm owners of the West, regularly subsidized by their countries’ finance ministries, against the millions of unprotected small-size farmers of China," argued Meng Zhou. "Farmers and agriculture are still the pillars of many developing countries’ economies. In the West though, peasants represent only a fraction of the population and agriculture accounts for only a small portion of the rich nations’ GDPs".

Editorials in some Chinese newspapers have accused the U.S. of "hypocritical compromises" negotiated at the Doha round tables. The U.S. agreed to cap its trade-distorting farm subsidies at 14.5 billion dollars but an editorial in the "21st Century Business Herald" said the compromise was "meaningless."

"As the world’s most efficient grain producer whose exports account for 40 percent of the global grain exports, the U.S. is the biggest beneficiary of soaring food prices," the paper said. "The U.S. has calculated rightly that high grain prices would offset the decrease in its agricultural subsides. In fact, last year the U.S. spent only 9 billion (dollars) on such subsides".

Chinese academics predict high food prices would continue for at least another 10 years. Last month the State Council, or China’s cabinet, approved a mid- and long-term grain security plan that aims for the country to be 95 percent self-sufficient in grain over the next 12 years.

The plan outlines a state goal of reaching annual grain output above 500 million tonnes by 2010, and increasing production to more than 540 million tonnes a year by 2020.

After years of debate, Beijing gave the green light, last month, to a controversial plan to cultivate high-yield and pest-resistant genetically modified (GM) crops designed to boost the country’s agricultural productivity.

"Departments must fully understand the importance and urgency of this significant project and waste no time to implement it," said a circular posted on the website of the State Council.

IPS

Safeguard demands for small scale farmers derailed WTO negotiations

Safeguards to protect small farmers’ livelihoods in African and other developing states, as opposed to subsidies for commercial agricultural interests in rich countries, remained an insurmountable obstacle in the World Trade Organisation (WTO) talks, leading the Doha Round to collapse last week.

The Doha Round crumpled unceremoniously on July 29, the ninth day of the mini-ministerial meeting. The straw that broke the camel’s back -- the special safeguard mechanism (SSM) – has to do with small farmers’ livelihoods in the developing world.

However, it should be noted that there were gaping differences on a whole host of other issues that were yet to be discussed in detail, such as the U.S.’s subsidies for its cotton farmers, as well as several issues in the industrial tariffs negotiations.

The difference in views on the SSM was not only between the U.S., on the one hand, and India and China, on the other. In fact, a hundred developing countries did not accept the figures which WTO Director General Pascal Lamy had produced on July 25 (the fifth day of the negotiations).

These countries -- the Group of 33 (which includes 46 countries); the African, Caribbean and Pacific (ACP) group; the Africa Group; and small and vulnerable economies (SVEs) -- produced an alternative set of numbers on Sunday July 27.

The wrangle between the U.S. and India and China was highlighted simply because the negotiations were taking place mainly among seven players: the U.S., the European Union (EU), Japan, Australia, India, Brazil and China (also known as the Group of Seven or G7).

The other selected ministers who had been invited to Geneva were excluded from those negotiations and were waiting in the corridors. Hence, it appeared that India and China were alone in disagreeing with the U.S..

The SSM is meant to address import surges in farm products. In order to protect its domestic agricultural sector from injury, the SSM would allow a country to implement an additional tariff to stem the import surge.

Among several problematic constraints in the Lamy figures that the hundred developing countries identified was the suggested trigger of 140 percent. This means a country should have a 40 percent increase in imports compared to a preceding three-year period before the SSM can be invoked.

Developing countries, in contrast, were asking for a five or, at most, 10 percent import increase. A 40 percent import increase before action can be taken is likely to be too late as the import surge could already have wiped out the country’s producers. However, the U.S. and a few other countries with agricultural exporting interests were immovable on this issue.

On the last two days of the talks, other possible options were proposed in the G7 which India accepted but the U.S. not. The U.S. wanted a weak SSM to ensure that the Doha Round would provide them access to developing countries’ agricultural markets.

The battle was thus between commercial interests in agricultural exporting countries, and the livelihoods of subsistence farmers in Africa, Asia and elsewhere.

What happened in the area of the SSM, however, was echoed in several other areas. Commercial interests were seen as more pressing than the measures developing countries wanted in order to minimise the threats of unemployment and de-industrialisation.

If talks had not collapsed over the SSM, there was a real chance they would have done so in the area of the non-agricultural market access (NAMA) negotiations, or the area of cotton, where consensus was not even on the horizon.

There was also the issue of preference erosion, which was not yet resolved. If markets all around were to be liberalised further, many African countries stood to lose, rather than gain, because of the carving away of existing trade preferences.

