WTO chief leads cotton review

Cotton is the mainstay of Mali's economy

World Trade Organisation chief Supachai Panitchpakdi is reviewing demands by African cotton producers for an end to subsidies paid to farmers in richer countries.

Mr Panitchpakdi, the WTO's Director General, was asked by the Mexican Foreign Minister Luis Ernesto Derbez to negotiate on the issue which was forced onto the agenda by a coalition of central and west African nations.

Benin, Burkina Faso, Chad and Mali say subsidies paid to cotton farmers in more developed countries cost them $250m a year in lost exports, a figure which rises to $1bn when indirect costs are included.

Campaigners argue that the resulting high levels of production mean lower exports and lower world prices for cotton.

That, they say, spells the loss by entire communities across the region of their only means of survival.

African delegates want the deal to be part of a declaration which will form the basis of a new world trade agreement by 2005.

African cotton producers protesting at the WTO

"We are very optimistic right now. We believe that... the big powers will understand us and that the WTO will do everything it can to arrive at a fair solution," Benin Industry and Commerce Minister Fatiou Akplogan told reporters.

As well as the ending of all cotton subsidies from 2004 until 2006, they want financial compensation for the loss in revenue.

'Moral merit'

According to Oxfam, the US pays three times more in subsidies to its 25,000 cotton farmers than its budget for aid to Africa's 500 million people.

The organisation calculates that the cost of producing cotton in the US are three times higher than in Burkina Faso.

We're engaged in discussions with the four countries who are sponsoring the cotton initiative and we are looking with them at the entire situation that affects trade in cotton Peter Allgeier, US trade representative Cotton subsidies squeeze Mali

But the US argues that its cotton support schemes fall within WTO limits and also points the finger at the EU and China.

Peter Allgeier, deputy US trade representative, declined to say whether his country would be willing to compensate the African countries, saying that negotiations are ongoing.

China is the second-biggest subsidiser; the EU spends only $700m, but as cotton is only produced in Greece and Spain its subsidies are the highest - up to 180% of the global price.

EU Trade Commissioner Pascal Lamy said as European cotton production represented only 2% of that of the world, the community aid scheme does not have a significant impact on world prices.

The cotton initiative features in a 21-page draft declaration under discussion by ministers of the 146 WTO member states for reviving currently stalled talks to end trade barriers.