TN/AG/35  
TN/AG/SCC/7  
 
26 January 2017  
(17-0529) Page: 1/4 
Committee on Agriculture  
Special Session  
Sub-Committee on Cotton    
 
SIXTH  DEDIC ATED DISCUSSION OF T HE RELEVANT  
TRADE -RELATED  DEVELOPMENTS FOR COT TON 
23 NOVEMBER  2016 
Report1 by the Chairman , H.E. Mr Vangelis Vitalis  
1.  Pursuant to the Bali Ministerial Decisio n on Cotton of 7 December 20132 and the Nairobi 
Ministerial Decision  on Cotton of 19 December 20153, the sixth dedicated discussion of the 
relevant trade -related developm ents for cotton  took place on 23 November  2016, in the context of 
the Committee  on Agriculture in Special Session. The dedicated discussion was held back -to-back 
with the 26th round of the Director -General's consultative framework mechanism  on the 
development aspects of cotton.  
2.  In my introductory  remarks , I referred to the main elements of my report  on the state of 
play in the agriculture negotiations  made at the Committee on Agriculture in Special Session  of 
16 November . I noted in particular that it was generally understood that Agriculture should f orm 
part of any outcome at the 11th WTO Ministerial Conference  (MC11) , that Ministerial expectations 
should b e delivered upon, including as set out in the relevant Nairobi Ministerial Decisions, the 
Nairobi Ministerial Declaration, as well as Article 20 of the Agreement on Agriculture , and that  it 
was difficult to envisage an outcome on agriculture without progre ss across the Doha agriculture 
issues, as well  as in other areas of the non -agriculture negotiations . 
3.  I also highlighted  that an outcome on Domestic Support in general , and Cotton in particular , 
continued to be regarded by the overwhelming majority of Memb ers as a priority for MC11 . That 
assessment  was also  confirmed by the statements made by several Ministers at the Oslo 
Ministerial meeting o f 21-22 October  2016. 
4.  I drew Members ' attention to the Declaration4 issued by Cotton 4 (C4)  Ministers at the 
26-28 October meeting in Bamako, Mali . The Declaration  called on WTO Members to work towards 
the elimination of Domestic Support for Cotton. The Declaration also (i) sought the implementation 
of the MC10 Decision on Cotton, including on Export Subsidies and Market Access,  (ii) urged  
Members to keep in mind the specific n eeds of LDCs and  (iii) encouraged  development partners to 
assist cotton sector reform and export efforts of the C4.  
5.  I noted that the Director -General 's speeches and statements during th e Bamako C4 Ministerial 
Meeting also underline d his continued com mitment on this matter. Finally , I recalled  that the C4 
had announced an upcoming  contribution on a possible outcome on Domestic Support for Cotton 
at MC11. 
6.  I stressed  once again that the discussions and negotiations on Cotton needed to be based on 
recent and up -to-date data on Members' policies and support levels, especially in terms of 
Domestic Support . Looking at the situation in terms of compliance with Domestic Support 
notifications  obligations , I pointed out  that, among the 32 M embers identified as potential C otton 
                                                
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 Document TN/AG/GEN/41 – TN/AG/SCC/GEN/16 , dated 9 December 2016.  
 TN/AG/35 • TN/AG/SCC/7  
 
