chapter  4
19 Pages

Poverty and Cotton in the Doha Development Agenda

ByDONNA LEE

The singular most important recommendation to the Doha Development Agenda (DDA) that will help alleviate poverty among some of the poorest farming communities in a sustainable way is that developed country cotton subsidization, which in recent years has topped $6 billion annually, must be removed expeditiously. Numerous studies have demonstrated the direct link between these developed country subsidies and income poverty in the West and Central African farming communities;1 it is estimated that subsidies provided by the US Congress and the European Commission reduce the annual income of francophone African cotton farmers by around $150 million, thus directly decreasing the earning power of some 40 percent of the cotton farmers of Benin, Burkina Faso, Chad, and Mali (hereafter referred to as the “Cotton Four”).2 The fact that domestic cotton subsidies primarily used by the US Congress and the European Commission have not already been removed despite the mounting evidence of their negative impact on the livelihood of some 10 million African farmers is evidence of the huge political influence of powerful cotton lobbies inWashington and Brussels, and the limitations of the influence of African countries in the DDA, aswell as theWorld Trade Organization’s (WTO) ability to regulate cotton trade policy. That said, given the weight of moral suasion in the cotton issue, the small step changes to US policy brought about by the WTO’s judicial process,3 and the reductions in European Union (EU) levels as a result of agreements reached in an intra-regional African-EU process,4

there is some room for hope that the level of American and European subsidies will continue to decline with or without the completion of the DDA. This chapter begins by highlighting the link between developed coun-

try cotton trade policy and poverty in West and Central Africa. It then analyses the political economy of cotton subsidies in the United States to illustrate the difficult domestic politics that are embedded in the

DDA cotton negotiations and that thwart the WTO’s attempts to influence and regulate cotton trade liberalization. Finally the chapter briefly scopes the DDA cotton negotiations in order to assess the impact of African states in the WTO on cotton trade policy. In the chapter I set out two recommendations. My first recommendation calls for the elimination of cotton subsidies in line with The Johannesburg Statement on the Doha Development Agenda.5 My second calls for reform of the WTO’s Dispute Settlement Understanding (DSU) to compel members to provide financial compensation to injured parties in disputes. Both recommendations, if implemented, would provide liberal cotton trade policy as well as multilateral process solutions that would go a long way towards addressing the problem of income poverty in African cotton farming communities.

West and Central African countries are heavily dependent for their income on cotton production and export. In Burkina Faso and Benin, for example, cotton provides 60 percent of foreign exchange earnings with more than 40 percent of the population in both countries dependent on cotton exports for their earning power.6 The problem of African cotton highlights the extent to which poverty in African peasant communities is not primarily a growth issue but rather a matter of income. Not surprisingly, the high level of dependency on cotton production and export for household income makes African cotton farmers exceptionally vulnerable to price drops in the world cotton market. Price instability, along with several severe price drops, throughout the last 25 years have exposed this vulnerability and increased poverty among farming communities across West and Central Africa. While cotton production in these regions increased by 14 percent between 1999 and 2002, income from cotton exports dropped by 31 percent.7