RESTRICTED  WORLD TRADE  
ORGANIZATION  TN/AG/SCC/R/3 
16 June 2005  
 (05-2544) 
Sub-Committee on Cotton  
  
 
SUMMARY REPORT ON THE THIRD MEETING OF THE SUB-COMMITTEE 
ON COTTON HELD ON 29 APRIL 2005 
 
Note by the Secretariat
1 
 
 
1. The Sub-Committee on Cotton, which was esta blished by the Committee on Agriculture, 
Special Session at its formal meeting on 19 No vember 2004 in accordance with the instruction 
resulting from the decision on the Doha Work Pr ogramme adopted on 1 A ugust 2004 by the General 
Council (WT/L/579, refers), held its third mee ting on 29 April 2005 under the chairmanship of 
Ambassador Tim Groser of New Zealand. 
2. The agenda as contained in WTO/AIR/2558 was adopted. 
ITEM A:  ASSESSMENT OF PROGRESS IN THE AGRICULTURE SPECIAL SESSION  
(i) Statement by the Chairman 
3. Under this agenda item the Chairman gave his assessment of progress in the agriculture 
negotiations with a particular focus on cotton.  A su mmary of the statement made by the Chairman is 
attached to this report (see Annex 1). 
(ii) Statements by Members 
4. Rwanda, on behalf of the African Group, presented a document on "Proposed Elements of 
Modalities in Connection with the Sectoral Initiativ e in Favour of Cotton" (TN/AG/SCC/GEN/2 dated 
22 April 2005, refers). 
5. Zambia noted that the issue of cotton was clearly articulated in the communication from the 
African Group which it endorsed fully.  Zambia al so wished to support the statements made by 
Paraguay, Benin and Uganda.  Cott on was one of Zambia's major expor ts and it employed a total of 
250 families, each counting about 4 people, out of a total population of 10.5 million people.  Zambia 
therefore attached great importance to finding a solu tion to the problem of cotton, and trusted that 
Members would continue to work towards a reas oned and reasonable solution.  Noting the general 
agreement that market access for LDCs should be facilitated by a number of modalities including duty 
free and quota free access for their products, Zambia hoped that developed markets, such as those of 
the United States and the European Communities, w ould quickly remove farm subsidies giving LDCs 
an opportunity to compete in those markets.  This long standing issue was crucial for the future of 
developing countries and in particular the LDCs and Zambia appealed to Members that 2005 be 
crowned with success in that regard. 
                                                      
1 This document has been prepared under the Secret ariat's own responsibility and is without prejudice 
to the positions of Members or to their rights or obligations under the WTO. TN/AG/SCC/R/3 
Page 2  
 
 6. The representative of Guinea stated that his delegation fully endorsed the statement by 
Rwanda on behalf of the African Group.  As Members had noted, 33 of the 53 African countries, 
including Guinea, were producers and net exporters of cotton which was the main source of revenue 
for their populations and played a key role in thei r economic development.  If the attempts to revive 
cotton production and exports did not produced tangi ble results over the next few months, a vital 
component of those countries' economies would be in  jeopardy.  Consequently, the need to eliminate 
all obstacles to the development and export of co tton as rapidly as possible was clear.  Guinea called 
upon Members to accept the proposed time-limits fo r the elimination of trade-distorting domestic 
support measures and all forms of cotton export subs idies.  Guinea also supported the African Group 
proposal for an emergency support fund for cotton pr oduction as a measure to alleviate the impact of 
cotton subsidies pending their elimination.  The representative of Guinea informed the Sub-
Committee that a Committee had just been set up by the Guinean authorities to examine the ways and 
means of revitalizing the cotton sector.  The Committee was made up of representatives of the agricultural and trade departments as well as th e Chamber of Agriculture and the Chamber of 
Commerce.  The discussions of the Committee should result in a general policy paper on the 
revitalization of Guinea's cotton sector which would be submitted to the Sub-Committee in due 
course. 
7. Burkina Faso noted its support for the statemen ts made by Rwanda on behalf of the African 
Group as well as those of Brazil, Paraguay, Zambia, Benin, and Guinea.  The cotton problem was one 
of deep concern, and Burkina Faso looked forward to finding rapid solutions in accordance with the 
mandate of the July Framework.  In the meantime, Burkina Faso wished to r eaffirm its confidence in 
all delegations which had devoted their efforts to the cotton issue ever since the initiative was tabled 
by the four West and Central African countries.   Members of the Sub-Committee were certainly 
aware of the difficulties facing West and Central Afri can farmers.  Those farmers needed solutions to 
be adopted in Geneva which would allow them to take care of thei r families and their education and 
health needs.  The representativ e of Burkina Faso noted that at the March 2005 seminar on cotton in 
Ouagadougou, people on the ground complained that  negotiators and diplomats were showing too 
slow a progress in Geneva, while at home povert y was taking an increasing toll on families.  The 
representative of Burkina Faso noted that he had stressed that Members were engaged in multilateral 
negotiations which obeyed their own logic but that no efforts would be spared by negotiators to find a 
solution to the urgent problems facing cotton.  Burk ina Faso stressed that Members needed to speed 
up their efforts on the cotton issue and respect the Ju ly mandate to act "ambitiously, expeditiously and 
specifically". 
8. Senegal stated its support for the statements of Rwanda on behalf of the African Group, 
Zambia, Benin, Guinea and Paraguay.  The represen tative of Senegal noted that cotton played an 
important part in the economy of African countries, including his own.  With a 5 to 10 per cent share 
of GDP, cotton was a major component of the trade balance of those countries, accounting for a large 
share of export revenue and, as the representative of Paraguay had pointed out, the figure in some 
cases exceeded 40 per cent.  The d ecision adopted by the General Council in July 2004, recognizing 
the significance of the issue and above all its vita l importance for developing countries and especially 
LDCs, had called on all the WTO Members to work to  achieve expeditious results.  In light of the 
urgency of the matter, Senegal wished to i nvite Members of the Sub-Committee to show 
receptiveness and understanding in considering the proposed elements of modalities put forward by 
the African Group.  Senegalese cotton producer s placed high hopes in the Sub-Committee's 
proceedings and Members had to ensure that those ho pes were not frustrated.  Senegal reaffirmed its 
commitment to a constructive approach towards fi nding prompt solutions to that critical issue. 
9.
 Argentina thanked Rwanda for introducing the proposal on cotton and all the African 
countries, Paraguay, and other de veloping countries which shared similar positions on cotton.  
Argentina believed that the initiative that had been tabled by the African Group could be useful in 
moving forward and in focusing the Sub-Committee's work on modalities and disciplines to be applied to cotton.  The paper tabled by the African  Group was split into five parts and Argentina was  TN/AG/SCC/R/3 
 Page 3 
 
 
 of the view that, as a basis for future work, Memb ers could start with parts 3, 4 and 5 which dealt 
respectively with modalities, disciplines and the pro posal for an emergency fund.  Argentina noted 
that while it had been recognized that the monitori ng and surveillance disciplines did, to a certain 
extent, anticipate the work by Members, in Annex A of the July framework, paragraph 48 on 
disciplines had not been sufficiently examined by the Committee on Agriculture in Special Session.  
Hence, Argentina believed that the proposal by the African Group on disciplines for monitoring and 
controlling should be further discussed on the basi s of the guidance given by paragraph 48 of the 
Agreed Framework. 
10. Mali stated its support for the statements of Rw anda on behalf of the African Group, Benin, 
and other delegations which ha d expressed support for the cotton issue.  The draft modalities 
submitted by the African Group would enable Member s to genuinely address the substantive issues 
which had to be addressed if cott on producing countries, particularly  the four countries of West and 
Central Africa, were to be preserved from decline.  Cotton played an extremely important role for 
those countries, and given the drastic downward tre nd in cotton prices, they were confronted with 
enormous financial problems.  Indeed, Mali stressed that producers were on the brink of collapse, and 
were in fact even ready to change crops.  In add ition to the fall in prices, West and Central African 
countries in particular had been subjected in 2004/ 2005 to locust attacks which had devastated not 
only cotton plantations, but other cash crops as well.  Members had to find a safety net to enable those 
farmers to go on living, otherwise, prospects for those countries would be disastrous. 
11. Japan welcomed the proposal by the African Gr oup which was in its view a good first attempt 
at starting the negotiations on cotton.  The represe ntative of Japan recalled that Japan was already 
offering duty and quota free market access for LDCs .  However, the negotiations mandated by the 
July framework were part of a multilateral appro ach and Japan asked the African countries to show 
patience and give Members time to discuss the issues .  In that regard, while Japan whished for a rapid 
solution to the cotton problem, it had problems with some elements in the African Group proposal in 
particular the dates mentioned therein.  The re presentative of Japan also stated that Japan had 
reservations about the emergency fund proposed by the African Group and its conformity with the 
mandate set by the July framework  for the Sub-Committee which was to  deal with the trade related 
aspects of cotton. 
12. The representative of Uganda stated that his country whished to engage in the multilateral 
trading system and had demonstrated this by carryin g out total liberalization of its economy.  Uganda 
had for instance  removed state trading enterprises and opened itself for trade in services.  However, 
despite all those efforts, foreign direct investment  continued to falter and prices of cotton and other 
important commodities for Uganda had continued to fall.  It was on that basis that Uganda fully 
supported the proposal tabled by Rw anda on behalf of the African group.  Uganda noted that, in the 
short run, the immediate beneficiaries of increased  investment, employment and production in poor 
countries would be developed countries with LDCs  and developing countries also gaining along the 
way.  Regarding the proposal tabled by the Afri can Group, Uganda noted that the request for bound 
duty and quota free access for products and by-produ cts of cotton, namely textiles and apparels, was 
reasonable since the countries concerned represented a very small share of the market.  On the issue 
of domestic support, Uganda stressed that it was the same countries which had pushed for developing 
countries to liberalize their economies which were s till hanging on to such supports.  Uganda noted 
that LDCs and many developing c ountries were very low cost produ cers and did not subsidize farmers 
hence the elimination of subsidies would force ma ny developed countries' farmers out of business 
allowing for developing countries to enter markets.  It was in that perspective of increased market 
access that Uganda was asking for development s upport to mechanize, improve seeds, gin and add 
value to raw cotton. 
13. The representative of China thanked Uganda fo r the clarification on the coverage of cotton 
by-products.  As stated earlier, China's comment s on the African Group proposal were preliminary 
and China's intention was simply to seek clarifica tions.  Following the explanation that the cotton by-TN/AG/SCC/R/3 
Page 4  
 
