TN/AG/38  
TN/AG/SCC/9  
 
27 February 2018  
(18-1286) Page: 1/5 
Committee on Agriculture  
Special Session  
Sub-Committee on Cotton    
 
EIGHTH  DEDIC ATED DISCUSSION OF T HE RELEVANT  
TRADE -RELATED  DEVELOPMENTS FOR COT TON 
17 NOVEMBER 2017  
Report1 by the Chairman , H.E. Dr. Stephen Ndũn'gũ Karau  
1. Pursuant to the Bali Ministerial Decision on Cotton of 7 December 20132 and the Nairobi 
Ministerial Decision on Cotton of 19 December 20153, the eight h Dedicated Discussion of the 
relevant trade -related developments for cotton took place on 17 November 2017. The Dedicated 
Discussion was  held back -to-back with the 28th Round of the Director -General's Consultative 
Framework Mechanism on Cotton (DGCFMC), dedicated to the development -assistance aspects of 
cotton.  
2. In my introductory remarks , I updated Members on the state of play in the negotiations 
on cotton leading up to the 11th Ministerial Conference  (MC11) . I noted that cotton clearly 
remained a priority for MC11 and that all Members were aware of the fact that Ministers had 
agreed more than a decade  ago that cotton would be add ressed "ambitiously, expeditiously and 
specifically within the agriculture negotiations".  
3. I reported  that I had convened five consultations  in Quad Plus format4 to discuss the various 
proposals on the table including one from the Cotton -4 (C4).5 Cotton Domestic Support remained 
the central and most controversial issue, and views remained far apart on what could constitute a 
possible outcome in this area.  
4. I noted that w hile all Members recognize d the Ministerial mandate to treat cotton 
ambitiously,  expeditiously and specifically , many considered that the C4 proposal was too 
ambitious in the current overall negotiation context.  In particular, many Members considered that 
further disciplines on Green Box direct payments granted to cotton producers as suggested by the 
C4 could not be achieved at MC11. Some Members considered that it was not a realistic 
perspective for the time being , while some others opposed this proposal for more fundamental 
reasons.  As regards trade distorting support for cotton, sev eral Members favour ed a limit of cotton 
trade distorting support expressed as a percentage of cotton value of production.  Other Members 
insisted on the need to address first the AMS granted to cotton beyond the de minimis  level.   
5. I also noted that t he C4  had stressed  the hardship of cotton producers in various parts of 
the world and had noted that its proposal was fully reflective of the WTO mandate on cotton and 
the need to address all the long standing trade distorting subsidies affecting cotton. The C4 had 
also called for a figure s-based negotiation in order to compare the various levels of support and 
cuts in cotton subsidies in the different boxes that would result from the different proposals on the 
table.  
                                                
1 This report is circulated under the Chair's own responsibility.  
2 Document WT/MIN(13)/41 – WT/L/916, dated 11 December 2013 . 
3 Document WT/MIN(15)/46 – WT/L/981, dated 21 December 2015 . 
4 Composed of the C 4, Argentina, Australia, Brazil, China, Colombia, the European Union, India, 
Pakistan and the United States.  
5 TN/AG/GEN/46  – TN/AG/ SCG/GEN/18 , circulated on 11 October 2017.  TN/AG/38 • TN/AG/SCC/9  
 
