One of the first files that will be handed to Paul Wolfowitz when he takes up his functions as President of the World Bank is the question of the African cotton industry, which is threatened by American subsidies, reports the World Bank press review Wednesday.
US cotton subsidies are estimated at 3 billion US dollar (17 milliarder DKR) per year, and export credits at 1,5 billion dollar. American farmers over-produce and are accused of distorting competition.
The issue is sensitive in the US: the 25.000 American cotton producers comprise a powerful lobby and one of the pillars of President George Bushs electorate. Will Wolfowitz be able to attack subsidies protected by the administration he just left?
– We are counting on you to become the advocate of Africa for the Bush administration, Thierry Breton, the French finance minister, and Xavier Darcos, Frances development minister, told Wolfowitz recently – a comment he brushed off with a smile.
Many believe it is on this type of issue that Wolfowitzs credibility is at stake.
On cotton, the US is meeting increasing opposition. Washington was already condemned once on the cotton issue by the World Trade Organization (WTO) after a complaint was put forward by Brazil.
To show his goodwill and because of the upcoming G8 meeting in Gleneagles, Scotland, which will be dedicated to Africas development, Wolfowitz promised that his first trip as World bank President in June would be to Africa.
Africans reacted with worry to Wolfowitzs nomination. They know that, if US development aid increased last year to 0,16 percent of GDP, half of the funds have already been allocated to Iraq.
Meanwhile, European Union trade commissioner Peter Mandelson said Tuesday that radical cuts in cotton subsidies and an opening up of markets to the imports of poor African cotton producers must be the first step global trading nations pledge when they sign a global trade deal later this year.
In a speech to West African cotton producers in Mali, Mandelson said collapsing cotton prices on the world market, spurred by high export subsidies to rich-nation cotton farmers, are putting at risk the livelihoods of millions of people in Benin, Mali, Burkina Faso and Chad.
Peter Mandelson pledged an annual 45 million euro to develop agricultural facilities in the four cotton-producing countries. Of that, 15 million euro will be dedicated directly to the cotton sector. Since last July, the EU says it has provided 310 million euro of development assistance to the four nations.
African states, which say they have lost hundreds of millions of dollars in income because US farm subsidies depress world prices, last year gave up a demand that cotton be treated as a separate chapter within WTO farm negotiations. In return they won a promise that cotton would be treated with “appropriate prioritization” and that a special WTO panel would be set up to monitors cuts in rich nation subsidies.
– The special sub-committee on cotton that has been set up in Geneva must now deliver results, Mandelson said, apparently referring to complaints from aid organizations that the panel has done little to advance the cause of vulnerable African producers such as Benin, Chad, Burkina Faso and Mali.
He noted that cotton accounts for 30-40 percent of export earnings in these four countries, and the roughly 15 million people who depend on it for their living face a precarious future because of falling prices.
– The World Bank estimates that these cotton support policies reduce world prices by some 10-15 percent. And that, at present, we are probably witnessing the sharpest drop in these prices in absolute terms since 1985, Mandelson said.
Kilde: www.worldbank.org
