WORLD TRADE  
ORGANIZATION  TN/AG/SCC/W/11 
25 May 2005 
 
 (05-2116) 
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  
 
Second Meeting of the Sub-Committee on Cotton (22 March 2005) 
 
Secretariat Progress Report  
 
 
 
 
 
 
  
 
 
 
 
1. In accordance with the instructions in para graph 1(b) on "Cotton" , and paragraph 5 of 
Annex A in the decision by the General Council on  1 August 2004, the Director-General provided a 
substantive First Periodic Report (circulated in  document WT/GC/83), to the General Council in 
December 2004, on the "Implementation of th e Development Assistance Aspects of the Cotton-
Related Decisions in the July Package".   
2. As requested by Members, the Secretariat provides this short progress report on relevant 
developments since the Director-General's first substantive report.   
3. In December the Director-General judged that  "a significant start had been made", with 
"overall good progress", but that so much more remain ed to be done.  The Director-General reported 
that "bilateral donor Members "had moved rapidly to reflect cotton-sector priorities in their bilateral 
donor programmes"; and, that "relevant multilate ral and regional agencies had also responded 
expeditiously".  The Director-General noted th at while the proponent countries had welcomed the 
Consultative Framework, he had established, the implementation process, and the results, the Director-General pointed to the deep concern of the proponent countries regarding the urgency of 
their domestic economic circumstances, directly lin ked to the continuing long-term downward trend 
in cotton prices and their virtual singular dependen ce on that commodity with consequences for their 
macroeconomic performance.   
                                                     