- 2 - 
 
  6. I further noted that a t least one delegation had expressed its strong scepticism about any 
possible substantive outcome on Cotton Domestic Support taking into account the overall 
negotiating environment , and had invited participants to acknowledge th at stalemate and turn 
their attention to a possible post-MC11 work programme in which cotton could be included.  
7. I had therefore stressed  that, at that juncture  and in light of the little time remaining, and in 
the absence of further engagement between Members, m y assessment was  that I could only 
reflect tho se divergences on Domestic Support in the textual elements I would put together on 
cotton.  I had therefore again suggested urgent and direct engagement between Members to find a 
possible way forward.  
8. As regards  the other components of Cotton, i.e.  Market A ccess, Export Competition, 
implementation and follow up as well as development assistance, I noted that delegations had 
reaffirmed the continued re levance of the Nairobi Decision and m ost had agreed that that fact 
could be recognized in a cotton outcome at  MC11 , as suggested by the C4 in paragraphs 10 to 13 
of TN/AG/GEN/46.  
9. Finally, I reiterated a point made in previous dedicated discussions,  and which had also been  
stressed  by the C4 an d at least one other delegation : that our negotiation must be based on 
recent and up -to-date data on Members' policies and support levels, especially in terms of 
Domestic Support.  While acknowledging the usefulness of external information, I stressed the 
importance of notifications, as well as Members'  replies to the cotton q uestionnaire circulated by 
the Secretariat in advance of the dedicated discussions.  I urged all Members to keep their  
notifications and data  up to date . 
10. Under the agenda item "General Statements from Members ", Mali, on behalf of the C4, 
reaffirmed the group' s commitment to obtain concrete results on cotton at MC11. The C4 
reiterated the importance of cotton production and export for their countries given the large 
population  employed in this sec tor, noting that a successful cotton season had a positive impact of 
2%-5% on their respective GDP . The C4 noted that work in the cotton dossier was in line with the 
UN Sustainable Development Goals 1, 2, and 8, which are aimed respectively at combating 
poverty, eliminating hunger and ensuring decent work and econ omic growth. The C4 pointed out 
that, however, the current context  was not favourable with cotton pri ces and cotton production in 
most C4 countries continuously declining in recent years, as indicated in  reports  by the 
International Cotton Advisory Committ ee (ICAC).  
11. The C4 invited all Members to consider  the cotton issue earnestly and engage constructively 
so as to achieve an outcome at MC11. The C4 highlighted in th at regard  the Declaration made by 
its Ministers at the 5th C4 Ministerial meeting in Cotono u, Benin. Ministers had affirmed on that 
occasion that they could not envisage a successful outcome at MC 11 in the absence of an 
outcome on cotton.  The C4 considered MC11 as the final st op to follow up on and implement the 
Hong Kong mandate on cotton.  
12. The C4 went on to note that the proposal by the European Union and its co -author s6 could 
not achieve the objective of effectively reducing the trade distorting effect of domestic support on 
cotton produced by the C4 and  Least Developed Countries  (LDCs). Moreover, from a technical 
point of view, the C4 noted that th at approach suffered from several inadequacies. For instance, 
Blue Box support, the second most trade -distorting support after Amber Box support, was not 
included in the overall trade -distorti ng domestic support  which would be subject ed to a limit . 
Furthermore, the C4 stated that treating the issue of trade -distorting domestic support through 
the notion  of total value of production would not address  the core of the problem .  
13. The C4 considered  that its approach, which aimed at (i) substantially reduc ing domestic 
support, with a  view to its final elimination and (ii) guarantee ing the promotion of the cotton 
sector in their countries through production, processing and marketi ng of cotton and its de rivative 
products , was the right way forward . The C4 invited the proponents of the proposal contained in 
JOB/AG/99 to provide quantitative data on the results of their approach , in order to enable 
Members to advance in their search of a satisfactory soluti on to the cotton issue.   
                                                