In sum, when African countries asked for their development concerns to be taken on board, their requests were frustrated at every turn. Conversely, the package on the table would have given the U.S. and EU special treatment.

The U.S. and EU would have been able to retain all of their agricultural subsidies, only shifting them to different subsidy categories. They would also have cut industrial tariffs by a smaller percentage -- about 30 percent -- while developing countries were expected to cut tariffs by about 58 percent.

*Analyst Aileen Kwa is the coordinator of the trade for development programme at the inter-governmental South Centre.

IPS

Burkina Faso fears 'collapse' of its cotton industry after failure of WTO talks

Cotton growers in Burkina Faso will suffer from the failure of world powers to conclude a global trade pact, its trade minister said July 30, highlighting broad concern over the impact of the breakdown on the developing world.

"We can hardly control our anger," said Burkina Faso's Trade Minister Mamadou Sanou the morning after July 29th's dramatic collapse of ministerial talks at WTO headquarters.

He warned that his country's cotton industry -- which accounts for over half its export earnings -- faced "extinction."

"They wanted me to be here to negotiate on cotton. I have been here for 10 days and I haven't been able to discuss cotton," he told a news conference. "There is a risk that the whole system will collapse in our country."

The Doha Round, launched in the Qatari capital in 2001, aimed to help poor countries around the world by using trade to boost economic development. With the collapse of the negotiations, countries such as Burkina Faso now face an even longer wait for help for their farming industries.

"We are most disappointed that the rich countries, the champions of liberalisation who urge us to liberalise our trade and our economies... are afraid to trade with us on an equal footing," Sanou said.

Sanou is the coordinator for the C4 group of West African cotton-producers, which since 2003 has been fighting for the cotton issue to be included in the Doha Round.

The group -- Benin, Burkina Faso, Chad and Mali -- wants industrialised countries, particularly the United States, to lower domestic subsidies that African nations say depress world cotton prices at poorer countries' expense.

Some diplomats accused the United States of tactically avoiding the issue.

"The US cannot afford to give way on cotton, so it does not even want to go into the issue," one Asian diplomat said.

"It knows that India would not give ground on SSMs, in which case India would be blamed in case of any collapse."SSMs, or special safeguard mechanisms, are a measure to protect farmers in case of an import surge. India and the United States were unable to agree on the question, triggering the failure of negotiations here.

On July 28 China -- a major buyer of US cotton -- waded into the row, saying it had heard "absurd arguments" that the United States would cut its subsidies on cotton only if China and other developing countries cut their cotton tariffs.

Senior Chinese official Zhang Xiangchen said the United States was "not in a position to discuss" tariff cuts with developing members until it eliminated its own subsidies.

"The extremely high cotton subsidies by the US have caused serious damage to cotton farmers in developing countries, including those in Africa and 150 million ones in China," said Zhang.

At a news conference on July 29, US Trade Representative Susan Schwab said the US "remained committed to working" with the C4 group to address cotton concerns.

AFP

African cotton producers see no progress in US subsidy talks

African cotton producers seeking a cut in US subsidies for US cotton producers voiced frustration july 27 as they claimed Washington offered "nothing concrete" during global trade talks underway now.

"We cannot say that we are satisfied. There is nothing concrete," an African negotiator said.

The so-called C4 group of West African cotton producers -- Benin, Burkina Faso, Chad and Mali -- met US Trade Representative Susan Schwab to discuss domestic cotton subsidies within the overall framework of mammoth talks to secure a new global free trade pact. The C4 group has since 2003 been fighting for the cotton issue to be included in the Doha Round of World Trade Organisation negotiations.

The group wants industrialised countries, particularly the United States, to lower domestic subsidies that the African nations say weigh down world cotton prices and penalise poorer countries.They were assured that the issue would be treated "ambitiously, expeditiously and specifically" by WTO trade partners in 2004.

But the African negotiator said July 27 that there had been "no advances" in the talks with Schwab. "The US promised they would do more on cotton than on the rest of agriculture, but they don't want to announce anything right now," he said. "There weren't even any signals at this stage on what figures they might propose," he added.

The group wants to see subsidies cut by 82.2 percent in the US, a figure included in a negotiating text that is forming the basis of discussions on a new free-trade pact.

Schwab's spokeswoman Gretchen Hamel said that the two sides "discussed creating opportunities for African farmers to export through lowering tariffs and barriers imposed on cotton."

But the African diplomat said market access was not the issue, stating: "What we want is for them to relieve us of the burden of (their) subsidies."

AFP

ACP countries under pressure to reach banana deal at WTO talks

African and Caribbean countries came under pressure on July 27 to reach a deal on bananas and remove a major obstacle to efforts to rescue global trade talks.

