Members discuss progress on cotton by-products initiative, negotiations, launch of World Cotton Day

At the WTO “cotton days” on 4, 6 and 7 June, WTO members discussed a new project on “transferring technologies and know-how for the development of cotton by-products (CBPs) in eight pilot African LDCs”, a key output of the WTO UNCTAD-ITC joint initiative on CBPs. WTO members continued discussions on the state of play of cotton negotiations. Benin announced the Cotton-4’s request for an official World Cotton Day for 7 October 2019, with a launch event to be held at the WTO.

Workshop on new EIF-funded project on cotton by-products

As a follow-up to the WTO-UNCTAD-ITC joint-initiative on cotton by-products (CBPs) endorsed by WTO members at a meeting in November 2018, a workshop was held on 7 June as part of the Director-General’s Consultative Framework Mechanism on Cotton held the previous day.

The objective of the workshop was to: 1) collect evidence and success stories on the contribution of CBPs to poverty reduction, food security, job creation, revenue diversification and the circular economy; and 2) collect comments and questions by potential donors and technical partners for the new WTO-UNCTAD-ITC project on «transferring technologies and know-how for the development of CBPs in eight pilot African least-developed countries (LDCs)».

The Board of the Enhanced Integrated Facility (EIF) officially approved, on 7 June 2019, a grant of USD 204,000 to help the WTO implement the first exploratory phase of this project. 

China, the Cotton-4, Turkey, Uganda, the United States and the United Nations Conference on Trade and Development gave presentations on «evidence of the contribution of CBPs to poverty reduction, food security, job creation, revenue diversification and the circular economy». Discussions covered information on the latest technologies for gossypol sequestration (allowing the production of edible oil from cotton seeds) as well as new processes to create 100% biodegradable substitutes to plastic, without using electricity from cotton waste (both presented by the United States).

In addition, the presentations covered information on challenges facing the processing of cotton stalks due to climatic conditions in cotton-producing regions (China), a roundtable discussion on challenges and opportunities for CBP development, led by the C-4 with interventions by various representatives of C-4 cotton companies, and a presentation by UNCTAD on the 2016-2019 CBP promotion project in Eastern and Southern Africa (WT/CFMC/W/76), a key reference point for the new WTO-UNCTAD-ITC project.

The WTO Secretariat, together with UNCTAD, the International Trade Centre (ITC), the C-4 and Mozambique provided a detailed account of the new project. The presentation covered project preparation activities (supported by the EIF with an initial grant of USD 204,000) as well as project implementation work (covering, for example, the preparation of country-specific projects for local transformation of various CBPs, a service to accompany private sector investments, and assistance to establish quality infrastructure for food safety), due to start in January 2020.

In the final part of the workshop, members including Brazil, China, France and Germany as well as the EIF and private sector entities including Toyoshima Inc. (Japan) and the African Cotton Foundation noted their readiness to take an active role in project preparation activities and, at a later stage, to possibly commit financial and technical resources for the implementation phase.

Discussions on cotton policies and negotiations prospects

During the 11th Dedicated Discussion on Cotton on 4 June, Mr Daniel Costa Figueiredo (Brazil), Friend of the Chair, reported on the Technical Quad Plus meetings (a group of 11 members) held since February.  A high level of engagement and active interactions were noted in all meetings, with members focusing on two main tasks: (1) collecting cotton-related data within the Quad Plus group; and (2) identifying the list of possible elements and options in the cotton-related negotiations, with a view to achieving an outcome by the 12th Ministerial Conference in June 2020.

Mr Figueiredo noted that members generally agreed with his proposed list of negotiation topics, which included elements from all three pillars of agricultural negotiations: namely market access, domestic support and export subsidies provided by members. Members in particular committed to working towards achieving an outcome on cotton trade-distorting support and said an outcome on cotton should contain development-related elements

Mr Figueiredo also reported on the ongoing exercise of illustrative calculations intended to foster data-based discussions on trade-distorting support results for cotton. The latest version of the illustrative calculation contains simulations based on the following proposals: the C4 proposal; the proposal by Brazil, the European Union, Colombia, Peru and Uruguay; the proposal by China and India; and the proposal by New Zealand, Australia, Canada, Chile and Paraguay.

Mr Figueiredo noted that at the next meeting, scheduled for 14 June, participants would continue to discuss these illustrative calculations as well as address the remaining topics listed aside from trade-distorting domestic support.

