INDIA: Developed countries continue to dominate world cotton trade
In the US, fewer than 25,000 farmers cultivate cotton and they receive annually payment to the extent of $3 billion as subsidy. The US is amongst the world’s largest producers and continues to be the topmost exporter of cotton.
As much as two-thirds of cotton produced in the US is exported. Low-priced US cotton depresses global cotton prices and hurts the competitiveness of other suppliers, for instance, African cotton. Despite a WTO ruling against US cotton subsidy, there is no evidence of its withdrawal.
The Doha Round of global trade negotiations under the WTO has remained inconclusive so far because of a standoff between groups of countries on the magnitude and speed of addressing the subsidy issue.
It goes without saying that livelihood issues must get priority. Governments must exercise utmost caution when a commitment can potentially affect the livelihood of already poor and vulnerable people.
Importantly, countries that are hurt by lack of progress in WTO trade negotiations must begin to put their house in order. There is another category of expenditure called ‘General Services’. The General Services support is the monetary value of gross transfers to general services provided to agriculture as a sector and includes expenditure on research, development, training, inspection, rural infrastructure, marketing and promotion. This kind of support is not provided to individual farmers but is intended to benefit all stakeholders.
Latest estimates suggest the US spends $35 billion and the EU $15 billion on providing general services. Through a combination of technology adoption and subsidy, developed countries continue to produce more mainly for the export market, and are able to dominate world trade.
Added: November 27, 2007Source: Agencies