 products mentioned in the African Group proposal covered textiles and clothing, China whished to 
state that its concern was not linked to any pot ential competition coming from African countries but 
rather, China was worried that that issue of cotton by-products was not within  the mandate of the Sub-
Committee.  In addition, China was already pr oviding duty and quota free access for textiles and 
clothing from some African countries. 
14. Benin welcomed the support expressed by a nu mber of delegations for the African group 
proposal which was in effect a first try at bringi ng all delegations to en gage constructively on 
substance.  In addition to the clarifications provide d by Uganda to China, Benin whished to recall that 
the sectoral initiative on cotton had been tabled to call attention to the plight of West and Central 
African cotton producers which despite being co mpetitive were, because of  heavy subsidies by 
developed countries, loosing money on  international markets.  The pr oblem had worsened in the past 
three to two years with every year seeing a widening gap between the cost of production and international prices.  That gap totalled 400 million dollars which the 4 proponents of the initiative 
needed to buy the current cotton production faili ng which, producers could envisage disengaging from 
cotton production.  This was the rationale behind the request by the African Group for a temporary 
emergency fund for cotton to maintain production while agreements were  being negotiated and 
implementation of their results started.  Benin,  referring to the specific dates mentioned in the 
proposed modalities (21 September for domestic support and 1 July for export subsidies), stated that 
cotton had to be tackled with a holistic approach within the WTO and that included the Agriculture 
negotiations but also legal issues such as those re lating to the Cotton panel between Brazil and the 
United States to which some of the 4 proponents ha d been third parties.  Benin noted that most 
African cotton producers were LDCs and hence alre ady beneficiated from duty and quota free access.  
However, concerning cotton by-produc ts which covered textiles, cotton seeds, etc, LDCs also sought 
duty and quota free access which would be fully in line with the objectives of the Doha Development 
Agenda.  Benin noted that China was one of th e countries which had supported that treatment for 
LDCs and that China also contributed largely to th e development efforts of the countries concerned.  
Regarding domestic support, a surveillance mech anism was proposed to prevent the shifting of 
policies between the different boxes. 
15. Statements made by the following delegations  were forwarded to the Secretariat and are 
attached to this summary report:  Benin, Brazil,  Canada, China, Cuba, the European Communities, 
Paraguay, Rwanda (on behalf of the African Group) , Tanzania, the United States, and Zimbabwe (see 
Annex 2). 
I
TEM B:  COHERENCE BETWEEN TRADE AND DEVELOPMENT ASPECTS : UPDATE ON THE 
DEVELOPMENT ASPECTS  
16. The Chairman recalled that the terms of re ference establishing the Sub-Committee on Cotton 
clearly referred to the need of coherence betwee n trade and development aspects of the cotton issue 
(paragraph 1.b and paragraph 5 of  Annex A, WT/L/579 refers). 
(i) Statement by the Secretariat on the Third Round of Consultations on the 
Development Assistance Aspects of the Cotton Initiative 
17. On behalf of the Secretariat, Mr. Chiedu O sakwe provided the Sub-Committee with a report 
on the third round of consultations on the deve lopment assistance aspects of the cotton initiative 
which had taken place on 25 April 2005 under the chai rmanship of Mr. Stuart Harbinson, Director of 
the office of the Director-General.  The statement ma de by the Secretariat is attached to this report 
(see Annex 3). 
(ii) Statements by Observer Internationa l Intergovernmental Organizations 
18. There were no statements by Observer Inte rnational Intergovernmental Organizations.  TN/AG/SCC/R/3 
 Page 5 
 
 
 (iii) Statements by Members 
19. Zambia thanked the Secretariat for its report a nd expressed its appreciation to all the countries 
and organizations which had res ponded positively to the call for development assistance for cotton. 
20. Statements made by Benin and Rwanda (on behalf of the Afri can Group), were forwarded to 
the Secretariat and are attached to this summary re port (see Annex 4).  The Chairman asked that any 
delegation that wanted its statement included as an attachment in the summary report on the formal 
meeting should sent it to the Secretariat in electronic format as soon as possible. 
21. The Chairman summed up the discussions of the third meeting of the Cotton Sub-Committee 
and provided some concluding remarks.  A summary of the remarks made by the Chairman is attached to this report (see A nnex 1:  Concluding Remarks
). 
ITEM C:  OTHER BUSINESS  
Date of Next Meeting 
 
22. The Sub-Committee agreed to meet again on 22  June 2005, following the Agriculture Week 
of 30 May to 3 June. 
Chairman's Report to the Special S ession of the Committee on Agriculture 
 
23. The Chairman stated that in making his report to the Special Session of the Committee on 
Agriculture he would bear in mind the statements made by all Members, that the report would be 
short and entirely factual, the essence of which w ould be about the presentation and the discussion of 
the African Group proposal (TN/AG/SCC/GEN/2 refe rs).  Keeping in mind the interests of all 
Members the report would be circulated to Members, as part of the Summary Report on the formal 
meeting of the Committee on Agriculture Special Se ssion, and if a factual error was discovered an 
amendment would be issued. TN/AG/SCC/R/3 
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 Annex 1
 
 
Statement by the Chairman, Ambassador Tim Groser 
at the Third Meeting of the Sub-Committee on Cotton held on 29 April 2005 
  
Agenda Item A(i):  Assessment of Progress in the Agriculture Special Session
 
   Let us just recall that at the last meeti ng of the Sub-Committee we finally succeeded in 
getting a work programme established which provides the platform for us to get into the substance.  
Now, as mentioned at the last meeting of the Sub-Committee, my intention is that we should look at this under two items.  First of all paragraph 1(a), the "Nature and Sc ope of the Work Programme" will 
be on our agenda for all our Sub-Committee meetings until such time as you indicate to me otherwise, 
and this will allow us to look at an assessment of the work of the agriculture Special Session and the 
second aspect of this, given that there are two tracks to this whole matter, we can also look at the 
coherence between the trade and development aspects.  So with this logical structure in mind, we will 
pass now to the question of the assessment of progress in the agriculture Special Session. 
  Now the Secretariat have produced for me an excellent analysis of progress in the 
negotiations on agriculture, but yesterday, speaking to  your heads of delegation, I tried to give an 
overall strategic assessment of the state of progress.  I do not intend to repeat it here, but I will try and 
sum up what I think is the key point.  Yes, of course we are completely stuck on this issue of ad valorem  equivalents, but the key point I wanted to make was that behind this issue, we have 
actually made a lot of progress in the agriculture ne gotiations since last July, and I outlined to the 
TNC yesterday what I can see.  I can see a very subs tantial outcome on agriculture for July, if we can 
get through this AVE issue, and this is not a rhet orical statement, I outlin ed the evidence for that 
yesterday.  So while we face this what I described as a relatively small iceberg blocking our path to 
the safe waters of July, nevertheless I think we can deliver to Ministers at th e end of this technical 
phase of this negotiation a very substantial outcome i ndeed, but I hope that the momentum of that will 
help the momentum of the entire Doha Development agenda, but most particularly I hope it will help 
advance the reform that is needed in cotton. 
 