The chances of a deal on the core areas of farm and industrial goods in make-or-break talks at the World Trade Organisation (WTO) were delicately poised as rich and poor nations examined proposals for real new export opportunities.

The European Union and Latin American banana producers agreed early on July 27 to cut the EU's import duty to 114 euros ($179) a tonne by 2016 after an initial cut to 148 euros in 2009 from 176 euros now, people familiar with the fruit talks said.

But it must still be approved by former European colonies in Africa, the Caribbean and Pacific (ACP) as well as EU member states such as France and Spain, whose farmers in the Caribbean territories and the Canary Islands also grow bananas.

A banana deal would settle one of the world's oldest trade disputes and is key to any breakthrough in the WTO's Doha round of talks on a new agreement to open up world trade, potentially giving a boost to the global economy.

The WTO talks began on July 22 and are likely to run into the middle of the coming week.

Under Doha's agriculture proposals, tropical produce from Latin America would have faster, steeper tariff cuts than usual.

But ACP exports would see duties come down more slowly so they can retain some preferential access to rich markets.

The two sides have been working to tidy up overlaps of products on the tropical and preferential access lists but agreement would be impossible without a deal on bananas.

The fruit is a key export for many Latin American and ACP countries. Cameroon's banana industry is the biggest employer in the country after the public sector, and government officials say the industry helps prevent unrest in West Africa, which has been wracked by civil conflict in recent years.

Lowering the EU's import tariff further for their competitive Latin American rivals could devastate ACP banana output, they warn. ACP banana exports pay no EU duty.

"Bananas for us are a factor for political stability," said Luc Magloire Atangana Mbarga, trade minister of Cameroon.

Delegates were hoping to reach final agreement on bananas and other tropical products issues before ministers from 35 key WTO players resumed talks on the Doha deal.

The Doha negotiations were launched in November 2001 to boost the world economy and help developing countries grow out of poverty. They were almost written off last week as rich and poor countries remained deadlocked.

But a controversial move by WTO Director-General Pascal Lamy to shut out most of the ministers and get seven key members to tackle the nine most sensitive issues was vindicated on Friday when they produced a grudgingly accepted compromise.

Talks on July 26 on opening up services sectors were hailed by ministers and businessmen as also offering positive signals. The compromise included a proposed new cut in the ceiling for disputed U.S. farm subsidies and revised proposals allowing developing countries to protect their farmers, seeking to balance the needs of poor country importers and exporters. It also sketched out limits on the ability of developing countries to shield entire industrial sectors from opening up.

A trade source said developing countries were growing alarmed at signs that China would seek to protect markets for rice, cotton and sugar and other industrial sectors, shutting off new export opportunities for them.

Reuters

African cotton farmers hope for WTO trade talks breakthrough

While besuited government officials slug it out at world trade talks in Geneva this week, African peasant farmers watching their cotton plants grow hope any deal will allow them to farm their way out of poverty.

Subsidies that encourage farmers to grow more cotton in rich countries like the United States are blamed for flooding the market and depressing world prices in recent years, making it harder for poor farmers in Africa to make ends meet.

"It is the growers at the bottom who suffer," said Seydou Ouedraogo, who grows cotton near Leo, some 200 km south of Burkina Faso's capital Ouagadougou. "We just want to be treated equally. It is our only source of income, and only cotton can lift us out of poverty. This is unfair competition," Ouedraogo said.

At this time of year, the cotton plants here are still small, standing 20-30 cm tall. Their broad green leaves standing out against the rich, dark earth which has soaked up the seasonal rains of the past couple of months.

Burkina Faso, West Africa's top cotton producer, is a leading member of the Cotton-4, or "C-4" group, which has pressed World Trade Organisation (WTO) negotiators to include extra restrictions on cotton subsidies in any final trade deal.

The group, which also includes Mali, Benin and Chad, has had some success. Negotiators in Geneva are discussing a draft that would cut U.S. cotton subsidies by 82.2 percent -- more than the 60 percent cut proposed for other similar farm subsidies.

Washington has paid out $2 billion to $4 billion a year in subsidies in recent years to the 25,000 U.S. cotton farmers who export 80 percent of their output and account for 40 percent of cotton traded internationally around the world.

The resulting oversupply has pushed down world cotton prices, in turn cutting the household income for millions of farmers across West Africa for whom cotton is the leading cash crop, used to pay school fees, healthcare and other necessities.

Farmers here mostly run smallholdings of just a few hectares, tending the fields with a combination of their own muscle power, help from family members and oxen. Even the few big plantations with tractors and other machinery are a far cry from the huge, heavily mechanised farms of the United States.

