WORLD TRADE  
ORGANIZATION  TN/AG/SCC/W/8 
11 July 2007 
 (07-2952) 
Sub-Committee on Cotton  
  
 
IMPLEMENTATION OF THE DEVELOPMENT ASSISTANCE ASPECTS OF THE 
COTTON-RELATED DECISIONS IN  THE 2004 JULY PACKAGE AND 
PARAGRAPH 12 OF THE HONG KONG MINISTERIAL 
DECLARATION 
 
Item 2C:  Coherence Between Trade and Development Aspects:
 
Update on the Development Aspects of Cotton  
 
Secretariat Progress Report 
   
 
 
 
 
 
 
 
I. INTRODUCTION 
1. This is the fourth Progress Report to the Sub-Committee on Cotton (SCC), on the 
development assistance aspects of cotton, pursuant to paragraph 12 of the Hong Kong Ministerial 
Declaration.
1  Since the last report to the SCC, there have been three specific developments.  The 
Director-General convened a High-Level Session (HLS) on Cotton from 15 to 16 March 2007;  
follow-up action was initiated subsequent to the March 2007 HLS;  and, the 8th Round of the Director-
General's Consultative Framework Mechan ism on Cotton took place on 18 June 2007.   
II. HIGH-LEVEL SESSION ON COTTON 
2. The Director-General convened a HLS on Cotton, from 15 to 16 March 2007.  The HLS 
responded to the request of the cotton proponents for such a meeting.  The HLS, which the WTO 
General Council endorsed at its 7 Februa ry 2007 meeting, was convened to:  
 - take stock of action so far, consolidat e and explore scope for further progress on the 
implementation of the mandate on cotton development assistance;  
 
 - take stock of the state of play on th e trade policy aspects within the agriculture 
negotiations;  
  - assess progress on coherence between the trade policy aspects and the development   aspects; and,  
                                                     
 
1 "We invite the Director-General to  furnish a third Periodic Report to our next Session, with updates at 
appropriate intervals in the meantime, to the General Council, while keeping the Sub-Committee on Cotton fully 
informed of progress".  (WT/MIN(05)/DEC):  paragraph 12. This document has been prepa red under the Secretariat's own 
responsibility and without prejudice to the positions of Members 
and to their rights and obligations under the WTO. TN/AG/SCC/W/8 
Page 2  
 
   - seek further information and clarity on domestic cotton sector reforms in the cotton 
  proponent countries.    3. Participants, including Ministers, at the HLS e ngaged in an intensive exchange of views.  
Emerging from this exchange of views, was an U nderstanding on how to pr oceed.  This included, 
inter alia , necessary adjustments in format and me thodology to the Evolving Table on Cotton 
Development Assistance (WT/L/684);  bridging the gap between commitments and disbursements;  
improving the pace of operational implementation by the development community;  improving 
coherence at all levels;  and, c ontinued domestic reform efforts in the cotton proponent countries.   
4. This Understanding was reflected in the Su mmary Concluding Remarks by the Director-
General, circulated to WTO Members.
2  The Director-General addressed a letter to all WTO Members 
on 4 June 2007.  This letter updated Members on fo llow-up action sequel to the HLS and circulated a 
revised version of the Evolving Table. 
III. DIRECTOR-GENERAL'S CONSULTATIVE FRAMEWORK MECHANISM ON 
COTTON – 8TH ROUND 
5. The 8th Round of the Director-General's Consu ltative Framework Mechanism on Cotton took 
place on 18 June 2007.3  The consultations focused on two broad areas:  updated analysis by the 
World Bank and the International Cotton Advisory Co mmittee (ICAC) on recent central trends in the 
global cotton market;  and follow-up action, on  seven specific areas, to the HLS on Cotton. 
6. In accordance with the coherence mandate on the trade policy and development assistance 
aspects of cotton, Ambassador Crawford Falcone r, Chairman of the Committee on Agriculture 
Special Session / Chairman of the Su b-Committee on Cotton, briefed the 8th Round on the status of 
the negotiations on the trade policy aspects of cotton.     
7. World Bank and ICAC updated analysis on the cen tral trends in the global cotton market 
made evident several facts.  The global cotton market continued to be characterized by short-term price volatility and a long-term downward trend.  The market had experienced enormous productivity 
gains as a result of new technology and significan tly improved Good Agricultural Practices (GAP).  
Analysis, and the subsequent exchange of views on the challenges confronted by African cotton 
proponents, indicated a complex set of factors.  These included government measures (domestic support and border tariff measures);  productivity ch allenges;  exchange rate movements;  and 
changes in technology.  The presentations by th e World Bank and ICAC would be circulated to 
participants on request.   
A. TRADE
 POLICY  ASPECTS 
8. Ambassador Falconer gave a status report on  the trade policy aspects of cotton in the 
agriculture negotiations.  He reiterated the mandate  for ambition, specificity and expeditiousness on 
cotton.  He noted that the more recent intense engagement amongst Members was positive for cotton.  
Discussions on aggregate measurement of support (A MS), Blue Box and overall trade distorting 
domestic support (OTDS) were a dvancing, and logically, this should have positive effects for 
addressing cotton.  There was much more convergence on AMS product-specific caps.  Although there was no agreement yet on the base periods fo r AMS product-specific caps, there was movement 
towards a common view.  There was greater enga gement and willingness to speak about commodity 
specific commitments in the old Blue Box and new Blue Box (but no agreement yet).  On OTDS, although there were no new numbers to report, there was "movement to a more realistic zone about 
                                                     
