The African Cotton Initiative and WTO Agriculture Negotiations

Publication Date: January 2004

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Trade

Type:

Abstract:

In World Trade Organization (WTO) Negotiations on agriculture, a group of African countries have proposed that all subsidies for cotton be eliminated by the end of four years. The proposal also advocates compensating African cotton producing countries for revenues estimated to be lost due to cotton subsidies. The United States, which provides substantial production-related subsidies to cotton producers, agrees that cotton subsidies distort trade, but maintains that the issue should be negotiated in a comprehensive manner. Disagreement over the African cotton initiative has blocked progress on an agreement on agriculture in the current round of multilateral trade negotiations known as the Doha Development Agenda (DDA). How to tackle the question of cotton subsidies -- either as a stand-alone initiative or as part of a broader agreement to reduce trade-distorting farm subsidies -- will be on the agenda as DDA negotiations continue in 2004. If the initiative were agreed to as proposed, U.S. cotton producers would no longer be receiving 2002 farm bill marketing loan, loan deficiency, or counter-cyclical payments after four years. Under a U.S. alternative proposal for reduction in trade distorting subsidies, cotton producers could still receive payments under those programs but in reduced amounts. This report will be updated.