Subsidies to U.S. cotton farmers have become increasingly contentious in recent years. Apart from the C-4 campaign, Brazil has successfully challenged the U.S. subsidies at the WTO and said this week it will seek $4 billion in trade sanctions.

"We are hoping these negotiations will eliminate subsidies completely and immediately," said Seydou Coulibaly, who grows around 7 tonnes of cotton a year on his 6-hectare farm in Ouelebougou, southern Mali.

Coulibaly should be a prime beneficiary of the current "Development Round" of WTO talks, launched in Doha in 2001.

But a successful conclusion to the crunch talks in Geneva is far from certain. And even if a deal is struck, the effects may not be immediate, or enough to transform the lives of an estimated 10 million West Africans who depend on cotton.

Some economists have estimated the U.S. subsidies depressed world cotton prices by up to 15 percent in recent years.

But since hitting a 2007 low of just under 46 U.S. cents per lb in May that year, U.S. cotton futures market prices almost doubled to more than 90 cents/lb in March this year, helped in part by falling U.S. output which Washington says has dropped by 38.5 percent in the past two years.

Prices have eased back since March, and futures closed in New York on Tuesday at 68.76 cents/lb.

African cotton farmers say that despite the price rise, which is passed on to farmers in most West African countries through a centrally-fixed producer price that takes account of ginning and transport costs, they struggle to make ends meet.

"For cotton to be profitable today, we need a producer price of 250 CFA francs ($0.60) per kg. For years it was around 160 CFA, but this year the government has set it at 200 CFA/kg," said Coulibaly in Mali.

He said the price of fertiliser -- a major cost for farmers growing cotton, which bleeds the soil of vital nutrients -- had doubled in the past year, partially offsetting the better price.

"An increase in the price of cotton will improve farmers' standard of living, but price is only one aspect of development," said Mohamed Lamine Ndiaye, an African programme manager for British aid group Oxfam in Senegal.

"We need to develop added value ... Only 3 percent of West African cotton is processed here. We need to develop a strong cotton industry, but to do that we need to have a good (price) environment," he said.

Reuters

US offers $15 billion cut in farm subsidies at WTO talks, developing countries scoff

The United States offered on July 22 to cut its ceiling on trade-distorting farm subsidies to $15-billion in a bid to close world trade talks this year, but leading developing countries said it was not enough.

"This is a major move, taken in good faith with the expectation that others will reciprocate and step forward with improved offers in market access," US Trade RepresentativeSusan Schwab said.

The move came on the second day of a meeting aimed at reaching a long-awaited breakthrough on farm and manufacturing trade issues at the centre of the nearly seven-year-old Doha round of world trade talks.

Because of high international farm prices, current US spending on trade-distorting farm programmes is about $7-billion, or well below the $48,2-billion ceiling the United States is allowed under World Trade Organisation rules.

But Schwab said the offer - which is dependent on other countries opening their markets to more foreign farm and manufactured goods - would require Congress to rewrite recently passed farm legislation.

President Bush vetoed the 2008 farm law which boosted subsidies, but was overridden by Congress.

The offer would dramatically reduce the amount of government assistance US farmers would receive when farm prices are low, Schwab said, noting that the United States spent $18,9-billion on trade-distorting support in 2005 and close to $25-billion in both 1999 and 2000.

"My immediate response is it doesn't pass the 'laugh test'," a senior Indian official said, speaking on condition that he not be named.

European Union Agriculture Commissioner Mariann Fischer Boel said the offer would take the negotiations forward but declined to comment further.

A Brazilian diplomat said developing countries would press the United States to offer deeper cuts. "This is only the second day of the talks here, so we imagine there is room for manoeuvre to reduce them further," the diplomat said.

A third developing country official called the US offer "unacceptable," but others said they had expected the United States to announce an even higher initial number with several days of negotiation still to come.

Ahead of last week's meeting, a draft text put together by the WTO's farm trade mediator proposed capping US spending on trade-distorting farm subsidies in a range between $13-billion to $16,4-billion. But India, Brazil and many other developing countries have called for even deeper cuts that would prevent US outlays from rising sharply when crop prices fall.

"Anyone who is suggesting a number outside the range that is in the text is not engaged in a serious effort to conclude the Doha round," Schwab said.

US farm groups complain that current proposals for cutting tariffs on both developed and developing countries would offer them few new export opportunities.

At a meeting in Hong Kong in 2005, the United States agreed to make deeper and faster cuts in payments to US cotton farmers than to other US farmers under a Doha deal.