The WTO Secretariat introduced the updates to the 10th revision of the background paper (TN/AG/GEN/34/Rev.10, TN/AG/SCC/GEN/13/Rev.10 and two addendums), which compiles  information on the three pillars of agriculture policies. Members expressed their appreciation for the background paper as an important and useful tool.

ITC gave participants a recap of the Cotton Portal and an update regarding the most recent improvements  made to the Portal. A demonstration of the Export Potential Map tool using cotton exports from the C-4 as an example was made. Members, and particularly the C-4, welcomed the presentation and stressed the importance of members working with the ITC to ensure that the data published online are up-to-date.

In his concluding remarks on the negotiations on cotton, the Chair of the Committee on Agriculture in Special Session and the Cotton sub-committee, Ambassador Deep Ford, stressed the sense of urgency and called for members´ redoubled efforts to overcome the difficulties and deliver the mandates for cotton. «We must move forward, even if (they are) small steps … Not only steps, but also (how to) harvest … (so that) we can open great market opportunities for farmers,» he said.

World Cotton Day initiative

The WTO Secretariat provided information about the Cotton-4 request that the UN General Assembly recognize 7 October as World Cotton Day. Members unanimously supported the Cotton-4 initiative and pledged participation at the launch event to be hosted at the WTO headquarters on 7 October 2019. The day’s events will include a high-level plenary, a partners’ conference, multiple side events for thematic discussions on cotton, a cotton exhibition and a fashion show.

The launch event will be organized by the WTO Secretariat in collaboration with the secretariats of the UN Food and Agriculture Organization (FAO), ITC, UNCTAD and the International Cotton Advisory Committee (ICAC).

Development assistance: DG Evolving Table and qualitative evaluation of projects

Members reviewed the latest version of the Director-General’s Evolving Table on Cotton Development Assistance (WT/CFMC/6/Rev.26, 24 May 2019) prepared by the WTO Secretariat. Taking stock of all cotton-related development assistance projects, members noted there are currently a total of 28 active cotton-specific projects and 43 active projects in relation to agriculture and infrastructure-related development assistance, reflecting the full disbursement and completion of 12 projects since the last revision of the Evolving Table.

The Cotton-4 coordinator, Amb. Laourou of Benin, laid out the landscape of the «Cotton Roadmap Project» (WT/CFMC/W/73). The African Cotton Foundation (ACF) and Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ), the Brazilian Cooperation Agency, International Trade Centre, Better Cotton Initiative and some National Cotton Focal Points introduced their ongoing projects on cotton.

Qualitative analysis injected new energy into the discussions, which represents a switch from a quantitative-only approach, and examines the real impact of over 182 projects in beneficiary countries both on poverty reduction and economic growth. Through the four presentations made by the WTO Secretariat, Agence Francaise de Developpement, the European Commission and the Institute of Development Studies, members gained a better understanding of various projects’ effectiveness and the value addition generated at each step of the value chain. Members agreed that such qualitative evaluation with a multi-stakeholder approach could lay solid foundations for future field work and should continue.

Regarding South-South cooperation, the Chair of the DGCFMC, Deputy Director-General Alan Wm. Wolff commented on the enhanced contributions made by Brazil, China, India and Pakistan, which constitute an integral part of the development assistance.

All background papers are here.

Cotton trade trends and intra-African trade

Following on from past discussions by members and in the light of ongoing work in cotton development-assistance projects, Mr Kai Hughes, the Executive Director of the ICAC, gave a presentation on cottonseed oil and its potential expansion as a product (both intermediary and final) for human consumption. He also pointed out the main challenges to market development in LDCs and developing countries, including in particular sanitary and phytosanitary measures (SPS) aspects and technological constraints.

In his presentation on trade trends, Mr Hughes shared ICAC´s new projection on global cotton production and consumption, noting Africa´s production remains relatively steady while China is becoming the biggest cotton producer and consumer in 2018-19.  Despite the continent’s huge potential in cotton lint production, the low intra-African trade, recorded at only 5.5% of overall African cotton trade, sounded an alarm for many African countries. The Cotton-4 and other members made a strong plea to have more studies on this topic in the hope of improving understanding of the situation and reversing the negative trend.

ICAC presentations are here.

Links

All the videos and presentations can be found in the dedicated page on «Cotton Days».

Contact the WTO Cotton Section for further information: cottonclub@wto.org.

World Cotton Day – WTO Launch: www.wto.org/worldcottonday and worldcottonday@wto.org.