 Concluding remarks
 
  
 First of all, I would like to congratulate you all on keeping your cool and I do not say that for 
a small reason.  Obviously I have the AVE issue in mind when I am saying this because when people 
become very emotional and there is good reason to become emotional on this issue as our colleague 
from Tanzania reminded us.  Frankly this is for some of you or your farmers you're representing a 
matter of survival.  But I congratulate you for keepi ng your cool because it is abundantly clear that the 
moment that goes out the window even the smallest  of differences seem unbridgeable.  Words are not 
a constant.  They change their colour depending on th e light that is shone on them and the perspective 
of where you sit.  So people have to exercise th eir words with great care when we are dealing with 
tinder dry political material like this.   Now, I think you would have to exercise mu ch effort to tell the difference between the 
discussion in this third meeting of the Sub-Committ ee and the discussions in meetings one and two.  
In meetings one and two, we were  just focusing on procedure, people not really listening, no real 
atmosphere in the room, and nothing real going on .  And as Ambassador Trojan pointed out, I think 
we've had "une vraie discussion pour la première fo is" and I agree with him.  The atmosphere today 
has been very interesting, clearly people are very a ttentive, there are more people in the room.  I think 
it is beginning to work.  So, I want to thank Rwanda and the African Group because they may not  TN/AG/SCC/R/3 
 Page 7 
 
 
 have pleased everybody with the way they did it bu t I think they have achieved a very good meeting 
here today.  We also learned a few new things.  For instance this important point that it is not just the 
proponent countries at stake here, there is a lot of other people with cotton farmers.  I did not realize 
until today that Zimbabwe exported 70 per cent of its cotton, that this is your second cash crop or that 
China had a hundred million people involved in cotton.  So we are talking about something very, very 
big here. 
  Now, this Sub-Committee is an attempt to draw th reads together and to make sense of reality.  
We, people who are responsible at the sharp end, alwa ys have to divide up this reality into different 
compartments, and then try and get some coherence t ogether, and this is what we are trying to do with 
this Sub-Committee, but as the Ambassador of Beni n put it, "finalement, au sein de l'OMC, nous 
sommes dans un ensemble".  So let's follow procedure but let's remember the point that he is making 
here that finally, this has to come together overall.  So what we have done toda y, I think is to have had 
a very interesting discussion of some different elemen ts that all finally have to come together.  We 
know that there is an internal reform element in this  where the developing countries in particular have 
to continue with their efforts to improve their effi ciency and their structures and we had our colleague 
from Guinea explaining what they are trying to do about that.  But I have heard others, Burkina Faso 
in the past explained what they are trying to do and I think that's great.  I think it's an important 
element.   We then heard an interesting analysis from Ambassador Trojan on the distinction between 
things that can be done in terms of autonomous reform and the question of the commitments in the 
system under the three pillars and that's part of the single undertaking, quite clearly.  And there were some very subtle points made by the Ambassador of  Benin when he said these dates were not chosen 
"par hasard".  
 The other element is Development Assistance and Chiedu Osakwe's comprehensive summary 
I think is very interesting.  Finally we come down to really specific things such as Uganda was saying 
about cotton farmers in Uganda who keep on re-usi ng, recycling the same seeds with low productivity 
as a result.  Uganda asked what we could do there?  So it is a micro issue as well as is macro issue.  
On the question of the development track at the mo re global level of it, well I have the impression, 
and I think other speakers noted this too in their presentations, that this may be beginning to move 
now.  And I think I do not want to take the pressu re off people but I think that is encouraging.  
Sometimes, it takes a massive amount of political  movement to get things moving and maybe "ça 
bouge".   I don't know whether this is separate from trade development or just a component of it, but 
there is also a trade promotion concept here.  We  heard the ITC representative at the consultations on 
the development aspects talk about the significant shift in world trade of cotton to Asia and this has a 
lot of resonance with me because as a New Zealand o fficial, we struggled for years with our farmers, 
historically geared towards Europe and not seeing the rise of Asia.  So, I think there is something important there but I also think it was very encouraging to hear from China today that in 2004 they have increased their imports of cotton from the set of African countries concerned by 2.1 times since 
2003 and that is encouraging.  And maybe there is something we can do to accelerate that even 
further.   Now, on the trade track it is actually more co mplex, with these other elements in it.  But 
finally of course our core focus in this house must  be on the agriculture trade liberalization and the 
reform of world agriculture.  That is what we are doing.  We are not neutral about this.  That's the 
direction we are heading, and I am very pleased that some of you realized that its not just rhetoric on my part, just to try and cover up the very difficu lt situation we are in.  I can genuinely see a solid 
package coming through in July if we can get over this AVE issue.  And I am also pleased that 
somebody picked up the very strong point I was making yesterday that people who are in a position of 
responsibility have got to bear in mind that this is  not some highly sophisticated diplomatic parlour TN/AG/SCC/R/3 
Page 8  
 
 game we are playing here, because the issues that lie  behind this are the issues that we discuss today 
on cotton, or on sugar or on a host of other products that are linked to trade and development, and I 
think if people just keep that broader prospective in mind we can move this obstacle out of the way in 
the next few days, no completely I think, but the core substantive point if people keep that bigger 
picture in mind. 
 
So thanks again for your forbearance, and a very g ood meeting, very positive meeting in my opinion, 
and your patience and we will see you again on the 22
nd of June. 
  
  TN/AG/SCC/R/3 
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 Annex 2  
 
Statements at the Third Meeting of the Sub-Committee on Cotton held on 29 April 2005 
 
 
Agenda Item A(ii):  Assessment of Progress in the Agriculture Special Session  
  
Statement by Benin
 
 
 
Mr Chairman, Excellencies, Representatives of International Organizations, and Regional and Sub-Re gional Organizations, 
Distinguished Delegates, 
Ladies and Gentlemen, 
  First of all, I would like to thank Ambassador  Tim Groser, Chairman of the Sub-Committee 
on Cotton, for his tireless efforts in carrying our wo rk forward and for his introductory remarks this 
morning that clearly explained the scope and importance of the cotton issue.  
 My delegation endorses the statement made by  the Ambassador of Rwanda who spoke on 
behalf of the African Group.   Mr Chairman,  
 At the end of July 2004, the WTO Genera l Council gave us a clear mandate on cotton, 
instructing us to address the issue "... ambitious ly, expeditiously, and specifically, within the 
agriculture negotiations ..." and specifying that the work should encompass "... all trade-distorting 
policies affecting the sector in a ll three pillars of market acce ss, domestic support, and export 
competition ...".  
 Following through on the General Council's in structions, the Sub-Committee on Cotton was 
set up on 19 November 2004 and its work pr ogramme was adopted on 22 March 2005. 
  In response to the urgency of the cotton issue, and taking into account the serious and structural problems facing the sector, which ha d been exacerbated in recent months, the African 
cotton producing and net exporting countries submi tted for the consideration of WTO Members the 
proposed elements of modalities contained in doc ument TN/AG/SSC/GEN/2 of 21 April 2005 that 
Rwanda has just presented on behalf of the African Group.   Without wishing to repeat wh at has been said, I would like to point out that the proposals 
address measures we regard as essential in confron ting the problems facing the cotton industry in 
Africa. 
  These measures can be summarized as follows:  1. Market access
:  improve market access for interna tional trade in cotton, and grant LDC 
cotton producers and net exporters bound duty -free and quota-free access for cotton and its 
by-products; 
 2. Export subsidies
:  eliminate all forms of export subsidies on cotton by 1 July 2005  at the 
latest; 
 TN/AG/SCC/R/3 
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 3. Domestic support
:  eliminate domestic support measures that distort international trade in 
cotton by 21 September 2005  at the latest ; 
 4. Emergency support fund for cotton
:  establish an emergency support fund for cotton 
production in order to contain the serious socioeconomic consequences for the farming 
communities resulting from loss of revenue due to  the drastic decline in cotton prices on the 
global market. 
  The resources allocated to the fund shall be equi valent to 20 per cent of the value of cotton 
production for the most favourable of the three most  recent years in each of the countries concerned. 
 
 The operation and management of the fund have been outlined in paragraph 27 of the 
document containing our submission on elements of modalities.   The justification for this proposal to create su ch a fund is based on the need to adopt a safety 
net for cotton producing communities in the thirty -three African cotton producing and net exporting 
countries and to save them from economic disaster which would lead to the plain and simple disappearance of cotton production in Africa.   It is therefore our duty to act, and to do so swiftly, and we can count on the spirit of cooperation and solidarity among all WTO Members. 
 
 Thank you for your attention.    TN/AG/SCC/R/3 
 Page 11 
 
 
 Statement by Brazil  
  Mr. Chairman,  
 Brazil would like to welcome the proposal tabled  by the African Group.  After almost a year 
since the General Council decided to create a Sub- Committee on Cotton, this is the first concrete 
attempt to comply with the provisions established by the Framework Agreement.   The crisis situation of cotton described in th e introductory part of the African Group proposal 
would by itself justify the taking of measures that  are concrete, substan tial and expeditious in 
international trade.  In order to - at least - prev ent the deterioration of economic and social conditions 
faced by African and other developing countries th at produce and export cotton, effective measures 
should be taken concerning the huge amounts of di storting subsidies that developed countries throw 
into their cotton production. 
 
 The recognition of the trade distorting aspects of the subsidies in question does not stem from the African or developing countries themselves.  Many studies that have been developed confirm 
assessments in the same sense.   Brazil considers, therefore, the African countries' document a good basis to initiate, in the 
Sub-Committee, substantive discussions concerning th e trade aspects of cotton,  as determined by the 
July Package.  It meets the criteria on ambition, expeditiousness, and specificity which should orient 
our work.   TN/AG/SCC/R/3 
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 Statement by Canada
 
  
Canada indicated support for dealing with the i ssues of cotton expeditiously and specifically 
within the agriculture negotiations as called for in th e July Framework.  In this regard, we are calling 
for: the maximum possible reduction in trade distor ting domestic support, the elimination of all forms 
of export subsidies, and real and substantial impr ovements to market access for all products in the 
agriculture negotiations, goals which, if achieve d would go a long way towards addressing the trade 
concerns of cotton producing developing countries.   Canada already provides duty free/quota free 
access for LDC exports of cotton and cotton products.  Canada noted that the creation of a specific 
fund for emergency support for cotton farmers wo uld not address the fundamental source of the 
problems for the cotton industry, and an ambitious  outcome to the round that eliminates export 
subsidies in all forms, and make s substantial reductions in trade distorting domestic support must be 
achieved.  We reiterated what was said on Monday at the meeting on developmental aspects of cotton, 
namely that Canada will continue to provide ou r considerable and growing ODA through multilateral, 
regional and bilateral channels on a responsive basis.  This means that if support for cotton farmers is 
identified as a high priority within the PRSPs or other development plans, then we can provide 
support in cooperation with other donors.   TN/AG/SCC/R/3 
 Page 13 
 
 
 Statement by China  
  Thank you Mr. Chairman,   
Mr. Chairman, China attaches great attention to this negotiation under the Sub-Committee on 
Cotton, because China is one of the biggest produ cers and consumers of cotton.  In recent years, 
China has become a net importer of cotton.  But we have pointed out that the cotton production in China represents a very critical means that we try to  solve the issues of rural employment, alleviating 
rural poverty.  China has a rural population of 900 million, while the per capita farmland in China is 
less than 0.1 ha.  The pressure of rural employment  is very huge.  In China more than 100 million 
people are involved in cotton sector.  That showed why we understand very well the importance of this issue of cotton to millions of African people.  It is our view that the work of this committee 
should reflect fairly the requirement of the July  Framework and we should find solutions in an 
ambitious, expeditious and specific way within agriculture negotiations. 
 