A proposal made by West African cotton producers, who say they have been badly hurt by the US cotton programme, would require a 25 percent cut in the first year, to about $600-million, and then a subsequent cut to about $143-million.

US officials said they stood by commitments made in Hong Kong, but how deeply the United States agrees to cut cotton payments depends on how much much major cotton importer China and other countries agree to cut their tariffs.

"China has very high tariffs on their cotton imports. So, it's important that we obtain very significant access to our markets [there] for American cotton. That will have a big factor on what we're able to negotiate for the specifics on cotton," US Agriculture Under SecretaryMark Keenum said.

Reuters

WTO deal being mooted could ruin small scale farmers, groups charge

Farmers from Europe, Africa, Asia and Canada warned the World Trade Organisation (WTO) on July 22 that a trade deal being negotiated this week could ruin small farmers, harm the environment and increase hunger.

On the second day of a week of crunch talks seeking a breakthrough to rescue the 'Doha' trade liberalisation round, groups representing small-scale farmers told WTO chief Pascal Lamy the proposals were dangerous and unacceptable.

"Further trade liberalisation will benefit large-scale corporate farming and multinational traders at the expense of small-scale, vulnerable farmers, hindering agricultural and rural development in countries which need it most," the farm groups said in a joint declaration handed to Lamy.

The Doha round aims, among other things, to open markets for farm exports from developing countries and limit the huge subsidies paid to farmers in Europe and North America which skew the market against agriculture in the developing world.

The coalition of farmers from the wealthy and highly subsidised European Union and producers from some of the world's poorest countries, in east Africa, showed battle lines at the Geneva talks were not based on purely 'north' versus 'south'.

Pekka Pesonen, head of EU farm lobby COPA-COGECA, said the big winners of the proposed liberalisation would be large-scale farm exporters, some of which are in the EU, but mostly in Brazil, Argentina, the United States and Australia.

While not against liberalisation per se, he said the rules had to allow for subsidies and tariffs to be used to protect livelihoods, the environment and local food production.

European farmers have long been protected by high import tariffs and subsidies totalling more than 40 billion euros a year.

But they are concerned the EU could bargain away too much in reducing import tariffs in the WTO talks while the Africans fear their domestic producers will be squeezed out of their home market by powerful foreign exporters if their tariffs come down.

"We fear that the proposals currently on the table in the WTO will undermine the ability of many countries throughout the world to provide their citizens with urgently needed food security and stability," said the statement, which was also signed by farm groups from India, South Korea and Sri Lanka.

John Mutunga, head of a Kenyan farmers federation, said reforms to global trade that would cut high tariffs on value-added goods would greatly help Kenya, which exports crops like tea and coffee in a less profitable, unprocessed state. But he said developing countries, which have suffered greatly from global food price spikes over the last two years, had much to fear from the Doha round.

"We support the WTO ... but developments are likely to take away livelihoods, especially in developing countries," Mutunga said. "Food security cannot be solved through the free market."

Under the WTO proposals, countries will be able to shield some of their agriculture from the impact of tariff cuts with developing economies and especially the very poorest nations being offered more protection.

But producers in some developing countries are concerned that such measures could fence off markets for them.

Paraguayan Foreign Minister Ruben Ramirez said 70 percent of his country exports, led by beef, soy and maize, went to other developing countries, and he was concerned about possible abuse of so-called safeguard measures.

"This round cannot be allowed to generate new forms of protectionism," Ramirez said.

Reuters

Food exporters at WTO talks decry US, EU farm subsidies

Developing countries and food exporters from rich and poor nations on July 20 demanded that the United States and European Union open their farm markets and eliminate trade-distorting subsidies.

Trade in farm products was at the center of discussions as ministers from three dozen trading powers met in negotiating alliances to prepare for next week's make-or-break talks on a new world trade pact.

Pascal Lamy, the World Trade Organization director-general, called the ministers to Geneva to seek a breakthrough in the seven-year-old Doha round to free up world trade. The various alliances among the WTO's 152 members, from the Cairns group of food exporters to the African, Caribbean and Pacific countries met Sunday to plot strategy.

"Those members responsible for the most significant distortions in global agricultural trade - the EU, U.S. and Japan - bear a heavy responsibility," the Cairns Group of agricultural exporters, which includes Canada, New Zealand, Argentina, South Africa and Thailand, said in a statement. "We can and must now seize this opportunity to secure the main parameters of the Doha round. The costs of failure are too high."

Australia, which is serving as leader of the group, said the prospects of a Doha deal were better than ever.

"This in our judgment is the best opportunity ever, in the whole seven years of this round, to conclude the deal," Trade Minister Simon Crean said.