6 JOB/AG/99 , circulated on 17 July 2017.  TN/AG/38 • TN/AG/SCC/9  
 
- 3 - 
 
  14. Pakistan underlined the importance of cotto n to its economy, highlighting the significant 
contribution of cotton and cotton -related p roducts to  its GDP  as well as  Pakistan's large share in  
world cotton production and imports . Pakistan noted that, however, in recent times,  its cotton 
sector faced several challenges, including worsening terms of trade, declining cotton prices, 
climate change and extreme weather conditions . Therefore c otton production declined and cotton 
imports increased . Pakistan noted that  its cotton farmers were particularly vulnerable to losses 
result ing from declining cotton prices since Pakistan cotton producing areas were amongst the 
poorest and most of the co tton growers are small farmers . 
15. Pakistan referr ed to ICAC's report that direct assistance to cotton is provided through direct 
support to production, border protec tion, crop insurance subsidies and minimum support price 
mechanism s, and  noted that , although direct government assistance had  slightly decl ined in recent 
years, the share of world cotton production receiving such assistance  remained high . Pakistan 
highlighted the negative correlation between  cotton  subsidies and cotton prices which aggravate d 
the impact of subsidies on its farmers. Pakistan also noted the detrimental effects  of border 
restrictions to cotton exports by developing countries  and LDCs , mainly in the form of import 
tariffs,  in addition to domestic support. D ue to  the absence of support , farmers in Pakistan could 
not compete with highly subsidized cotton producers from developed countries. Pakistan reiterated 
its strong interest in resolving the cotton issue and called for  Members' speedy action  to achieve 
that goal and allow its cotton produc ts to compete fairly in the world cotto n market.  
16. The European Union stressed  the importance of an in -depth discussion o f cotton policies  to 
enhance a better understanding of the C4's concern s and better address them at the  multilateral 
level. The EU exp ressed its continuous support to  the C4 's efforts  and called upon Members to be 
pragmatic and focus on achieva ble outcomes at MC11 and beyond.   
17. The International Cotton Advisory Committee (ICAC)  made a detailed presentation on 
the latest development s in the global  cotton market and trade trends . ICAC also reported on 
recent development s relating to government measures such as subsidies and assistance in favour 
of cotton , stating that a majori ty of cotton production received  direct assistance  despite the decline 
in subsidies . The strong negative correlation between  the international price of cotton and  direct 
assistance to cotton production was highlighted . ICAC also updated Members on its involvement in 
the work related to  e-Phyto  (electronic phytosanitary certificates ) and noted its key relevanc e to 
trade in cotton and its derivative products.  
18. The WTO Secretariat presented its revised background paper  and addend um7 which 
compile factual information and data from Members' notifications and other submissions to the 
WTO on Export Subsidies, Domestic  Support and Market Access, including both tariff and non -tariff 
measures. The paper also includes Members' latest responses to the questionnaires on cotton 
policy deve lopments, as well as relevant information on c otton markets and policies from Trade 
Policy Review reports.  The Secretariat noted in particular  that the European Union's reply to the 
questionnaire , which had been  received after the circulation of the background paper , would be 
included , along with any other late replies,  in an addendum .8  
19. I reiterated the importance of the quality and  timeliness of Members' notifications and 
submissions to the WTO, including replies to the questionnair e circulated by the Secretariat, 
stressing that the quality of the information contained in the Secretariat d ocument  was fully 
dependent on th at information. I repeated my call to Members, particularly key cotton actors, to 
be more forthcoming in sharing information on recent policy developments.  
20. Members welcomed both presentations  by ICAC and the Secretariat. M embers  thanked in 
particular ICAC for its participation in the dedicated discussions  and for its valuable contribution . 
ICAC's  detailed presentation elicited  great interest amongst Members.  
21. Noting the downward trend of direct assistance  observed by ICAC , the United States 
inquired about how much direct assistance was provided in the form of border protection. The 
                                                
7 Documents TN/AG/GEN/34/ Rev.7 – TN/AG/SCC/GEN/13/Rev.7 and TN/AG/GEN/34/Rev.7/Add.1 – 
TN/AG/SCC/GEN/13/Rev.7/Add.1, dated 7 November 2017.  
8 TN/AG/GEN/34/Rev.7/Add.1 – TN/AG/SCC/GEN/13/Rev.7/Add.1 ,circulated on 23 January 2018 
includes  additional  replies from Chad, the European Union and the Russian Federation to the Secretariat 
questionnaire  circulated on 10 October 2017.  TN/AG/38 • TN/AG/SCC/9  
 
