October 19, 2004

Where’s the moral fibre?

International agency Oxfam is concerned that the United States is fighting on to protect its massive cotton subsidy programme, which is causing suffering to millions of poor African farmers.

The US announced today that it is appealing a World Trade Organization (WTO) ruling that declared the vast bulk of US cotton subsidies illegal.

In a new report released today, Oxfam details how US subsidies encourage overproduction and facilitate the dumping of excess cotton overseas, undermining the livelihoods of poor farmers in the developing world. The report, Finding the Moral Fibre: Reform Needed for Fair Cotton Trade, is being published as part of Oxfam’s Make Trade Fair campaign. It urges the US to reform its farm programmes and stop dumping.

“This latest move by the US confirms that there is an enormous gulf between the rhetoric and the reality when it comes to actually delivering on promises of reform,” said Barry Coates, Executive Director of Oxfam New Zealand. “The case against US cotton dumping is overwhelming and the WTO ruling confirms that. The refusal of the US to accept the ruling flies in the face of their promises of ambitious reform of cotton subsidies. These promises were a crucial factor in clinching agreement to the Agriculture Framework at the WTO meeting in July.

“The attitude revealed by the US appeal in this case does not bode well for the Agriculture Framework as a whole,” added Coates. “The Framework kept the talks alive, but at the cost of creating a whole new set of loopholes which could be exploited by the US to keep its subsidy regime going. What confidence can cotton farmers in West Africa now have that the US will refrain from destroying their livelihoods by export dumping?”

In a case brought by Brazil and backed by other developing nations, a WTO panel found in September that $3.2 billion in US annual cotton subsidies and $1.6 billion in export credits (for cotton and other commodities) are illegal under WTO rules.

Oxfam estimates that US dumping created losses of almost US$400 million for poor cotton-producing African countries between 2001 and 2003. In Finding the Moral Fibre, Oxfam calls on the US to swiftly implement the WTO ruling and negotiate new rules that would stop dumping. Doing so would bring relief to the millions of farmers in poor countries dependent on cotton for their livelihood.

Some of the facts discussed in the report: The United States government regularly spends up to US$4 billion a year in subsidies to the cotton sector, a total that is more than the GDP of Benin, Burkina Faso and Chad. The US spends three times more money propping up its domestic cotton industry than it spends on aid to all Africa in a year.

Cotton is one of the most widely produced agricultural crops in the developing world. Ten million households in West Africa depend on cotton for their livelihoods. Cotton is produced at a net cost to the US, whose subsidies depress world cotton prices by 26 percent. This cripples poor African farmers, who cannot compete.

Over 75 percent of the world’s poorest people rely on farming as a living, making less than a dollar per day. Many of them are too poor to send their kids to school, buy basic medicines or put food on the table because the rules of farming and trade are rigged against them.

ENDS

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