The World Bank president, Robert Zoellick, said progress on farm issues would bolster confidence in the world economy amid strains from soaring food and energy prices and a financial crisis. "It has never been more important for WTO members to move forward on the Doha Development Agenda," he said in a statement before the talks. "It is now or never." Zoellick, as former U.S. trade representative, helped to inaugurate the Doha round in 2001.

He said an open and fair trading system would give farmers in developing countries a reason to expand production. Consumers would benefit from lower prices and governments could save on the costs of subsidies and improve their budgets.

But ministers will face tough negotiations next week as they seek a deal on tariff and subsidy cuts in the most sensitive areas of agriculture and industrial goods, and the main exceptions to them.

Developing countries want rich nations to open up their markets for farm goods like beef and cotton, in exchange for liberalizing their own markets in industrial goods like cars and textiles, as well as services like banking and telecommunications.

A major sticking point is the level of U.S. farm support. The U.S. trade representative, Susan Schwab, has said the United States is ready to make "enormous" cuts in agricultural subsidies. The latest WTO proposals call for a cut of about 70 percent in trade-distorting U.S. subsidies, to $13 billion to $16.4 billion.

But those figures refer to the ceiling negotiated at the WTO, and the actual, or "applied," figure is already about half that at $7 billion thanks to soaring food prices.

So big developing countries like India and Brazil want either cuts in actual support, or at least a narrowing of the gap between the actual level and the ceiling - known in trade jargon as "water."

"Reducing the amount of water is the objective," the Indonesian trade minister, Mari Pangestu, told reporters after a meeting of the G-33 group of developing countries.

Switzerland, which has one of the world's most protected farm sectors, said any special treatment in industrial goods for poor countries would have to be matched with higher average cuts. "This will be a huge discussion this week with developing countries," the Swiss Economic Affairs minister, Doris Leuthard, said. "I will fight for each percentage point in this negotiation."

Rich countries are concerned that proposals to allow developing countries to protect their fledgling industries from the full impact of tariff cuts could allow them to shield entire sectors from market opening.

That would not fly with powerful business lobbies in the United States and Europe.

"We want a fair balanced deal," the EU trade chief, Peter Mandelson, told reporters after a meeting with Lamy. "It's doable this week, but it has to be sellable to all our constituencies and not just some of them."

IHT

African cotton farmers work harder for less pay

François Tani -- a cotton grower in Koumbia, western Burkina Faso -- has cleared extra land this year for cultivation, bringing the total number of hectares he is farming to 28. But, he's under no illusion that a larger harvest will bring him more money.

Instead, the hope is that it will simply keep him from earning a lot less. While Burkinabé cotton farmers sold their raw cotton for 42 cents a kilogramme two years ago, they earned 35 cents per kilo in 2005. This year, the price has fallen still further, to 33 cents.

"Last year, I obtained 47 tonnes (of cotton); but in spite of (harvesting) 50 tonnes this year, I will earn less," Tani said. With up to six million Burkinabé depending on the cotton trade in one way or another, this steady depletion of income has grave consequences for the country -- as well as for other producers in the West African region.

While farmers in Mali have obtained about 34 cents for a kilogramme of cotton this year, those in Chad, Benin and C- te d'Ivoire received a little less than 33 cents. In all, some 20 million people in sub-Saharan Africa live off cotton.

Much of the blame for this state of affairs is laid at the door of the United States, which stands accused of driving down prices through the subsidies it provides to its 25,000 cotton farmers.

"Cotton production is not profitable for the Americans. The World Bank and International Monetary Fund would have already stopped such production in African countries if it was the same case (there)," said François Traoré, president of the African Association of Cotton Producers. "But they (the Americans) are strong and rich, and can therefore continue to produce cotton."

Some had hoped that World Trade Organisation (WTO) talks conducted under the auspices of the Doha Development Agenda would bring a respite. The Doha round, named after the Qatari capital where it was launched in 2001, is aimed at giving developing nations a proper share of international trade -- in part by cutting agricultural subsidies.

However, the collapse of negotiations last month in the Swiss city of Geneva means that farmers like Tani face a bleak future. The Doha round has now been suspended indefinitely.

Matters could become even worse when the U.S. Farm Bill is revised in 2007. Subsidies are determined by this bill, which comes up for discussion every five years. Reports indicate that in the absence of new WTO subsidy agreements which would need to be incorporated in the bill -- and with Congressional and presidential elections looming in November and 2008 respectively -- legislators will be in no frame of mind to move ahead with cuts that could undermine voter support.

A more positive note was struck earlier this year, when the WTO Appellate Body upheld an earlier ruling by the organisation that certain U.S. cotton subsidies were illegal in terms of WTO agreements already in place. The ruling followed a complaint by Brazil, in 2005.