Mr. Chairman, as far as import by China is concerned, last year according to our statistics, 
imports of cotton by China from Burkina Faso, Be nin and Mali and some other African countries, 
increased by 2.1 times over the previous year, i.e. the year of 2003.  Now the Chinese imports of cotton from this area already account for some 10% of China's total cotton imports.  Therefore on the issue of market access, China stresses the impor tance of developed count ry Members providing duty 
free, quota free access to the cotton from LDCs.  Of cour se, in a principle of voluntary participation, 
developing country Member is also encouraged to  improve the market access opportunities for cotton 
and cotton products from LDCs. 
 Of course, in the international market of cott on, developed countries are the major exporters.  
Cotton products from China do not pose any distortion to the international cotton market.  In order to 
rectify the distortion caused by export subsidies on cotton provided by certain Members, it is necessary to stress that on the pillar of export comp etition, China supports the idea of elimination of 
export subsidies as soon as possible.  Later on I will make some initial comments on the specific 
proposal by the African Group after my general remark s.  It is important for the elimination of the 
export subsidies as soon as possible, however for deve loping country Members; we have to take into 
account the fact that cotton production for those coun tries bears on the issue of livelihood security of 
the farmers, bears on the issue of poverty reducti on, employment and other crucial issues.  And 
besides, the very important fact is that the dom estic support levels provide d by developing country 
Members to their farmers are very low.  The absolu te level of support for those farmers who could be 
defined as resource poor or dependent on cotton fo r their livelihood is minimum.  This kind of 
domestic support by developing country Members does not cause any international market distortion.  
Therefore on the problem of domestic support for cott on, we support the idea of elimination of trade 
distorting domestic support measures made by developed country Member s;  at the same time, we call 
for special and differential treatment for developing  country Members in order to fully reflect the 
mandate of the Doha Round. 
 
On the development aspect of the cotton issue,  China calls for international and regional 
organizations as well as developed country Members to make great efforts to dress the needs and concerns of the developing country Members in this regard.  These efforts should cover technical 
assistance and funding arrangement. 
 
Let me come back to the specific proposal by the African Group (TN/AG/SCC/GEN/2).  We 
have sent the original version of French to our cap ital for study.  I would like to use this opportunity 
to make some initial comments. 
 TN/AG/SCC/R/3 
Page 14  
 
 First, we welcome this paper.  Second, we congratulate the African Group for this important 
piece of work.  We thank them for this important  contribution to the work of this committee.  
Comparing with work in agricultu re special session as a whole and other areas of Doha Round, the 
pace of progress in this committee seems not slow at  all.  This Sub committee is blessed with a 
detailed proposal on elements of modalities.  Of c ourse, as I said our capital people are studying this 
important proposal very carefully and will come b ack with more detailed comments and analysis and 
suggestions.  Anyway we believe that this pape r well represents an effort to dress issues in a 
comprehensive and rapid manner.  Therefore effo rts of this kind should be welcomed in this 
committee.  Of course, I am not saying I understand ever y core element in this paper.  For instance, on 
the one point, in paragraph 12, they asked whether or why it set on 21 September 2005.  I need help 
from the African Group for giving me the answer.  Why is it not 20 of September?  But I would be 
grateful if any Member of sponsors of this paper could give me the rationality for setting this specific 
date. 
 Of course, as I said in my starting remarks, we  would support that elimination of domestic 
support distorting trade provided by developed Memb ers.  And for developing country Members, the 
domestic supports on the one hand are very low, the supports on the other hand are consistent with the 
requirement of the existing Agreement on Agricu lture and are intended consistent with the new 
agreement on disciplines as well. 
 The other point I would like to seek clarific ation or help from our African friends is 
concerning the paragraph 19 on market access.  For instance, in the paper, it called for a duty free, 
quota free access for LDCs' cotton and its by-products .  For cotton it's foreseen because I understand 
this sub-committee was supposed to work on cotton.  But for cotton by-products, I will be interested 
to know what these by-products cover.  First, ar e they all agricultural by-products or also cover 
industrial by-products?  Because some Members' or delegations' interventions pointed out that 
concerns the mandate.  If it also covers by-produc ts for non-agriculture products, I am wondering it is 
maybe not proper for this committee to deal with or discuss it.  We believe that this committee's 
mandate is only cotton.  Maybe it is  better for us to stick on cotton. 
 With regard to paragraph 21, it called for speci fic disciplines to be developed to prevent the 
box shifting of domestic support.  The requirement from the African Group is clear.  But now the 
question is what kind of specific discipline?  I also attended the debate on this issue in the agriculture 
special session and it seems that so me Members were suggesting that the boxes shifting from more 
distorting box to less distorting box is welcome and not forbidden.  While box shifting from less trade 
distorting, for example, from Green to Amber w as suicidal because the Amber will be reduced.  So 
the question concerning the box shifting of domestic s upport is what kind of box is trade distorting or 
lesser.  It would help us to work out more precise or to operationalize these ideas if we can get into 
this direction and get some details.  Of course, I understand the discussions here are related to the on-
going discussions in the large agri culture special session group, and for instance, in paragraph 21.1 it 
mentioned that ambitious cotton specific criteria sh ould be developed for the measures authorized 
under the green and blue boxes, and we  believe one of such criteria is to protect the interest of cotton 
farmers in developing country Member s whose livelihood depends on cotton. 
 
So much for my preliminary comments on this paper.  As I said our capital and mission here 
are going to study this paper very carefully with great interests and we are prepared to communicate and talk with African friends and we are going to wo rk with the participants of this sub committee to 
see how we can find proper answers or make appropria te arrangement in order to deliver the Doha 
mandate. 
 Thank you Mr. Chairman. 
  TN/AG/SCC/R/3 
 Page 15 
 
 
 Statement by Cuba  
   Mr Chairman, I would like to join the speakers that congratulated you for your efforts on this issue. 
 
 I would also like to congratulate the African  Group for the excellent proposal they submitted 
to us this morning, a proposal which contains a number of well thought out ideas for solving the 
cotton crisis in the countries concerned ambitiously, expeditiously and specifically, as stipulated in the 
Sub-Committee's mandate. 
 
 Similarly, I would like to express our solidarity with the statements of the distinguished representatives of Benin, Paraguay, Zambia, Brazil,  Burkina Faso and other speakers who took the 
floor before me and supported this proposal.  
 We have listened very carefully to the rema rks made by the distinguished representative of 
China in his statement, and we shall follow with in terest the discussions to take place on that subject. 
  Thank you.   TN/AG/SCC/R/3 
Page 16  
 
 Statement by the European Communities
 
  
I am delighted that this meeting is being held, as it will enable us to get to the heart of the 
trade-related aspects of the cotton issue.  The July 2004 package stipulated that the problem should be 
addressed within the agriculture negotiations
, ambitiously, expeditiously, and specifically.  We are 
ready to do just that.  It is extremely useful to  have concrete proposals before us from the African 
Group.  This is a good starting point, and will enable us to have substantive discussions. 
 
The initiative of the four cotton producing co untries seems to have triggered increased 
awareness on the part of the international comm unity:  the main development partners and the 
international financial and development organizations. 
 
This has certainly been the case for the EC and its member States, as Peter Mandelson's 
speech in Mali testifies.  Last Monday, at the meetin g chaired by Stuart Harbinson, we were able to 
take stock of the different initiatives. 
 
As soon as the Sub-Committee has been set up,  I appealed to members to address the 
substance of the issue under all three pillars.  In th e end, we are lucky to have the same Chairman as 
the Special Session, and the participants are identical.  
Obviously, in due course the discussions in this  forum will have to be incorporated in the 
comprehensive negotiations on agriculture.  However,  there is nothing to prevent us from moving 
ahead, taking account of the specificity of the sector.  We are ready.  We are also prepared to look at 
ambitious solutions.  
For example, we referred to the comprehensive negotiations in the TNC yesterday.  The EU, 
for its part, is determined to complete the Doha Roun d in 2006 and to that end, to consider a fast track 
in the three pillars of the "cotton" sector.  Pete r Mandelson made this clear in his speech in Mali. 
 