- 4 - 
 
  United States also sought ICAC's views  on how recent oil price  levels were affecting the 
competitiveness and production of polyester materials ver sus cotton.  In terms of the competition 
between polyester and cotton, ICAC noted that  while low oil prices  would effectively lead to low  
prices for  polyester fibers and affect the competiti veness of  cotton , price was not the only 
parameter to be taken into account. T he fashion, functionality and comfort that can be offered by 
polyester fabric were probably the main factor s affecting the competiti veness of man-made fiber  
versus cotton.  
22. Benin  sought ICAC's advice  on how to (i) identify and analyse the periods during which 
cotton pri ces ha d been largely  impacted by support levels , and (ii) compare  the average lev el of 
support granted during tho se periods . Benin also asked whether ICAC could  provide more 
disaggregated data on support and value of production by major cotton exporters. Benin noted 
that they would also be particularly be interested in  how more restrictive domestic support 
disciplines could affect world cotton market s. ICAC noted that the breakdown of direct assistance 
by country was available in an annual ICAC publication  that could be share d with interested 
Members. ICAC also indicated  that it should be in a position to carry out the type of  comparison  
suggested by Benin  but sought  more details on the request .  
23. Burkina Fa so enquired about the causes underlying the good behavior of  cotton prices in 
2016/17 and 2017/18. Burkina Faso also asked  about the impact of China 's stock ing policies on 
the global cotton market. ICAC noted that prices are in general related to supply and demand and 
when the  two factors meet, prices remain stable. ICAC also noted that the  controlled release of 
China's cotton stock had helped stabiliz e cotton prices over t he past few years.   
24. Chad asked about the risk of disappearance of cotton use in light of the strong competition 
from polyester and whether polyester ha d an adverse effect  on human health. ICAC stated that 
there would always be a demand for cotton, but th at the concern should be the trend in the 
respective market share  of cotton versus  synthetic fibers . To address th at concern, ICAC 
underlined the importance of applying new technologies like smart textile to cotton clothing, as 
was already developed for synt hetic fiber clothing such as the function of reducing body 
temperature. Concerning the health impact of man -made fiber, ICAC noted that microbes were 
becoming a major issue , but that  the impact on human health remained unknown.   
25. The EU raised  technical questi ons with a number of Members based on  the information 
contained in  the Secretariat background paper . The EU noted India's reintroduction of market price 
support for cotton as of 2011  and the related low eligible production level in 2011 as compared t o 
total cotton production in India. India was asked to clarify the principles of determining the eligible 
production for the purposes of calculating market price support for cotton . As reg ards the US 
tariffs for cotton, the EU observed that in some cases applied duties exceeded bound duties and 
also that some  bound tariffs were different from previous version s of the background paper. The 
EU asked the United States to explain those figures.   
26. The EU also sought clarification from the C4  as to why several measures , which seem ed to 
include price support elements , as listed  in the most recent version of the Table on Domestic 
Cotton Sector Reforms9, had not been notified . That included  measures such as the fixing of 
transfer price for cotton inputs and the setti ng of  price or floor price for the purchase of seed 
cotton and organic  seed cotton  in Benin,  Burkina Faso, Chad, and Mali.  
27. Benin, Burkina Faso, India, Mali and the United States noted that they would check  on the 
questions raised  and provide an answer as soon as feasible . Chad confirmed that cotton price s 
were fixed pursuant to a mechanism put in place by a decree from 1997. The cotton seed purchase 
price was linked to the international cotton fibre price as measured by the cotlook A i ndex. The 
payment was made in two instalments. Inputs were sold on credit to producers at a subsidized 
price. However,  the level of subsidy was low and in compliance with Article 6.2 of the Agreement 
on Agriculture which allows developing countries to prov ide input  subsidies to  low-
income  or resource -poor producers .  
28. In relation to the Secretariat background paper, t he C4  highlighted the importance of having 
complete information through Members' notifications and replies to the Secretariat's questionnaire. 
The C4 called on Members who ha d not yet replied to the questionnaire or notified their cotton 
                                                
9 WT/CFMC/21/Rev.14 , circulated on 7 November 2017.  TN/AG/38 • TN/AG/SCC/9  
 
- 5 - 
 
  policies in recent years to do so. The C4 also acknowledged the decreasing trend of export 
subsidies since 2014 and encouraged Members to continue working toward s securing the total 
elimination of export subsidies .  
29. The International Trade Centre (ITC) gave a presentation on the joint WTO/ITC initiative to 
develop a dedicated Cotton Portal . The Cotton Portal is a market access  information  tool which 
would provide a single entry point for all the cotton specific information available in the various 
WTO and ITC databases , such as information  on market access, trade statistics, country -specific 
business contacts and so on. The ITC gave a  first preview of the Cotton Portal  website  to show 
how to make use of the P ortal and noted that the official launch of the Cotton Portal would take 
place during MC11 . ITC further noted that the Cotton P ortal site would  be available  in both English 
and French.  
30.  I noted that t he Cotton Portal project was an excellent initiative that will contribute to 
improving the quality and accessibility of information related to Cotton Market Access, as well as 
that of relevant information for the cotton -related daily a ctivities of both private operators and 
officials.  In particular the Portal would  facilitate the monitoring of the implementation by Members 
of the Market Access paragraphs contained in the Nairobi Ministerial Decision on cotton. For 
instance I highlighted  the useful link between the information that could be  found on the Portal 
and the reference made in paragraph 6 of the Nairobi Decision on the issue of improved 
transparency in relation to market access for cotton products from LDCs.   
31. The C4 welcomed the Cotton portal project as a useful new tool in accessing  cotton -related 
information and increasing transparency in the WTO. They also expressed their sup port towards 
the launch of the Cotton Portal at MC11.  
32. Finally, I reminded Members of  paragraph 5 of the Nairobi Ministerial Decision  which gave 
Members the opportunity to review the list  of cotton bi-products  annexed  to the Decision within 
two years  of the Decision, in the  context of the dedicated discus sions. In light of  the absence of 
any such request by a ny Member , I asked Members to keep this in mind in the context of the 
continu ed implement ation of the Nairobi Ministerial Decision and that of any new mandate on 
cotton post MC11.  
__________