The U.S. House of Representatives has responded by voting in favour of a progressive elimination of subsidies representing about 10 percent of those paid annually to American cotton farmers, starting this month.

But the effects of existing market distortion will be hard to erase. According to global aid agency Oxfam, American cotton farmers have received about a billion dollars in assistance between 2004 and 2005 -- while producers in sub-Saharan Africa lost 450 million dollars.

Ultimately, decreasing cotton revenues may also affect the quality of crops produced in Africa.

Although Burkina Faso's government has kept the price of 50 kilogrammes of chemical fertilizer at about 25 dollars, this is still beyond the reach of certain farmers -- who are now using two sacks of fertilizer for a hectare of land instead of the four normally required. Others have resorted to organic fertilizers.

And, changing crops seems to hold out little hope of improvement.

"We cannot find something else to replace the cotton, or else we would have done so. We have tried sesame, cereals -- it didn't work...As many have turned to cereals, the price of these products have fallen as well," said Lamoussa Ouattara, a cotton farmer from the province of Leraba in western Burkina Faso.

"I do not know how long we can hold on for, if nothing changes."

IPS

World Bank's pro-globalization, trade liberalization policies responsible for world food crisis

by Raj Patel

For anyone who understands the current food crisis, it is hard to listen to the head of the World Bank, Robert Zoellick, without gagging.

Earlier this week, Zoellick waxed apocalyptic about the consequences of the global surge in prices, arguing that free trade had become a humanitarian necessity, to ensure that poor people had enough to eat. The current wave of food riots has already claimed the prime minister of Haiti, and there have been protests around the world, from Mexico, to Egypt, to India.

The reason for the price rise is perfect storm of high oil prices, an increasing demand for meat in developing countries, poor harvests, population growth, financial speculation and biofuels. But prices have fluctuated before. The reason we're seeing such misery as a result of this particular spike has everything to do with Zoellick and his friends.

Before he replaced Paul Wolfowitz at the World Bank, Zoellick was the US trade representative, their man at the World Trade Organisation. While there, he won a reputation as a tough and guileful negotiator, savvy with details and pushy with the neoconservative economic agenda: a technocrat with a knuckleduster.

His mission was to accelerate two decades of trade liberalisation in key strategic commodities for the United States, among them agriculture. Practically, this meant the removal of developing countries' ability to stockpile grain (food mountains interfere with the market), to create tariff barriers (ditto), and to support farmers (they ought to be able to compete on their own). This Zoellick did often, and enthusiastically.

Without agricultural support policies, though, there's no buffer between the price shocks and the bellies of the poorest people on earth. No option to support sustainable smaller-scale farmers, because they've been driven off their land by cheap EU and US imports. No option to dip into grain reserves because they've been sold off to service debt. No way of increasing the income of the poorest, because social programmes have been cut to the bone.

The reason that today's price increases hurt the poor so much is that all protection from price shocks has been flayed away, by organisations such as the International Monetary Fund, the World Trade Organisation and the World Bank.

Even the World Bank's own Independent Evaluation Groupadmits (pdf) that the bank has been doing a poor job in agriculture. Part of the bank's vision was to clear away the government agricultural clutter so that the private sector could come in to make agriculture efficient. But, as the Independent Evaluation Group delicately puts it, "in most reforming countries, the private sector did not step in to fill the vacuum when the public sector withdrew." After the liberalisation of agriculture, the invisible hand was nowhere to be seen.

But governments weren't allowed to return to the business of supporting agriculture. Trade liberalisation agreements and World Bank loan conditions, such as those promoted by Zoellick, have made food sovereignty impossible.

This is why, when we see Dominique Strauss-Kahn of the IMF wailing about food prices, or Zoellick using the crisis to argue with breathless urgency for more liberalisation, the only reasonable response is nausea.

The Guardian

George W. Bush tells African cotton producers U.S. subsidies are none of their business

President George W. Bush told West Africa's cotton producers that US subsidies to American cotton growers were a matter for Washington, Benin's President Boni Yayi said on February 19.

Yayi was speaking at a joint press conference with Bush, who spent three hours in the small west African country at the beginning of a five-nation tour of the continent.

Bush "considers that the question of these subsidies was an American matter, and told me that he was well aware of the importance of this sector in the life of our people," Yayi said.

The US leader advised West African countries to grow cotton and process it for added value.

Benin, Burkina Faso, Chad and Mali have been battling at the World Trade Organisation for an end to export subsidies and other incentives provided by western industrialised countries, particularly the United States, to their cotton farmers.