However, we must distinguish between the mu ltilateral negotiations - which should result in 
an MFN binding of agreements reached in the areas of domestic support and market access - and what 
the different members can do individually. 
 
At the multilateral level, we are ready to envisage an immediate front-loading as soon as the 
agreements of the Round enter into force.  Under the three pillars, the position is very different from 
the one we have adopted for the other agricultural sectors as a whole. 
 
At the individual level, the European Commun ity has done its share in reforming the cotton 
sector in the framework of the Common Agricultura l Policy.  We do not have any export subsidies, 
and access to our markets will be free as from 1 January 2006.  
As regards domestic support, we will have dec oupled our support to the sector.  There will be 
no more amber box, and 65 per cent will be entirel y in the BB.  In other words, no production 
incentives.  
On the contrary, the ICAC recommends a 30 per cent reduction in cotton production 
following our reform. 
 
As for the multilateral negotiations, we are co mmitting ourselves to expeditious, specific and 
ambitious conclusions.  
Individually, the Community has proven its commitment to finding appropriate solutions for 
the entire sector.  TN/AG/SCC/R/3 
 Page 17 
 
 
 Statement by Paraguay  
  Thank you, Mr Chairman:  
First of all, on behalf of th e delegation of Paraguay, I w ould like to express our sincere 
appreciation for your work and effort towards reso lving the cotton issue, and in particular, for 
remembering and reminding us in the Sub-Committee and on other occasions, as you did in your speech to the Trade Negotiations Co mmittee yesterday, 28 April, that  Paraguay is one of the Members 
that has constantly highlighted the need to address its  particular situation with respect to cotton.  My 
delegation is most grateful for that. We are committed to our work towards presenting concrete 
proposals at the forthcoming sessions of the Sub-Committee. 
We would like to congratulate our friends in the African Group who have submitted the 
communication on proposed elements of modalities in connection with the sectoral initiative in favour 
of cotton, so eloquently introduced by my colleague from Rwanda.  We intend to study it closely,  and 
will present our comments at the next session of the Sub-Committee. 
A delegation from Paraguay is meeting in the ro om next door, where the Second Trade Policy 
Review of Paraguay is taking place.  They regret that  they were not able to attend this meeting, but 
have asked me to convey Paraguay's profound interest  in ensuring that our wo rk leads to the prompt 
resolution of issues affecting the cotton trade. 
I would now like to read the communication prep ared by the delegation of Paraguay for this 
session, under paragraph 1(b) of the work progr amme approved on 22 Ma rch 2005, recommending 
that the work should be "based on technical papers and submissions to be contributed by interested 
participants". 
My delegation would like to make the following points: The Doha Round saw a commitment to take account  of the needs and interests of the poorest 
countries.  We are sure that no Member disagrees with that objective. 
As Members are aware, Paraguay accords particular attention and the highest priority to 
agricultural negotiations in the multilateral trading sy stem, and is a member of the G20 and the Cairns 
Group.  Since the proposals and positions of both groups  in this regard are already well known, there 
is no need for me to reiterate them at this time. 
Paraguay believes that the sectoral initiative in fav our of cotton should be interpreted broadly;  
indeed, its economic status as a developing country mean s that in actual figures, the cotton industry is 
one of the mainstays of Paraguay's economy in terms of job creation in rural areas, particularly on small farms. 
The decline in cotton farming has played a definite part in the deterioration of the economy 
and the drastic increase in unemploymen t and poverty levels in Paraguay. 
In 1991, foreign exchange earnings from exports of cotton fibre and its by-products stood at 
318,912,000 US dollars, or approximately 43 per cent of  the country's total exports that year.  At the 
time, out of a total of 299,259 farm s some 190,000 were cultivating cotton. 
In 2001, those figures were very different: expor t earnings had fallen to US$90,505,000, a 
72 per cent shortfall in the value of exports.  The number of cotton farms dropped that year to 
approximately 90,000, a 52 per cent reduction, also  in terms of employment and revenue for small 
farmers.  This represents a descent into poverty. TN/AG/SCC/R/3 
Page 18  
 
 In Paraguay, 60 per cent of cott on is produced on farms of less than 10 hectares, which means 
that it provides the main or sole income for small agricultural producers and is the primary source of 
employment for the rural workforce in what is th e poorest and most restricted sector in terms of 
capital and technology, and one in which the ma in indicators on socio-economic welfare are among 
the lowest in the country. 
Paraguay has a population of approximately 5,3 00,000, and the number of persons involved 
in cotton production is over 500,000.   The addition of related industries and activities brings the figure 
to approximately 1,500,000 persons, or around 30 per cent of the total population. 
Paraguay hopes that in these development negotia tions systemic and lasting solutions will be 
formulated for agriculture in general and the cotton is sue in particular, to put an end to measures that 
distort international trade and run counter to the basic WTO objectives.   
Let me describe some of the problems involved and measures for resolving the cotton issue in 
Paraguay: 
Tariff and non-tariff barriers:  It must be borne in mind that the cotton fibre market has 
developed over the past decades in competition with othe r textile fibres, especially synthetics.  In fact, 
the proportion of cotton in the global consumption of textile fibres fell from 60 per cent, in 1970, to 
only 40 per cent in the years since 2000.  That dec lining trend closely matched the evolution in the 
relative price of synthetic fibre:  the polyester/cotton price ratio fell from 4:1 in 1960 to 1:1 since 1974, and has remained stable ever  since.  This meant that while world consumption of cotton per 
capita was stable for 40 years at 3 kg. per year, the per capita rate of consumption of other fibres 
increased constantly, from 1.5 kg. per year in 1960 to 4.5 kg. per year in 2002.   
In addition to this market development, the crisis has been exacerbated by the distortive 
effects of high subsidies for domestic production in  industrialized countries (especially the United 
States and the European Union), the main cause of oversupply on world markets.  It is now 
recommended that in order to minimize the harmful effects of the measures previously applied,  
government support in those countries should be linked to neither production nor sale. 
A point of concern that seriously restricts market  access is the tariff peaks and escalation that 
industrialized countries apply to cotton.  Another fact or that dampens the international textile market 
is the significant growth in the export of used  clothing from developed countries to developing 
countries, causing a shift in the potential de mand for new apparel in those markets. 
Strategies for surmounting the problem include the active promotion in all markets of the 
benefits of using cotton for apparel;  policy reform  to pass on a greater portion of the f.o.b. textile 
price to primary producers;  creation of a climate more conducive to the use of new biotechnological 
materials, or supply segmentation, producing orga nic cotton for markets with a high level of 
consumer awareness. 
Paraguay is therefore trying to establish and strengthen its competitive position as a net 
exporter of its traditional products (quality fibre) , and to improve its position with respect to non-
traditional products (textiles and clothing) in orde r to take advantage of such opportunities. 
Paraguay is a beneficiary of a number of de velopment and technical assistance programmes 
led by international organizations – the Bretton Woods Institutions, the United Nations Food and 
Agriculture Organization, the International Trad e Centre (ITC), UNIDO – as well as bilateral 
programmes with certain countries.  TN/AG/SCC/R/3 
 Page 19 
 
 
 Paraguay is a member of the International Cotton Advisory Committee (ICAC), which, along 
with the Ministry of Agriculture and Livestock (MAG ) cotton programme, uses ordinary UNDP budget resources to administer and provide funding where needed. 
In rounding up this information, I would like to present to the Secretariat an overview of 
cotton production in Paraguay. 
Thank you very much for your attention. 
 
Summary of Cotton Production in Paraguay
 
  
• Cotton is a crop of world-wide importance, w ith a consolidated market, and traded as a 
commodity.  Although its indicators fluctuate, ther e is no perfect natural or synthetic substitute 
for cotton that would suggest that there might be problems in the cotton market, even in the long term. 
 
• Paraguayan cotton is unique and occupies a distin ct niche in the international market.  Its 
production is marginal when compared with the large international cotton producers, and since 
it does not have a substantial influence on the ma rket, there is scope for a reasonable degree of 
expansion.  
 
• Production statistics clearly show that Paraguay is  suited to cotton production, which is closely 
bound to small farming communities and the vul nerable sectors of the country's rural 
population.  Cotton is therefore of particular so cial and economic importance, even in the long 
term, given the limitations involved in identifyi ng a substitute crop with similar characteristics 
in terms of market and climatic  adaptation, with which small farmers can identify, and above 
all, that has an overall direct and indirect multiplier effect over broad segments of society. 
 
• There is sufficient installed ginning capac ity for a potential area of approximately 
400,000 hectares. 
 
• Cotton is cultivated by producers whose farm size (between 10 and 20 hectares) has the 
potential to ensure the economic sustainabilit y of the crop and the farm, thereby allowing 
farmers to settle down and improve their living standards. 
 
• Although cotton is unquestionably associated wi th small farmers, there are significant 
technical limitations, ranging from the choice of cu ltivable land, the density of plantings per 
unit area, the inadequate or incorrect use of pesticides, improper handling of harvests, and 
poor access to technical and credit facilities, all of which prevent profitability from reaching 
the level required to strengthen th e recovery of the rural sector. 
 
• It would be possible to use technology adapte d to the conditions under which rural producers 
operate;  and the varieties currently grown have an untapped potential yield that would 
increase production per unit of area by 50 per cent or more.  
 