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  markets of interest for LDCs in the Secretariat's background paper , five Members had notified their 
support up to 2015 and only two more up to 2014  – and most of the key players on the  Cotton 
market were  absent from th at listing. 
7.  I noted  that what several Members had mentioned  in the overall negotiation context about the 
possibility of incentives and perhaps conseq uences for those Members who were  not up -to-date 
with their Domestic Support notifications was  of particular relevance for C otton.   
8.  I remind ed Members that notifications  could  also be usefully complemented by their replies to 
the C otton questionnaire circulated on a biannual basis by the Secretariat in advance of the 
dedicated dis cussions.   
9.  Under the agenda item " General Statements from Members ", Mali, on behalf of the C 4 
welcome d the holding of th e 6th Dedicated Discussion . The C4 recall ed the general mandate to 
address C otton " ambitiously,  expeditiously  and specificall y" and the mandates included  in the 
Hong Kong Ministerial  Declaration of December 2005, the  Bali Ministerial  Declaration of 
December  2013 and  the Nairobi Ministerial Decision  in 2015 . 
10.  The C4 welcomed the Nairobi Decision  on Cotton  as an encouraging step forward in th e areas  
of Market Access  and Export Competition , as well as for development -related aspects , and 
reaffirmed  that the implementation of the Decision would remain a priority  for the Group.  
11.  The C4 viewed  an outcome on Domestic S upport  for Cotton  as a major o bjective for MC11 in 
Buenos  Aires and referred to  the mandate given to the C4 Ambassadors in that regard by the 
Bamako Ministerial Declaration.  The C4 reaffirmed its commitment to table proposals and  renewed 
its call for  all Members  to active ly contribut e towards  the satisfactory resolution of the C otton 
issue.  
12.  Benin, on behalf of the LDC G roup, supported the C4's statement and stressed the importance 
of achieving an outcome on Domestic Support  for Cotton by MC11. The LDC Group echoed the 
C4's call to Membe rs to work towards that objective. The LDC Group underlined once again the 
importance of updated data and notifications in conducting negotiations  on Cotton  and recalled  
previous requests in th at regard .  
13.  The LDC G roup pointed out  the need to reflect on  all categories of support including  the Green 
Box, Blue Box, Amber Box as well as de minimis  in the negotiations  on Domestic Support . The LDC 
Group noted its intention to work closely with  the C4 over the coming weeks and share with  
Members details of the  Groups'  expectation s for MC11 .  
14.  Several  Members supported the statements by the C4 and the LDC Group and also echoed 
their call for Members  to improve notification  record s. Members looked forward to the C4's 
proposal and indicated their willingness to eng age actively and constructively to reach a rapid and 
fair resolution of the matter.  
15.  The International Cotton Advisory Committee (ICAC)  made  a detailed presentation5 on 
the lat est developments in the global C otton market  and trade trends  as well as recent 
developments relating to governme nt measures in favour of C otton. ICAC also  briefed Members  
about the outcome of ICAC's 75th Plenary Meeting.  
16.  The WTO Secretariat presented its revised  background paper  and addend a6 which compile  
factual information and data fr om Members' notifications and o ther submissions to the WTO on 
Export Subsidies, Domestic Support and Market Access, including both tariff and non -tariff 
measures. The  paper also include s Members' latest responses to the questionnaires on C otton 
policy deve lopments circulated on 4  February  2015, 17  September  2015, 22 February  2016 and 
13 September 2016 , as well as relevant information on C otton markets and policies from Trade 
Policy Review reports .  
                                                
5 https://www.wto.org/english/news_e/news16_e/cdac_23nov16_e.pdf . 
6 Documents TN/AG/GEN/34/ Rev.5 – TN/AG/SCC/GEN/13/Rev.5 and TN/AG/GEN/34/Rev.5/Add.1 – 
TN/AG/SCC/GEN/13/Rev.5/Add.1 , dated 14 November 2016, and TN/AG/GEN/34/Rev.5/Add.2 – 
TN/AG/SCC/GEN/13/Rev.5/Add.2 , dated 6 January 2017.  TN/AG/35 • TN/AG/SCC/7  
 
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  17.  Further to a Member's  request a t the last Dedicated Discuss ion, the revised background paper 
also includes  information on C otton exports  with (i)  two c harts showing the  evolution of total 
exports of C otton to the world and to LDCs, in value and quantity terms during 2005 -2015 and 
(ii) two tables showi ng total expo rts of C otton to the world and LDCs in 2015, in value and 
quantity terms, for the 3 2 Members identified as potential C otton markets of interest for LDCs in 
the background paper . 
18.  I noted that the quality of the information contained in the Secretariat docum ent was fully 
dependent on the quality and timeliness of Members' notifications and submissions to the WTO, 
including replies to the questionnair e circulated by the Secretariat. I took the opportunity to again 
urge Members, particularly key C otton actors, to be more forthcoming in sharing information on 
recent policy developments.  
19.  Members  welcomed both presentation s and thanked  ICAC, in particular , for its  presence and 
participation in the dedicated discussions , highlight ing the importance of  ICAC's  contri bution for 
substantive  debates.  
20.  The LDC Group noted that  ICAC's most recent data on government assistance  reinforced the 
fact that Members were lagging behind in terms of WTO notifications.  The LDC Group asked  ICAC 
to provide a breakdown of the direct assi stance to C otton  on a country -by-country basis . Senegal  
was also interested in comparing th at information  with the different forms of  support as per  the 
WTO definition  and a ssessing the impact s of countries transferring  their support from one box to 
anothe r. ICAC note d that the  methodology  it used to categorize the various forms of support  was 
different from the WTO methodology.   
21.  Chad highlighted  the importance  of both traceability of raw C otton  and diversification  of 
African Cotton exports . ICAC noted the complexity of the traceability issue, taking into accoun t the 
numerous steps along the C otton value chain and made reference to the "mass balance system" 
approach as a possible way forward. Another Member  expressed concern  in relation to  the 
significant ma rket shares gained by some major C otton exporters and asked if ICAC had done 
some  analysis of the reason s behind those developments .  
22.  In relation to the  Market Access  section of the Secretariat's paper , the C4  noted its  
disappoint ment with the low percenta ge of Cotton imports from LDCs . The C4 also stressed  the 
lack of information in  the replies to the questionnaires regarding  preferential tariffs and quotas 
applied to  imports of C otton from each LDC.  
23.  Regarding E xport Subsidies, the C 4 noted  the continuatio n of the  downward trend in the use 
of Export Subsidies, in line with the Nairobi Decision.  
24.  On Domestic Support, the C4 noted an upward trend in the use of market price support and 
non-exempt direct payments . The C4 noted  that very high level s of D omestic Support could have  
effect s similar to  Export Subsidies  when most of the Cotton production was exported  and 
reiterated the call for Members to make efforts to secure an outcome on Domestic Support by 
MC11.  
25.  The C4 also took th e opportunity to appeal  to Memb ers who ha d not yet responded to the 
three questions7 posed on Cotton to provide a reply , and to those  Members  who ha d already 
replied to improve their responses.  
26.  Pakistan highlighted  the importance of the Cotton sector in its economy , including for both 
agricultural and industrial employment , and the important  reforms undertaken in the sector over 
the last two decades.  Pakistan hosted  the 75th Plenary Meeting of ICAC  held in November 2016  
and a vailable figures confirmed that the level of suppo rt to C otton remained high and that border 
restrictions mainly in the forms of tariffs were still present.  Hence, in addition to unfavourable 
weather conditions, l ocal farmers growing C otton clear of government assistance had to  compete 
with highly -subsidized Cotton f arms in other countries , resulting in a decline of both cotton area 
and production  in Pakistan . Pakistan stressed that more needed to be done to address distortions 
                                                