 
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 prepared 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/1 
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4. Since the December 2004 report, although there is scope for more action, nonetheless, four 
relevant, positive developments have taken place and deser ve mention, at this stage, to Members.  (It 
needs to be borne in mind that this report is an update on developments that have been previously 
reported).   
• First , the OECD Development Assistance Committee (DAC) organized a "Briefing" on 
28 January.  The Briefing implemented one of th e "agreed Outcomes" from the WTO Secretariat 
Cotton Workshop in Cotonou last year.  The purpo se and timing of the "Briefing" were designed 
to accelerate implementation of the development as pects of the cotton-related decisions in the 
July General Council Decision.  All the key stake holders were present: bilateral donors, and the 
proponent countries.  The results were positive and contributed to the implementation process.  It 
is useful to underline that the DAC Chairman in  his "Concluding Summary" remarks, noted that 
"collapse of the cotton sub-sector in the West A frica, would harm development efforts.  That, 
short and medium-term measures were required to  address the current difficulties faced by the 
cotton sub-sector.  And, that the regional dime nsion (regional integration, organizations and 
infrastructure) was critical for assistance and suppor t to the cotton sub-sector.  In noting the long-
standing efforts of donors' support to the developm ent of the cotton sub-sector in West Africa, the 
DAC Chairman underscored the political prior ity accorded by DAC Members and multilateral 
institutions to work with the West African c ountries on cotton development issues.  The EU, the 
US and the African Development Bank outlined  comprehensive medium-term actions for 
assisting the West African countries through co operative multilateral efforts.  Particularly 
highlighted were programmes to address price risks and volatility  through market-based hedging 
and insurance schemes.  Participants acknowledged the necessity for stepped-up coordination.  It 
was also self-evident that, although well designe d programmes existed with availability of 
resources, there was the need for an urgent shift in gears to reflect greater operational reality on 
the ground in the proponent countries.  The mee ting acknowledged the linkage between progress 
on the cotton issue and successful preparations for the Hong Kong Ministerial.   
• Second , the EU has forwarded to the Secretariat an "Update" on the implementation of the EU-
Africa Cotton Partnership, agreed between the EU and African countries in July 2004.  The 
contents of the "update" illustrate concrete progress and give meaningful impetus to the 
development assistance aspects.  The areas of " update" correspond to the 7 areas agreed in the 
EU-Africa Action Plan namely: i) International Tr ade; ii) National and regional cotton strategies; 
iii) Policies and institutions; iv) Technological in novation; v) Risk management and finance; 
vi) Chain integration; and, vii) Coordination.  The detailed EU "update" will be circulated at the 
next Secretariat-organized consultations on the implementation of the Development Aspects.  
However, one point, out of several, that is highli ghted from the "EU Update" is the conclusion, by 
the EU, on how to better manage the complicated  challenge faced by the African countries with 
the recent and continuing sharp drop in cotton prices.  The EU notes that, "The African cotton 
sector again learned that reserve funds do not suffic e anymore to manage the effects of the price 
risks and that hedging price risks should be considered" .  At the same time, from EU resources, 
€45 million has been allocated and approved fo r an all-ACP capacity-building programme on 
commodities, of which €15 million are reserved for cotton.  In addition, France (an EU Member) is playing a leadership role.  It is concluding feasibility studies for a new regional programme for 
cotton support in several clearly identifie d areas, which, include amongst others, "a regional price 
insurance scheme in complement to  national self-insurance initiatives" .   
• Third , the United States have also forwarded to the Secretariat an update on its implementation of 
the development assistance aspects pur suant to the July Package.  In the update, the US re-affirms 
its commitment to the development aspects.  The update shows that the US development agencies 
(USAID, USTDA and the MCC) have been fully mobilized to address the obstacles faced by the 
cotton producing countries.  The updates indicates that significant resources are available for eligible countries in the Millennium Challenge Account (MCA) to address development obstacles,  TN/AG/SCC/W/1 
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including on cotton, if eligible countries identify cotton as a priority and propose well defined cotton projects in accordance with that priority.  Benin, Mali and Senegal are eligible.  Burkina 
Faso is a "threshold country".  Furthermore, th e US update informs that an inter-departmental 
team visited West Africa in January for dialogue , engagement and needs assessment.  Following 
this visit was circulated a "Summary and Findings  of the West African Cotton Assessment".  The 
identified 15 possible areas of intervention in production, transformation, and cotton marketing.  
The US confirms that "short-term assistance can be provided on a number of interventions ...", in 
the identified areas.  The update refers to re levant programmes, such as approved US funding for 
WAEMU-sponsored regional railway integration f easibility study to the value of US$ 614,600.   
• Fourth , the African Development Bank (AfDB) is a principal African regional actor in the 
implementation process.  Its contributions are pos itive and tangible.  More significant gains can 
be made with greater support from bilateral donor s and relevant multilateral institutions for the 
projects and activities of the AfDB.  Currently, the African Development Bank is preparing "a Multinational Programme for the Improvement of  the Competitiveness of the Cotton Sub-Sector 
in Central and West Africa", with the support of the FAO.  To this end, a mission was undertaken 
by the FAO, early in March 2005, in Benin, Burkina Faso, Mali (and Côte d'Ivoire) to identify 
activities to be considered for financing under the programme.  The African Development Bank 
has announced a Workshop for 25
th March, in Burkina Faso, to validate the findings of the FAO 
identification mission.  All the stakeholders a nd officials of the West African Economic and 
Monetary Union (WAEMU) are expected to attend this workshop.  The WTO Secretariat strongly 
urges support for the programmes, projects and activities by the African Development Bank, 
around which many if not most of the African countries are focusing their efforts.   
5. These are the 4 areas where the Secretariat can provide a positive update on the development 
aspects of cotton, based on the inform ation that has been made available to it.  Obviously, this is work 
in progress.   
6. In addition to this factual "update", several comments are constructively offered in the hope 
that they would be useful for Members as positive contributions in the preparatory efforts for the 
Hong Kong Ministerial.   
• First , continued price instability and downward trending in cotton price (at a six year low of 
47 cents per pound), all due to a wide range of fact ors, are cause for serious concern for the cotton 
proponents.  However, potentially significant results  could be produced in the implementation of 
the development assistance aspects of cotton, if th ere is greater accelerated and cooperative focus 
by the bilateral donor community and the rele vant multilateral institutions in assisting the 
proponents to establish, either at country or  regional levels, market-based instruments for 
commodity price risk management .  Several options have been suggested by the experts.  These 
include, inter alia , hedging schemes to reduce uncertainty ; agricultural price risk insurance ; and 
self-insurance schemes .  And, here we believe that the World Bank has a role to play.   
• Second , many of the bilateral donors have designed well conceived programmes.  But there is 
need for greater speed to shift to operational proj ects.  And, here the operational reality clearly 
suggests that that leadership could be provided by the African Development Bank, on the spot, 
working in close partnership with the West Afri can Economic and Monetary Union.  The AfDB is 
committed and predisposed.  As underlined by the Director-General in his First Periodic Report, 
coordination remains a major challenge.  Greater progress would be made and more efficiency would be achieved with e nhanced coordination.   
• Third , there is need for continuing commitment on th e part of the proponents to domestic reform, 
including in the cotton sector to ensure that the assistance provided is optimally utilized.  There is 
also a need for feedback and inputs to the donors, for well prepared project documents, and for 
submitted projects to directly reflect expressed priorities.   TN/AG/SCC/W/1 
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• Fourth , the recently released Report of the Africa Commission provides many useful 
opportunities.  This is an area of follow-up action for all concerned parties.   
7. At this early stage, the Secretariat would lik e to underline the necessity for accelerating action 
on all these fronts in order to provide a concrete b ase for a  meaningful Second Periodic Report by the 
Director-General to the Hong Kong China Ministerial.   
8. To conclude, the Secretariat would like to:  
(a) inform
 Members that it will convene the 3rd and 4th Rounds of the Director-General's 
"Consultative Framework for the Implemen tation of the Development Assistance 
Aspects of Cotton", on 7 April and 7 July; and also,  
(b) inform  Members that following discussions with the OECD Secretariat, a "cotton 
section" will be created in the 2005 Report from the OECD/WTO Trade-Related 
Technical Assistance Database to be rel eased before the Hong Kong Ministerial 
Meeting.  Doing so will implement one of the "Outcomes" agreed at the 2004 Cotonou Cotton Workshop.  It will also enable the "monitoring and tracking" of progress on programmes, projects and activities, either planned or implemented in the follow-up to the cotton-related decisions on the Development Assistance Aspects of 
Cotton in the 2004 July Package.     
9. Director-General Dr. Supachai  remains fully seized and focused on this issue and will 
continue to advance progressive and early implementation at every opportunity.   
 
 
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