• The sociological profile of cotton producers would permit the development of projects for the 
production of cotton that differs from other types of cotton, to take advantage of possible emerging market niches such as organic textiles, innovations in the use of colour, fibre length, and so on, that would raise cotton's currently low value-added capacity.  It would also be 
possible to develop projects for the production and marketing of raw cotton with prices and 
premiums differentiated according to quality an d technological characteristics of the fibre, TN/AG/SCC/R/3 
Page 20  
 
 inter alia , that do not currently exist.  The current system does not attach a high value to 
quality, and encourages the adoption of harmful practices that undermine the rating of the fibre in international comparisons, and consequent ly result in market loss and low or zero 
profitability. 
 
  TN/AG/SCC/R/3 
 Page 21 
 
 
 Statement by Rwanda (on behalf of the African Group)  
  Mr Chairman,  Distinguished delegates, 
Ladies and Gentlemen, 
  First of all, Mr Chairman, I would like to congratulate you, and to thank you for the efforts you have made in promoting the issue of cotton in the current negotiations. 
 
 These efforts led to the adoption of the work  programme of the Sub-Committee at our session 
held on 22 March 2005.   I would also like to express appreciation to  all WTO Members for the individual and 
collective efforts that have contributed to the adoption of the work programme, published by the 
WTO Secretariat as document TN/AG/SCC/1, dated 29 March 2005. 
  By adopting this important document, we have  made a commitment to  work steadfastly and 
in depth, on the basis of the Doha Ministerial Declaration and the Framework Agreement adopted at 
the end of July 2004, on all trade-distorting polici es affecting the cotton sector in all three pillars of 
market access, domestic suppor t and export competition. 
 
 A course has thus been set to deal with th e substance since the term s of reference of the 
Sub-Committee on Cotton have been clearly defined (see document TN/AG/13 of 26 November 2004) and its work programme has been established (see doc ument TN/AG/SCC/1 of 
29 March 2005). 
 
 The task is all the more ur gent since the situation on the ground remains critical.  Under the 
July 2004 agreed framework, we a ll undertook to find solutions to the issues raised by the sectoral 
initiative in favour of cotton, as regards both its trade component and its development aspect, by 
addressing the matter "ambitiously, expeditiously and specifically, within the agriculture 
negotiations". 
 
Mr Chairman,   In accordance with the announcement made at the above-mentioned meeting of the Sub-Committee on Cotton, and on the basis of proposals by the four (4) co-authors of the sectoral 
initiative in favour of cotton, the African Group has just finalized and circulated a set of draft 
modalities on cotton, published by the WTO as document TN/AG/SCC/GEN/2, dated 21 April 2005.   The first part of this document gives the historical background to the introduction of the sectoral initiative in favour of cotton by Benin, Burkina Faso, Chad and Mali. 
 
 It goes on to review the evolution of this issue, from its introduction to the action taken by 
WTO Members within the framework of decisions adopted by the General Council at the end of 
July 2004.   On the basis of those decisions and taking in to account the decision of the Dispute Settlement 
Body at its meeting on 21 March 2005, confirming the report of the Appellate Body in the upland 
cotton case, and the report of the working group, as amended by the report of the Appellate Body, 
specific modalities were proposed and circulat ed to Members for their consideration. 
  In accordance with the terms of reference and work prog ramme of the Sub-Committee on 
Cotton and the decisions contained in the July 2004 agreed framework, these proposals address the TN/AG/SCC/R/3 
Page 22  
 
 cotton issue "ambitiously, expeditiously and specifically", while taking into account the 
"trade-distorting policies affecting the sector in a ll three pillars of market access, domestic support, 
and export competition".   With respect to the first pillar
, substantially improved access to cotton markets is sought in 
the form of bound duty-free and quota-free access fo r cotton and its by-products from least developed 
countries (LDCs) that are producers and net exporters of cotton.   Domestic support measures
 that create distortions in the international cotton trade must be 
eliminated by 21 September 2005  at the latest, and specific disciplines are to be developed to prevent 
the box-shifting of domestic support.  Moreover, amb itious cotton-specific criteria are to be developed 
for the measures authorized under the green and blue boxes.   With respect to the third pillar
, all forms of cotton export subsidies should be eliminated by 
1 July 2005 at the latest. 
 
Mr Chairman,   As was stressed at our last meeting, at the present stage in the negotiations, this is no longer the time for speeches and declarations of intent.  
 Within this framework, we ar e awaiting specific responses to our equally specific proposals, 
and we would like to be able to count on the coop eration of all the parties involved and of all WTO 
Members in constructive discussions that are likel y to facilitate the expeditious and ambitious 
settlement of this issue.  
Mr Chairman,  
  The African Group submission also underscores th e balance that needs to be struck between 
the trade negotiations, as such, and the measures to be taken with respect to the development 
component.  
 Among other measures to be adopted in this  regard, the communication from the African 
Group recalls one of its basic concerns, namely, th e creation of an emergency support fund for cotton 
production.  The major concern is to provide a saf ety net of measures capable of safeguarding the 
survival of the cotton sector, pending the correction of imbalances in the multilateral trading system 
that seriously jeopardize cotton production. 
 
 The resources allocated to this fund, which is  to be managed by a tripartite commission made 
up of representatives of the donors, the producers, and the governments, would be  equivalent to 20 per 
cent of the value of cotton production for the most favourable of the three (3) most recent years in 
each of the countries concerned, and these resour ces would decrease in proportion to the pace of 
elimination of the domestic support measures and subsidies at issue. 
 
 In conclusion, the African Group hopes to be  able, as usual, to count on your personal 
involvement and tact in moving this issue forw ard, as well as on the willingness of all Members to 
facilitate your task by working to secure the swif t settlement of the problems raised in the sectoral 
initiative in favour of cotton. 
 
 Thank you.    TN/AG/SCC/R/3 
 Page 23 
 
 
 Statement by Tanzania  
   Mr. Chairman,  
 I am taking the floor to add on the statements made by Rwanda for the African Group, and 
those by Benin and other delegations.  First of all my delegation wants to thank you Mr. Ch airman for convening this meeting as part of your 
tireless efforts in an attempt to  advance the issue of cotton. 
 
 Mr. Chairman, Tanzania is among the LDCs and developing countries that are severely 
affected by the very costly and disappointing trend in  cotton.  Because of the international distortions 
in production and trade, millions of our peasants a nd farmers have to endure persistent and worsening 
unrewarding prices, sinking them into deeper poverty and other difficulties, at the same time 
threatening our national efforts for economic transformation. 
  In view of these realities, Tanzania would like to urge the entire membership to recognize in 
more concrete way that the issue of cotton to some of us is a matter of survival.  Even more so for 
Tanzania and other developing countries particularly LDCs, our options for survival are too limited.   
 
 A positive solution is therefore needed most urgently along the line proposed by Rwanda for 
the African Group, at least for a start.   I thank you.  TN/AG/SCC/R/3 
Page 24  
 
 Statement by the United States
 
   The United States recognizes the enormous challenges faced by West Africa cotton farmers and is committed to global agricultural trade re form. Ambitious trade liberalizing reforms are 
essential if we truly want to expand Africa’s agricultural trade and address poverty. 
 
 We are in the process of reviewing the Afri can proposal for a Sectoral Initiative for cotton 
and have some initial reactions. 
 
 As highlighted in the proposal, we understand the critical role cotton plays in the economic 
and social development of the African region.   We are committed to addressing development 
obstacles facing these countries through assistance programs.   Our position on an emergency fund remains uncha nged.  We do not believe a stabilization 
fund is the best way to address the development obst acles facing West African countries in this sector.  
It would be an anti-competitive approach that would only promote greater inefficiencies in the cotton sectors of the C-4.  For this reason the United Stat es supports good government policies coupled with 
targeted aid for this purpose.     The proposal calls for balanced rules and the need  to correct asymmetry.  We agree.  For this 
reason we are pursuing very ambitious reforms for cotton and other sectors as well.  However to get 
meaningful reform this can only be achieved in a single undertaking.   Realistically, we can’t deal with cotton, or any other element, separately.   It would be logical to get all details in the three pilla rs negotiated before we begin to talk about implementation.   An 
early harvest only undermines the momentum of the negotiations and thre atens the cross-cutting 
approach.   If we are committed to solving the difficulties fa ced by West African farmers, we must admit 
that trade in cotton is affected by many factors.  While subsidies may play a role, other factors include high or unpredictable tariffs and discretionary TRQ ad ministration, as well as market trends in fabrics, 
including competition with synthetics.  And, speci fically, domestic marketing arrangements in many 
West African countries negatively impact the price actually paid to farmers.    On cotton, the United States is committed to implementing the WTO Cotton decision.  We are also ready to negotiate commitments as part of th e Doha negotiations but onl y in a manner consistent 
with the July framework: within the co ntext of the agriculture negotiations. 
   TN/AG/SCC/R/3 
 Page 25 
 
 
 Statement by Zimbabwe  
   Thank you Mr. Chairman.  We would like to support the statement (proposal) by the African Group and those who have  spoken before us. 
 
 Cotton is the second major cash crop in Zimbabwe and it generates a lot of employment for our small farmers about 200 000.  A lot more sm all farmers are moving into cotton production under 
the agrarian reform programme.  And yet, things are not looking good for these farmers.  In a normal 
year, Zimbabwe produces about 300 000 tonnes of cott on but due to the drought conditions that have 
been experienced in the last three seasons, includi ng the current, production has significantly reduced. 
  Mr. Chairman, the price of cotton on the exte rnal market has dealt a major blow to our 
farmers.  About 70% of the cotton produced is exported.  In the 2003 – 2004 season, our farmers 
received US$0.36 per kg against their expectation of US$0.56 per kg. 
 
