Interviews
Oxfam slams US cotton subsidies for Chinese cotton farmers' plight
08 Dec '05
4 min read
With seven days to go before the World Trade Organization (WTO) Ministerial in Hong Kong (MC6), Oxfam publishes a report today highlighting the detrimental impact of US cotton subsidies and dumping on China's 46 million cotton farmers.
The WTO MC6 is an important chance to move the Doha round forward and to reduce trade-distorting agricultural subsidies, including those for cotton. However, the US and the EU have resisted making deep enough agricultural reforms, slowing negotiations to a stand-still.
WTO Director-General Pascal Lamy also made no concrete proposal to address the issue of cotton in the draft Ministerial text.
Chong Chan-yau, Executive Director of Oxfam Hong Kong, has just returned from Xinjiang, one of China's poorest regions and one of the country's biggest cotton-producing provinces.
"The influx of subsidized US cotton threatens the livelihoods of over 46 million cotton farmers in China, affecting over 143 million adults and children who depend on cotton revenues. The US must agree at the MC6 to reform its cotton subsidies so that poor cotton farmers in China - and other developing countries - have a fair opportunity for trade and development," Chan-yau said.
According to the aggressive WTO accession terms demanded by rich countries, China has opened its markets but the US continues to insulate its own cotton sector. The low price of cotton has alarmed farmers in China.
In 2005, 10 per cent of land devoted to cotton farming has been lost in China. This reduction could cost farmers RBM1.68 billion ($208m) in lost income, and the loss of approximately 720,000 jobs.
The Oxfam study "No Soft Landing" found that high US subsidies and cotton dumping are distorting the international price of cotton. In China, the procurement prices fell from a high of RMB 7 to 8 ($0.87 - 0.99) per kilogram in 2003, to only RMB 4 ($0.50) in 2004.
This meant a loss of farm income of about RMB 3.16 billion ($391m). The volume of subsidised, low-priced US cotton imported by China increased by 21 times between 2001 and 2004, from 48,000 tonnes to 1.06 million tonnes.
The report revealed a similarly worrying trend of imports crowding out local production. Approximately 870,000 tonnes, or some 15 per cent of China's 2004/05 total raw cotton crop, remained unsold as of March 2005.
It is highly unlikely that it will be sold as the quality of the stock is deteriorating and the typical May-to-November production season has ended.
China is just one of the many countries suffering from the unfair cotton trade. Brazil has lost more than $478 million over three years and African countries have lost $305 million in the past year due to depressed world prices.
Oxfam says that any agreement at the WTO MC6 meeting in Hong Kong beginning next week should contain:
· A flexible tariff reduction formula that allows developing countries to reduce tariffs in a way that does not undermine their development strategies.
· Full exemption from tariff reductions and no expansion of tariff rate quotas for crops essential for food security. These 'special products' should be self-selected by developing countries, using the criteria contained in the July Framework.
· A special safeguard mechanism for developing countries.
· A commitment by developed countries to eliminate all forms of export subsidies by 2010.
· Deep and rapid cuts in trade-distorting domestic support.
· The full implementation of the WTO Appellate Body's report on cotton by the US.
· Disciplines on the Green Box and the Blue Box.
· Freedom for developing countries from obligations to reduce their domestic agricultural support programmes.
Oxfam International is a confederation of twelve organisations working together in more than 100 countries to find lasting solutions to poverty and injustice: Oxfam America, Oxfam-in-Belgium, Oxfam Canada, Oxfam Community Aid Abroad (Australia), Oxfam Germany, Oxfam Great Britain, Oxfam Hong Kong, Intermón Oxfam (Spain), Oxfam Ireland, Novib Oxfam Netherlands, Oxfam New Zealand, and Oxfam Quebec.
Website: www.oxfam.org
The WTO MC6 is an important chance to move the Doha round forward and to reduce trade-distorting agricultural subsidies, including those for cotton. However, the US and the EU have resisted making deep enough agricultural reforms, slowing negotiations to a stand-still.
WTO Director-General Pascal Lamy also made no concrete proposal to address the issue of cotton in the draft Ministerial text.
Chong Chan-yau, Executive Director of Oxfam Hong Kong, has just returned from Xinjiang, one of China's poorest regions and one of the country's biggest cotton-producing provinces.
"The influx of subsidized US cotton threatens the livelihoods of over 46 million cotton farmers in China, affecting over 143 million adults and children who depend on cotton revenues. The US must agree at the MC6 to reform its cotton subsidies so that poor cotton farmers in China - and other developing countries - have a fair opportunity for trade and development," Chan-yau said.
According to the aggressive WTO accession terms demanded by rich countries, China has opened its markets but the US continues to insulate its own cotton sector. The low price of cotton has alarmed farmers in China.
In 2005, 10 per cent of land devoted to cotton farming has been lost in China. This reduction could cost farmers RBM1.68 billion ($208m) in lost income, and the loss of approximately 720,000 jobs.
The Oxfam study "No Soft Landing" found that high US subsidies and cotton dumping are distorting the international price of cotton. In China, the procurement prices fell from a high of RMB 7 to 8 ($0.87 - 0.99) per kilogram in 2003, to only RMB 4 ($0.50) in 2004.
This meant a loss of farm income of about RMB 3.16 billion ($391m). The volume of subsidised, low-priced US cotton imported by China increased by 21 times between 2001 and 2004, from 48,000 tonnes to 1.06 million tonnes.
The report revealed a similarly worrying trend of imports crowding out local production. Approximately 870,000 tonnes, or some 15 per cent of China's 2004/05 total raw cotton crop, remained unsold as of March 2005.
It is highly unlikely that it will be sold as the quality of the stock is deteriorating and the typical May-to-November production season has ended.
China is just one of the many countries suffering from the unfair cotton trade. Brazil has lost more than $478 million over three years and African countries have lost $305 million in the past year due to depressed world prices.
Oxfam says that any agreement at the WTO MC6 meeting in Hong Kong beginning next week should contain:
· A flexible tariff reduction formula that allows developing countries to reduce tariffs in a way that does not undermine their development strategies.
· Full exemption from tariff reductions and no expansion of tariff rate quotas for crops essential for food security. These 'special products' should be self-selected by developing countries, using the criteria contained in the July Framework.
· A special safeguard mechanism for developing countries.
· A commitment by developed countries to eliminate all forms of export subsidies by 2010.
· Deep and rapid cuts in trade-distorting domestic support.
· The full implementation of the WTO Appellate Body's report on cotton by the US.
· Disciplines on the Green Box and the Blue Box.
· Freedom for developing countries from obligations to reduce their domestic agricultural support programmes.
Oxfam International is a confederation of twelve organisations working together in more than 100 countries to find lasting solutions to poverty and injustice: Oxfam America, Oxfam-in-Belgium, Oxfam Canada, Oxfam Community Aid Abroad (Australia), Oxfam Germany, Oxfam Great Britain, Oxfam Hong Kong, Intermón Oxfam (Spain), Oxfam Ireland, Novib Oxfam Netherlands, Oxfam New Zealand, and Oxfam Quebec.
Website: www.oxfam.org
Oxfam Hong Kong
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