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Type: Report
Title: WTO's DOHA Cotton Initiative : how will it affect developing countries?
Author: Anderson, Kym
Valenzuela, Ernesto
Publisher: World Bank
Issue Date: 2006
Series/Report no.: World Bank Report ; 35929
School/Discipline: School of Economics
Abstract: Especially in Africa and Central Asia, cotton is an important cash crop. It is receiving attention of late because four poor cotton-exporting West African countries (Benin, Burkina Faso, Chad and Mali) have demanded cotton subsidy and import tariff removal be part of the World Trade Organization (WTO)'s Doha Development Agenda (DDA). This note reviews implications on how much would Sub-Saharan Africa and Central Asia gain from removal of all cotton subsidies and tariffs; on how would the welfare of those cotton-importing developing countries, with export interests in textiles and clothing, be affected by such reform. Moreover, it questions what would the relative contributions of domestic supports, export subsidies and import tariffs be to the global gains, from removal of those measures. To this end, the note examines the background of the global cotton market production, highly concentrated in a few countries - China and the United States, rising to India and Pakistan, and Brazil and Uzbekistan. Also highly concentrated are exports of cotton lint, with the US, Australia, Uzbekistan and Brazil accounting for almost two-thirds of the world's exports, while the cotton-four in West Africa and the other four countries in Central Asia bring that total to almost four-fifths. Especially noteworthy is the relatively large benefit bestowed on Sub-Saharan Africa, of $147 million per year. It is therefore not surprising that some African trade negotiators have threatened to walk out of the WTO's Doha round of talks, if substantial reforms to cotton policies are not included in the final Doha agreement - in which case the global cost of not reforming cotton would be many times greater than implied. But the note suggests there are other ways in which incomes of cotton farmers in developing countries can be enhanced. Adaptation and adoption of new genetically modified (GM) cotton varieties are one obvious way of contributing. Cotton subsidy reductions would enhance the capacity of poor farmers in low-income countries to purchase the more-expensive GM cotton seeds, and make the necessary adjustments to their farming practices, thereby increase the prospects of realizing the potential gains from GM adoption.
RMID: 0020082035
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Appears in Collections:Economics publications

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