 
2 TN/AG/SCC/W/7.   
3 Mr. Stuart Harbinson chaired the 8th Round of Consultations on behalf of the Director-General.  TN/AG/SCC/W/8 
 Page 3 
 
 
  what the numbers might be."  Ambassador Falconer re-affirmed the "obligations for cotton" 
(mandate).  He  reminded participants that the Cott on-4 proposal remained on the table.  He informed 
participants that in the recent consultations on the "Challenges Paper", "the important message 
emanating on cotton" was that there should be "ade quate informal processes undertaken in the near 
future".  Ambassador Falconer concluded that th e resolution of the trade policy aspects of cotton 
remained a part of the multilateral process.  
B. DEVELOPMENT  ASSISTANCE  ASPECTS 
9. Six specific items for follow-up were considered.   
i) Evolving Table on Cotton Development Assistance  
10. The Secretariat introduced the revised Evol ving Table on Cotton Development Assistance 
(WT/L/684), circulated to all WTO Members by the Director-General on 4 June 2007.   Intervening 
participants welcomed the change s in format and methodology.  They considered that the changes 
were on the right track and reflected the essence of the Understanding that had emerged at the 
March 2007 HLS.  Beyond these preliminary comments by all intervening participants, there was a 
range of further reactions.  Several of the recipi ents of cotton developmen t assistance indicated that 
they would forward the Table to thei r capitals for further and deeper reflection.  Some, at a later stage, 
would offer suggestions on re-categorization of a fe w individual entries.  Specific concerns were 
expressed on Part III by the C4, regarding how the resources released from the Multilateral Debt 
Relief Initiative (MDRI) should be reflected.4  
11. The bilateral donor community expressed partic ular satisfaction with the new categories 
which, inter alia , clearly showed the distinctions between available, committed and disbursed  
resources.  They took the position that cotton develo pment assistance was part of Aid for Trade and 
should be mainstreamed and fit into the broade r Aid for Trade agenda.  One member of the 
development community suggested that the Secretaria t could consider setting out the principles for the 
sorting and categorization of entries. 
12. Participants carefully examined the issue of th e periodicity for revising the Evolving Table.  
One suggestion was made for bi-annual revisions.  A nother suggestion was for account to be taken of 
different country fiscal cycles.  In light of differe nt positions, it was concluded that this issue would 
require further consultations. 
ii) MDRI Resources - Flexibility in Use  
13. The IMF and the World Bank confirmed flexibilit y in the use of the resources resulting from 
the Multilateral Debt Relief Initiative (MDRI).  The stat ements noted that, although the original use of 
MDRI resources were targeted to the achievement  of Millennium Development Goals (MDGs), these 
resources could be applied to the cotton sector in  instances where cotton had been identified as 
priority in the country's poverty-reduction strate gy.  Furthermore, the position was affirmed that 
actual attribution of cotton specific values in the Table must be left to the recipient countries 
themselves following specific domestic cotton sector allocations. 
                                                      
