WORLD TRADE  
ORGANIZATION  TN/AG/SCC/W/21 
25 May 2005 
 (05-2132) 
Sub-Committee on Cotton  
  
IMPLEMENTATION OF THE DEVELOPMENT ASSISTANCE ASPECTS OF THE 
COTTON-RELATED DECISIONS IN THE JULY PACKAGE 
 
Item 2C: Coherence Between Trade and Development Aspects:
 
Update on the Development Aspects of Cotton   
 
Third  Meeting of the Sub-Comm ittee on Cotton (29 April 2005) 
 
Secretariat Progress Report  
    
 
 
 
 
1. 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.   
2. The 3rd 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 rele vant multilateral agencies, participated fully.   
3. 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 ne w information provided on cotton development 
assistance.  Benin expressed the hope for further impr ovements by the next Round of consultations.   
4. Participants reaffirmed the prio rity accorded to the cotton issu e and the necessity for ensuring 
coherence between the trade and the development as pects.  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.   
                                                      
1 This document is an update to the First Periodic Report by the Director-General to the General 
Council, circulated under  the symbol WT/GC/83. 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/2 
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 5. Members may wish to note four (4) specific developments, which emerged at the 
consultations and which would be mo re fully elaborated in the next substantive periodic report by the 
Director-General.  These developments relate to the specific 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 prov ide information on recent, concrete , positive  developments, and 
enhanced opportunities  for development assistance on cotton.   
- The European Commission  confirmed the allocation of funds for the all-ACP 
capacity building programme on commodities, for an indicative amount of €45 million, with €15 million dedicated to cotton.  Areas for programme 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 confirmed, 
" ... attention to the issue of risk mana gement, since risk management schemes 
offer innovative and efficient means for countries and producers facing yield or price fluctuations to stabilise their inco mes".  In doing so, the EC announced the 
contribution of €25 million to the new "G lobal Index Insurance Facility", being 
developed by the World Bank.  The EC expressed the hope that its contributions 
would help leverage additional resour ces from other donors.  The EC also 
announced financial contributio ns 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-program ming of uncommitted 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 
context, the EC had allocated new add itional 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 expenditure" funds so that these were now programmable by individual country.  As a direct result, €52 million was now specifically allocated to Benin; €60 million to Burkina Faso; €30 million to Mali; and, €5 million to Chad.  The EC finally, reported that it was developing the regional dimension
 of 
the "EU-Africa Cotton Partnership" in three ways namely: through support for 
regional activity on the regul atory environment affecting the cotton sector; the EC 
regional programme for West Africa encompassing trade facilitation on customs; and, through support for "cotton instrume nt classing" for a higher international 
recognition of the quality of African cotton.  This "regional dimension" was also 
prominent in the EC/ACP negotiations on Economic Partnership Agreements 
(EPAs).   
- Germany
, in complement to the statement by the EC, informed participants about 
the centrality of donor harmonization in the activities 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.    TN/AG/SCC/W/2 
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 - 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 Indonesia, 22-23 April, that assistance to Africa would be  doubled in the next three years, 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 quantu m of its development assistance on the 
basis of country-established priorities.   Canada confirmed its continuing 
preference and the rationality of providing assistance through coordinated 
programmes such as the Integrated Framework for Trade-Related Technical 
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 Fr amework.  Priorities should be expressed 
through PRSPs or other development plans.   This was the best way to ensure 
maximum value for money and donor coor dination.  This was how Canada's 
considerable Overseas Development Assistance to Africa is managed.  Canada also announced its Initiative on, "The Afri ca Trade Policy Centre of the Economic 
Commission for Africa".  This was establis hed and was functioning with Canada's 
support.  It was focused on research and enhancing negotiating capacity for 
African Trade Negotiators.  It was available as a resource to the Cotton 
Proponents.   
- 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 a nd co-operation.  They had positive 
linkages to the cotton sector.  There we re several aspects to the information 
provided by the United States.  The starting point was the opportunities 
existing under the MCC .  Proponents were informed that the Millennium 
Challenge Corporation (MCC) presented an important avenue for grant-funded development assistance 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 c onsidering 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, wh ich would be the basis for discussions.  
The proposal focused on increasing regiona l 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 and mangos, but which should have positive knock-on effects for cotton.  Senegal had 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, had 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 fo r all of Africa.  In response to the 
Sectoral Initiative on Cotton, USAID was designing a development assistance TN/AG/SCC/W/2 
Page 4  
 
 package for the region focused exclusivel y on cotton.  This Package would be 
launched in June 2005.  USAID was worki ng in partnership with other 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 c ountries.  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 agri cultural 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 through 
better seed cotton grading and classing.  The US also reported on exchange 
programmes for capacity building, organization of specialized conferences and training, particularly in the areas of biotechnology, bio safety, and entomology.  Detailed information was provided on the US "Initiative to End Hunger in Africa" Programme, on which 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 
sustainability in selected African Countries.   
- UNIDO reported on its contributions  to support national and regional 
strategies to build up new policies and institutions to acquire necessary 
technology to strengthen the chain in tegration 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 Valu e Chains and Networks in Africa: 
Supporting Trade and Building Productive Capacity".  The purpose of the UNIDO programme is to enable the se lected 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 fibre.  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 about its forthcoming Cotton 
Seminar to assess the macroeconomic consequences of cotton price developments for the region, particularly for the main cotton-producing countries, and also to consider concrete steps that would safeguard progress in the region towards achieving the M illennium 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 attended by Mr. de Rato, the Fund's 
Managing Director, the Finance, Agriculture and Trade Ministers of the Cotton Proponents, cotton farmers, producers and representatives from the  TN/AG/SCC/W/2 
 Page 5 
 
 
 industrial countries, and the WTO.  Participants at the Informal 
Consultations, 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 subm itted 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 ar ea that required continuous work and further 
improvements.    
6. Further reports will focus on the actual implementation of the many projects and programmes 
that are actively underway.   
7. Participants agreed to convene the next – 4th Round – of Informal Consultations in July, on a 
specific date that is yet to be fixed. 
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