7 Document JOB/AG/74 – TN/AG/SCC/GEN/15 , dated 28 June 2016.  TN/AG/35 • TN/AG/SCC/7  
 
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  to trade through an ambitious, expeditious and specific approach which would allow developi ng 
countries ' Cotton growers to fairly compete in the world market.  
27.  The United States noted that discussions should reflect the current reality of world Cotton 
production and trade, taking into consideration the influence of new players, such as added 
comp etition from the polyester fibre sector. Cotton demand and prices continued to face significant 
headwinds due to increased competition from man -made fibres, in particular polyester produced in 
China. As fibres competed for market share, low polyester price s resulting from government 
subsidies, low oil prices and overcapacity were suppressing global cotton prices and negatively 
impacting cotton farmers across the globe. The United States referred to the final statement of 
ICAC's 75th Plenary Meeting which ha d dubbed competition from polyester as " Cotton 's greatest 
competitive threat".  
28.  The United States called for more transparency on government subsidies granted to man -
made fibre producers, and more generally from Members with ma jor impacts on C otton trade. The 
lack of transparency impeded Members' ability to have a fully informed discussion regarding 
historical and current trends in trade -related Cotton developments.  
29.  China stressed the importance of Cotton for many developing Members, and in particular f or 
the C4 and LDCs. China had fully complied with the Nairobi Decisio n on Cotton to facilitate DFQF 
Market Access for LDC Cotton exports and called on other Members to follow suit. China clarified 
that it did not intend to keep high levels of Cotton stock . Imported Cotton was used in textile 
processing  and there had been a decline in China's demand for Cotton given the difficulties 
encountered by its textile sector as a result of tariff peaks and tariff escalation.  
30.  At the request of the European Union, both Ch ina and Turkey provided clarifications regarding  
some of their updated d ata on bound and applied duties  as well as LDC preferential duties  for 
Cotton and Cotton by-products . The Secretariat also noted that it was following up on the issue 
internally and th at the next revision of the background document would reflect any new 
information  in that regard.   
31.  In reply to a query from the European Union, Benin clarified that some of the information 
contained in its reply to the Cotton questionnaire did not necessar ily mean that its budget for 2016 
include d Export Competition measures  per se . It was rather a reference to a set of support 
measures in favour  of local investment and processing in the context of Public -Private 
Partnerships . The objectives of the said mea sures were  primarily  aimed at addressing the 
vulnerability  of Benin's Cotton sector and to improve local processing of cotton . 
32.  At Turkey's request , and since such data were already available in the annual note by the 
Secretariat on "Members participation i n the normal growth of world trade in agricultural 
products", it was further agreed  that the Secretariat would include in the next revision of its 
background paper such information for  Cotton.  
33.  In concluding the meeting, I underlined the value of the inform ation presented by ICAC and 
the Secretariat, which had sparked constructive exchanges.  I noted the important  role of 
transparency in informing  the discussi ons and  I encouraged Members to continue or to start 
submitting  up-to-date notifications  and respond ing to the  Secretariat's  questionnaire. I also 
stressed the importance of implementing the Nairobi D ecision  on Cotton , as emphasized  by many 
Members .  
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