4 Following the 8th round of consultations, C4 reactions have been circulated in document WT/L/685. TN/AG/SCC/W/8 
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  iii) Fonds de Lissage /Smoothing Mechanism
 
14. The World Bank made a presentation.  The presenta tion surveyed the issues of pivot reference 
price, global market price, deficits in smoothing mechanisms and long-term issues relating to the 
viability of such mechanisms.  It was noted that pilo t projects were being considered for application in 
Burkina Faso and Senegal.  Questions raised in discussions included funding sources for such 
mechanisms.   
15. For the next round of consultations, partic ipants requested the invitation of the Agence 
française de développement  to provide a progress report.  UNCTAD indicated that it would report on 
its work in this area at the next round. 
iv) South-South Cooperation  
16. Brazil, China and India reported on cotton deve lopment assistance within the framework of 
south-south cooperation.  Assistance provided rela ted to cotton seminars, workshops and capacity-
building exercises organized for the recipient countr ies.  In addition, assistance from China and India 
encompassed the cotton/textile and clothing value chain.  In the context of these reports, India 
informed participants that it was working to  finalize duty-free quota free market access for 
least-developed countries, in a phased manner, for 2007.   
17. ITC reported on its capacity-building programme s in cooperation with India and China for 
African cotton producers from East, West and Central A frica.  It informed participants that its "Cotton 
Exporter's Guide" would be in circulation by Se ptember 2007.  The purpose would be to match Asia 
region cotton demand with African cotton production.   
v) Cotton Proponents Domestic Sector and Other Reforms  
18. Benin, Burkina Faso and Mali reaffirmed th eir commitment to domestic cotton sector and 
other reforms.  Benin5 and Burkina Faso6 had previously provided detailed information on their 
domestic cotton sector reform.  They undertook to u pdate the situation as the reforms evolved.  The 
EC requested Benin to provide, at the next ro und of consultations, the details of the recent 
reorganization of its cotton industry, and in particular, the creation of the new body:  Comité national 
transitoire de gestion de la filière coton .   
19. Chad informed participants that its domestic  reform document was undergoing "validation".  
As soon as this process was completed, the reform document would be circulated. 
20. Uganda reported that it had already undertake n domestic cotton sector and other reforms on 
the basis of World Bank and IMF recommendations.   
21. Uganda and Nigeria drew the attention of pa rticipants to their identified cotton sector 
priorities.  They informed participants that their project documents for development community 
support would shortly be circulated.   
22. The development community repeated an earlie r point that circulation of projects for 
development community support, under the mandated Geneva process  on cotton development 
assistance, must work in tandem  with the submission of same projects to development community 
representative offices in a coherent  in-country process . 
                                                      
5 WT/L/646. 
6 WT/L/645.  TN/AG/SCC/W/8 
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  vi) Commitment/Disbursement Gap and Operational Implementation Pace  
23. The Chairman underlined the high priority attach ed by the Director-General to bridging the 
gap between commitments and disbursements. The Chairman noted that the Director-General considered significantly improved disbursements an d a faster pace of operational implementation as 
indispensable for credibility in the implementation of the mandate on cotton development assistance.  
Furthermore, these two issues had direct implications in Aid for Trade implementation and related 
areas of WTO trade capacity-building.  On e delegation underscored the points by the 
Director-General and, in addition, stated that updated disbursement figures and reporting were crucial 
for two reasons.  It was consistent with the Paris principles on aid effectiveness.  And, implementation 
challenges could not be effectively addressed  in the absence of updated reports.   
 
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