 This year, the cotton merchants are offering a price as low as US$0.16 per kg as the buyers are determined to pay the lowest price for this ve ry valuable commodity whose price has been falling 
on the world market.   Mr. Chairman, we look forward to a resolution of the problems which we are experiencing, 
not just in Zimbabwe, but the African continent an d other developing countries.  The proposals made 
by the African Group are relevant in this regard.   Thank you.  
 
 TN/AG/SCC/R/3 
Page 26  
 
 Annex 3
 
 
Statement by the Secretariat 
at the Third Meeting of the Sub-Committee on Cotton held on 29 April 2005 
  
Agenda Item B(i):  Coherence between Trade and Development Aspects:
 
Update on the Development Aspects  
  
The initial report by the Secretariat under this agenda item was at the Second Meeting of the 
Sub-Committee on Cotton, on 22 March.  That Report was circulated under Job No: 1969.  The Secretariat is pleased to provide a further update  to this Third meeting of the Sub-Committee on 
Cotton. 
The 3
rd Round of Informal Consultations on the Development Assistance Aspects of Cotton, 
took place this week, on Monday, 25 April.  At the consultations, the three principal stakeholders: the 
Cotton Proponents; the bilateral donors; and, the re levant multilateral agencies, participated fully. 
Participants engaged interactively and constr uctively, and the results were positive.  The 
information exchanged indicated evidence of further progress, going beyond what had been 
previously reported to the Sub-Committee on Cotto n on 22 March.  Information reported showed a 
wide range of actual projects under way and pla nned, with new and enhanced opportunities for 
accelerated development assistance for cotton sector  programmes, projects and activities.  The cotton 
proponents welcomed the progress that emerged at th e consultations.  Benin, on behalf of the cotton 
proponents, conveyed appreciation to bilateral donors and multilateral agencies, and was explicit in 
expressing "optimism", albeit cautiously, on the new information provided on cotton development 
assistance.  Benin expressed the hope for further im provements by the next Round of consultations. 
Participants reaffirmed the pr iority accorded to the cotton i ssue and the necessity for ensuring 
coherence between the trade and the development aspects.  The importance attached to the cotton 
issue by the Director-General was underlined by Mr. Stuart Harbinson, who chaired the meeting.  The 
continuing commitment to coherence between the tr ade and development aspects, and the agreed 
treatment of the trade aspects w ithin the framework of the Agricu lture negotiations were underscored 
by Ambassador Tim Groser, Chairman of the S ub-Committee on Cotton, who participated at the 
meeting. 
Members may wish to note four (4) specific de velopments, which emerge d at the consultations 
and which would be more fully elaborated in the next substantive periodic report by the Director-
General.  These developments relate to the sp ecific contributions by bilateral donors, multilateral 
institutions, and the issue of coordination. 
• First , bilateral donors, namely, the European Co mmission, Germany, Japan, Canada and the 
United States intervened to provid e information on recent, concrete , positive  developments, and 
enhanced opportunities  for development assistance on cotton.   
- The European Commission  confirmed the allocation of f unds for the all-ACP capacity 
building programme on commodities, for an indicative amount of €45 million, with €15 million dedicated to cotton.  Areas for progra mme focus were specified.  The EC report 
showed a response to earlier Secretariat appeal for bilateral attention to the critical area 
of "price risk management".  It confirme d, " ... attention to the issue of risk 
management, since risk mana gement schemes offer innovativ e and efficient means for 
countries and producers facing yield or price fluc tuations to stabilise their incomes".  In 
doing so, the EC announced the contribution of €25 million to the new "Global Index  TN/AG/SCC/R/3 
 Page 27 
 
 
 Insurance Facility", being developed by th e World Bank.  The EC expressed the hope 
that its contributions would help leverage additional res ources from other donors.  The 
EC also announced financial contributions and support to cotton at the national levels in 
the proponent countries: €10 million for Burkina Faso; €15 million for Mali; €10 million for Benin; and, €5 million for Chad.  Beyond the 4 proponents, the EC provided 
information on the re-programming of uncom mitted Stabex funds to support Cotton 
projects in Senegal, Côte d'Ivoire and Togo.  Beyond these financial commitments in support of national cotton-specific programmes, the EC also provided information to show that it was supporting other areas of the national economy and related drivers of 
competitiveness.  And in this broader cont ext, the EC had allocated new additional 
resources for the proponents namely: €18 million for Benin; €95 million for Burkina 
Faso; €50 million for Mali.  And even more, the EC clarified that it had now switched the budget heading for "unforeseen expendi ture" funds so that these were now 
programmable by individual country.  As a direct result, €52 million was now 
specifically allocated to Benin; €60 milli on to Burkina Faso; €30 million to Mali; and, 
€5 million to Chad.  The EC finally, repor ted that it was developing the regional 
dimension  of the "EU-Africa Cotton Partnership" in three ways namely: through support 
for regional activity on the regulatory environment affecting the cotton sector; the EC regional programme for West Africa encompassing trade facilitation on customs; and, through support for "cotton instrument classi ng" for a higher international recognition of 
the quality of African cotton.  This "regional dimension" was also prominent in the 
EC/ACP negotiations on Economic Pa rtnership Agreements (EPAs).   
- Germany
, in complement to the statement by th e EC, informed participants about the 
centrality of donor harmonization in the ac tivities of the EC, an area where Germany 
was, inter alia , contributing through coordination the "Global Donor Platform for Rural 
Development".  Under this 24-donor country  platform, four pilot countries were the 
target of donor coordination efforts.  Burkina Faso had been identified as a pilot 
country.  Chad and Mali would follow shortly.  Germany was pursuing and implementing sustainable projects on textiles and clothing, linked to cotton.  Germany underlined, in particular, collective support by the European Communities to the Cotton 
Proponent countries for fiscal support and institutional development.   
- Japan
 announced new opportunities within its  development co-operation framework 
under the TICAD process.  Japan informed participants about Prime Minister Koizumi's 
announcement at the Asia-Africa Summit, in I ndonesia, 22-23 April, that assistance to 
Africa would be doubled in the next three y ears, with grant assistance as the central 
element.  Japan invited cotton proponents to submit cotton-sector projects immediately , 
as this was the start of the 2005 Fiscal Year for Japan.  
- Canada  provided information on the quantum of its development assistance on the basis 
of country-established priorities.  Canada c onfirmed its continuing preference and the 
rationality of providing assistance through coordinated programmes such as the Integrated Framework for Trade-Related T echnical Assistance to the Least-Developed 
Countries (IF) and the JITAP.  Canada reported that since the last Informal Consultations in November, Canada has set -aside more funds for the JITAP and the 
Integrated Framework.  Priorities s hould be expressed through PRSPs or other 
development plans.  This was the best wa y to ensure maximum value for money and 
donor coordination.  This was how Canada 's considerable Overseas Development 
Assistance to Africa is managed.  Canada also announced its Initiative on, "The Africa 
Trade Policy Centre of the Economic Commis sion for Africa".  This was established 
and was functioning with Canada's support.  It was focused on research and enhancing 
negotiating capacity for African Trade Negotiato rs.  It was available as a resource to the 
Cotton Proponents.   TN/AG/SCC/R/3 
Page 28  
 
 - The United States
 reported comprehensively on programmes, projects and activities 
completed, underway, and planned.  These are directly linked to cotton-specific financial and technical assistance, and also set within the broader framework of development assistance and co-operation.  They had positive linkages to the cotton 
sector.  There were several aspects to the in formation provided by the United States.  
The starting point was the oppo rtunities existing under the MCC .  Proponents were 
informed that the Millennium Challenge Corporation (MCC) presented an important avenue for grant-funded development assistan ce for eligible countries, which could also 
directly assist the cotton sector.  However,  it was pointed out that the provision of 
specific types of assistance under the MCC, ultimately depended on priorities set by 
countries themselves.  To illustrate the basis for considering the direction of assistance, 
the United States noted, for instance, that Benin had submitted a project proposal valued at US$ 198 million, over 4 years, which would be the basis for discussions.  The proposal focused on increasing regional and international market access for Benin's 
agricultural products, although not specifically targeted at cotton.  Similarly, Mali had 
submitted a project proposal valued at US$ 212 million, over 5 years, which would be 
the basis for discussions.  Although not directly focused on cotton, the proposal was focused on agribusiness products like rice a nd mangos, but which should have positive 
knock-on effects for cotton.  Senegal ha d submitted a proposal valued at US$ 251 
million, over 4 years, which would be the basis for discussions.  The proposal was largely focused on constructing primary roads at  site and utility infrastructure.  Burkina 
Faso, a threshold country under the MCC, ha d submitted a project proposal valued at 
US$ 12 million focused exclusively on policy reforms to promote female education.  
Thereafter, the United States reported on  the West Africa Cotton Development 
Program .  US$ 29 million had been expended by USAID on agricultural programs in 
FY 2004 in West Africa and $ 126 million for all of Africa.  In response to the Sectoral 
Initiative on Cotton, USAID was designing a development assistance package for the 
region focused exclusively on cotton.  This Package would be launched in June 2005.  
USAID was working in partnership with othe r donors to ensure that the program was 
part of a multilateral approach.  The 15 areas covered in the design are elaborated in the 
report by the United States, and resulted from an assessment visit to the 4 Cotton Proponent countries.  In the near term, within the next 1 to 2 months, USAID would 
intervene in 6 areas elaborated in the US report.  These range from strengthening private 
agricultural organizations, to linking US and West Africa Agricultural Research 
Organizations, arresting soil erosion and degradation, expanding the use of good 
agricultural practices in cotton farming, establishing a West African Ginning School, and improving cotton quality th rough better seed cotton grading and classing.  The US 
also reported on exchange programmes fo r capacity building, organization of 
specialized conferences and training, particularly in the areas of biotechnology, 
biosafety, and entomology.  Detailed informa tion was provided on the US "Initiative to 
End Hunger in Africa" Programme, on whic h US$ 45 million had been expended in 
Fiscal Year 2004.  Other on-going activities were reiterated.   
• Second
, multilateral agencies namely, the FAO, UNIDO, ITC and the IMF detailed their 
contributions.  They provided meaningful and substantive progress reports on earlier announced 
programmes, projects and activities underway and planned.  These reflected further 
developments.   
- FAO underlined various areas of its work on cotton, drawing attention to its submitted 
proposals for a "Regional Programme on Textiles and Competitiveness".  And also to its proposals on cotton competitiveness and sustaina bility in selected African Countries.   
- UNIDO reported on its contributions to suppor t national and regional strategies to build 
up new policies and institutions to acquire necessary technology to strengthen the chain  TN/AG/SCC/R/3 
 Page 29 
 
