US: Cotton subsidies burden exporters in poor nations - study
Failure by the United States to scrap trade distorting cotton subsidies to its producers and exporters has prevented poor farmers, especially in Africa, from benefiting from higher prices in global markets, an expert report says.
The study concludes that had the US moved to quickly slash the cotton subsidy programmes - challenged by Brazil and found by WTO dispute panels to be in breach of global rules - prices would have risen for African farmers by 3.5% (over a 1998-2007 base period).
West African cotton nations - Benin, Burkina Faso, Chad and Mali - say the US has been subsidising its estimated 20,000 cotton farmers by around $3bn a year, and jeopardising the livelihoods of millions of African farmers.
The study commissioned by the International Centre for Trade and Sustainable Development and carried out by Cornell University economist Mario Jales, concludes that had the US accepted proposals in the global Doha trade talks to scrap export subsidies and domestic measures - by around 82% - cotton production in the US would have declined by up to 15%.
In the meantime, production volumes would have surged by 13% for West Africa and central Asia producers, and 3-3.5% for their Brazilian counterparts.
The recent interim deal by the US and Brazil, under which Brazil agreed to hold off slapping punitive trade measures until 2012 in exchange for the US providing compensation to Brazilian producers worth $147m per year, puts further into the distance any gains being channelled to African producers, the study notes.
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