A US official said Washington was appealing a WTO ruling upholding Brazil's complaint that US farm subsidies, particularly to cotton growers, violate global trade rules. The United States claims it is now in full compliance with the WTO's earlier recommendations and rulings.

Agriculture is a main sticking point in the six-year-old Doha Round of WTO trade negotiations.

The United States and the European Union are under pressure to cut their farm subsidies but demand in return that other WTO members, notably developing nations like Brazil and India, reduce their tariffs on imported industrial goods.

Africasia

WTO declares EU duty on Latin American bananas illegal

A European Union import duty on bananas has again been declared illegal by the World Trade Organization (WTO).

The WTO backed the US in its challenge to a higher EU tariff of 176 euros ($254.9; £131) a metric tonne on bananas from Latin America.

It is the latest in a heated battle over the EU's preferential trade deals for its ex-colonies in Central America.

The EU said the ruling was "irrelevant" amid negotiations on major changes to its entire import quota regime. The EU's defeat follows closely behind a similar claim by Ecuador, the world's biggest banana exporter, last November, which it also won.

Latin American producers currently make up about 60% of the EU market, with African and Caribbean producers taking a further 20%. EU-grown bananas - mainly from Spanish and French islands - make up the final 20%. The US is not an EU exporter of bananas but three large US-based multinationals, including Chiquita, have plantations in the region.

EU officials have been working furiously to hammer out new trade deals with about 80 countries in Africa, the Caribbean and the Pacific (ACP) to end special trade relationships that have been in place since the 1950s. These allowed a range of products, including banana crops from ACP states enter the EU with no duty to pay, while Latin America exports were charged.

But under a WTO imposed deadline of 31 December last year, these special arrangements break international trade rules. Those countries harmed by the deal would have the right to impose retaliatory tariffs against the EU.

BBC

U.S. to challenge WTO cotton subsidies ruling in favour of Brazil

The United States is likely to challenge a WTO ruling that it kept up illegal subsidies to American cotton growers at a key meeting this week that could open the way to trade sanctions from Brazil.

The World Trade Organization announced that a meeting has been set for Feb. 15, at which point the panel report condemning the American payments will either be adopted or sent for a final appeals proceeding.

If the U.S. declines to appeal, Brazil could seek trade sanctions worth billions of dollars.

The WTO verdict in December was a major victory for Brazil's cotton industry and for West African countries that have claimed to have been harmed by the American payments to growers. The three-member WTO compliance panel found that export credit guarantees and U.S. subsidies under the 2002 Farm Bill unfairly helped American cotton farmers undersell foreign competitors.

Brazil has reserved the right to impose annual sanctions of up to $4 billion on the United States, but would probably seek less in retaliatory measures because the U.S. has removed some of subsidies found illegal by the trade body.

Despite repeated legal setbacks, Washington looks set to continue with the payments. The U.S. Senate joined the House of Representatives in December in approving a new $286 billion farm bill that would leave cotton programs largely intact for the next five years.

Brazil says Washington's continued support for American cotton producers ensures artificially high production and export levels, hurting Brazilian and African producers. The Brazilian government claims the U.S. retained its place as the world's second-largest cotton grower by paying out $12.5 billion in government subsidies to American farmers between August 1999 and July 2003. China is the largest exporter of cotton, while Brazil is fifth.

If the U.S. declines to appeal the WTO ruling - or fails to win its challenge - Brazil has said it would target American goods, as well as trademarks, patents and commercial services, in retaliation.

Forbes

EU reduction of sugar subsidies good for African farmers

The European Union agriculture ministers have recently agreed to cut the prices offered to European sugar farmers by 36%, bringing the EU sugar rules into line with global frameworks.

African sugarcane producers are among the first beneficiaries. This change was demanded of the European Union after the World Trade Organisation (WTO) ruled that its existing 40-year-old guaranteed pricing system was illegal.

The WTOs judgement followed a formal complaint from sugar cane producing countries. Countries like Australia, Brazil and Thailand will now benefit from a reduction in subsidised European sugar on the global marketplace, along with other smaller sugar producing countries in Africa like Uganda, Cameroon, Rwanda and Kenya.

In the past, international campaigning groups for poor countries have highlighted many times the absurdities of agricultural subsidies, by focusing on those for sugar, a product that developing countries are especially good at producing. The sugarcane raw material generates sugar, anhydrous alcohol (a gasoline additive) and hydrated alcohol for the internal and external markets, with different price and demand dynamics.

It is expected that the abolished subsidies by the European Union on European sugar farmers will lead to more production of sugar cane in the developing countries, especially in Africa.

International sugar prices are ruling now around $ 350 a tonne, which is good news for sugar mills also in Africa.

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