 
 integration processes needed to obtain more valued-added for cotton producers.  
UNIDO announced the launch, in the week of 18 April, in Ouagadogou, of a new Programme: "Development of the Cotton, Textiles and Garment Value Chains and Networks in Africa: Supporting Trade and Building Productive Capacity".  The purpose 
of the UNIDO programme is to enable th e selected African countries improve the 
volume of raw cotton processed inside Africa to at least 25% of the level of the volume 
of production of cotton fiber.  UNIDO invited agencies and donors to join in its efforts.   
- ITC made a case for a sales, marketing and promotion component for cotton project 
proposals by both donors and agencies.  ITC's technical assistance is demand-driven.   
- Notably, the IMF informed participants a bout its forthcoming Cotton Seminar to assess 
the macroeconomic consequences of cott on price developments for the region, 
particularly for the main cotton-producing count ries, and also to consider concrete steps 
that would safeguard progress in the region towards achieving the Millennium 
Development Goals (MDGs).  The objective would be to preserve macroeconomic and 
fiscal stability during a period of very low cotton prices.  The Seminar would take place 
in Cotonou, on 18 May.  It would be atte nded by Mr. de Rato, the Fund's Managing 
Director, the Finance, Agriculture and Trad e Ministers of the Cotton Proponents, cotton 
farmers, producers and representatives from the industrial countries, and the WTO.  Participants at the Informal Consultati ons, and Benin, speaking for the proponents 
welcomed and acknowledged the timely necessity for the imminent seminar.   
• Third
, Benin, on behalf of the proponents, expressed  optimism with the information provided on 
the implementation of programmes, projects a nd activities underway, and the information also 
provided on enhanced opportunities by bilatera l donors and agencies.  They expressed the hope 
that future developments would maintain this  positive turn.  The proponents acknowledged that 
they had responsibilities of their own to impl ement.  They remained committed to their 
responsibilities.  However, they appealed to partic ipants to bear in mind their critical dependence 
on the cotton sector, its relationship to their overall macroeconomic performance and their 
poverty reduction efforts.  Account needed to be  taken of the fact that the cotton sector was 
undergoing a crisis.   
• Benin informed participants that they had s ubmitted project proposals on cotton.  Burkina Faso 
and Mali indicated that they would soon submit their project proposals.  Uganda expressed the 
hope that the emerging benefits and opportunities would also cover and apply to other African 
countries that produce and trade cotton, beyond the 4 proponents.  Mali requested that the 
development and financial assistance from the Islamic Development Bank should be 
acknowledged in subse quent reports.   
• Finally , participants at the consultations acknowle dged the progress on coordination of efforts.  
Nonetheless, it was recognized that this was an area that required conti nuous work and further 
improvements. 
Further reports will focus on the actual implementation of the many projects and programmes 
that are actively underway. 
Participants agreed to convene the next – 4th Round – of Informal Consultations in July, on a 
specific date that is yet to be fixed. 
 
  TN/AG/SCC/R/3 
Page 30  
 
 Annex 4
 
 
Statements at the Third Meeting of the Sub-Committee on Cotton held on 29 April 2005 
 
 
Agenda Item B(iii):  Coherence betw een Trade and Development Aspects  
Update on the Development Aspects  
  
Statement by Benin
 
 
 Mr Chairman, Excellencies, Representatives of International Organizations, and Regional and Sub-re gional Organizations, 
Distinguished Delegates, 
Ladies and Gentlemen,   On behalf of my delegation, I would like to  thank you, Mr Chairman, as well as Mr Chiedu 
Osakwe for his update on the work and initiatives c onducted by the bilateral and multilateral partners 
on the development aspect of cotton. 
 
 My delegation endorses the statement made by Rwanda on behalf of the African Group 
 Mr Chairman,  
 We have embarked on an equally important aspect of the cotton issue. 
  In that context, we welcome the statemen t made in Bamako by Mr Peter Mandelson, 
European Commissioner for Trade, on 19 April.   At the end of July last year we had identifi ed this aspect as another major dimension of cotton 
that complements the trade aspect. 
  The WTO General Council therefore rightly ur ged Members of this Organization and of 
international, regional and sub-re gional institutions to work, in lin e with the recommendations of the 
WTO African Regional Workshop on Cotton held in  Cotonou from 23 to 24 March 2004, towards 
providing technical and financial assistance to streng then the cotton industry in Africa, and "to direct 
effectively existing programs a nd any additional resources toward s development of the economies 
where cotton has vital importance".   I would like to take this opportunity to exte nd my heartfelt thanks to the bilateral and 
multilateral partners that have so promptly iden tified activities and pledged financial support for the 
cotton industry in African cotton producing countri es, since cotton production is a vital sector for 
these poor and vulnerable countries.   This is also a good opportunity to invite the bilateral and multilateral pa rtners that have not 
yet done so to follow suit, without further delay;  indeed their efforts and initiatives to support the 
cotton industry in Africa would be welcome. 
  Every contribution to that effort counts and would be much appreciated.   TN/AG/SCC/R/3 
 Page 31 
 
 
  In order to ensure visibility in the pledges a nd activities, my delegation would like to reiterate 
the recommendation formulated by Rwanda that technical and financial assistance provided for cotton production should reach each of the 33 African cotton producing countries. 
  To that end, in presenting the status reports on the development aspect of cotton, the WTO 
Secretariat should prepare a logbook recording th e technical and financial assistance activities 
conducted in respect of each A frican cotton producing country. 
  This would enhance follow-up on the implementa tion of the activities, initiatives, projects and 
programmes identified for cotton. 
  
 I would also like to take this opportunity to remind you that the International Monetary Fund 
will be organizing an international seminar on the macroeconomic impact of the decline in global 
market prices on cotton in Cotonou on 18 May 2005.  
 I invite WTO Members and international, regi onal and sub-regional ins titutions to participate 
in this important meeting at which the problems facing the African cotton industry will be discussed 
from a truly international perspective.   Thank you.  TN/AG/SCC/R/3 
Page 32  
 
 Statement by the Rwanda (on behalf of the African Group)
 
  Mr Chairman,  
Distinguished delegates, 
 Ladies and Gentlemen, 
 
 
 We have held three (3) consultation sessions on the development aspect of the cotton issue 
(22 October 2004, 18 Nove mber 2004, and 25 April 2005).  These c onsultations were held pursuant to 
the mandate set for us by the WTO General Counc il in the Framework Agreement concluded at the 
end of July 2004, expressly stating that "the Council in structs the Secretariat to continue to work with 
the development community and to provide th e Council with periodic reports on relevant 
developments".  It also "instructs the Directo r-General to consult with relevant international 
organizations, including the Bretton Woods Institu tions, the Food and Agriculture Organization and 
the International Trade Centre, to direct effectiv ely existing programmes and any additional resources 
towards development of the economies where cotton has vital importance".   With respect to the development component of the Sectoral Initiative in Favour of Cotton, the 
African Group would like to thank the bilateral and multilateral partners that  have already adopted 
tangible measures to provide technical and financial support for the cotton sector in Africa.   The importance of these measures is clear from the periodic reports on th e priority given to 
cotton under their respective cooperation programmes.   
 
 We urge them to strengthen these measures and to take into account our concerns regarding 
the establishment of an emergency support fund for cotton production.   We hope that these various reports will take in to consideration, not only the action taken in 
favour of the four (4) countries that co-sponsored the Sectoral Initiative in Favour of Cotton, but also 
the work carried out or planned in behalf of th e other twenty-nine (29) African producers and net 
exporters of cotton.   It would also be advisable for these reports to highlight the developments regarding the 
activities undertaken, by clearly underscoring additio nal efforts made specifically for the cotton sector 
in the above-mentioned countries. 
  In closing, we would like to invite the ot her partners that have not yet expressed their 
intentions under the development aspect of the Sect oral Initiative in Favour of Cotton to do so as soon 
as possible.  
 Thank you. 
__________