WTO World Cotton Day Ministerial: U.S. Statement Delivered by Ambassador Dennis Shea

WTO World Cotton Day Ministerial – Level Session
U.S. Statement – Delivered by Ambassador Dennis C. Shea
Geneva, October 7, 2019

Thank you, Ambassador Ford.  Let me begin by congratulating the WTO Secretariat and the Secretariats of the other international organizations that have organized World Cotton Day.

My colleagues from the C4 have already emphasized the essential role cotton plays in their countries.

In the United States, cotton is a vital part of many rural communities across America, and the benefits extend far beyond farming families.

Cotton is used for many consumer and industrial products, from T-shirts to ice-cream to baseballs, wall paper and livestock feed.

Furthermore, U.S. family-owned cotton farms purchase billions of dollars worth of necessary inputs, which benefits the U.S. rural economy and manufacturing sector.

Farm to factory, nearly 400,000 U.S. workers are directly or indirectly employed by the U.S. cotton industry, with a total economic impact of nearly $60 billion.

So, how does the United States stay competitive?  The answer can be summed up in one word:  technology!

The United States is a global leader in the research, development, and adoption of new technologies — critical for cotton producers around the world to enhance sustainability and remain competitive in global fiber markets.

For example, a genetically engineered cotton is being developed at Texas A&M University, which is low in gossypol and can be ground into a high protein flour.  While this variety is not yet approved for human consumption, it could provide a new protein-rich food source.

The United States is also a leader in instrument classing.   HVI cotton classing is increasingly replacing hand classing around the world, adding objectivity and efficiency to the analysis of fiber quality.

U.S. cotton producers have made great technological strides in recent years, enhancing sustainability by reducing water use, soil erosion, greenhouse gas emissions, and energy use while at the same time improving yields and farmer incomes.

It is also the objective of the United States to ensure the cotton sector, not only in the United States, but globally is able to thrive, providing economic benefits to not only cotton farmers, but rural communities and all the workers employed directly or indirectly because of cotton value chains.

The United States has made vital contributions to both U.S. and global cotton value chains.

For example, USDA grades and classifies cotton samples that underpin the marketing of cotton and creates a trusted relationship with buyers around the globe who are purchasing these quality cotton products.

U.S. private sector market infrastructure is also important for global cotton value chains. The ICE cotton trading market in New York provides price discovery for the world, increasing the efficiency of world cotton markets.

In addition, the United States government, in partnership with the private sector, provides technical assistance to cotton stakeholders worldwide, through scholarships and scientific exchanges, cooperative global research, agricultural and trade capacity building, micro-credit programs and much more.

Global Development Assistance from the United States exceeded $1.6 billion between 2005 and 2018, focusing on key areas like infrastructure, biosafety, production and processing capacity, market development, export facilitation, and trade expansion.

The United States has also contributed to technical capacity building internationally and addressing challenges in global cotton markets, as a founding Member of the International Cotton Advisory Committee since its inception in 1939.

The United States seeks to continue to provide valuable and meaningful contributions to the global cotton sector both inside and outside the purview of the WTO.

We have also made technical contributions to the processes of the Committee on Agriculture in Special Session to advance Members’ understanding of the issues that face global cotton trade today.  Last fall, we made a submission highlighting the trade policies of major cotton producers and traders, as well as the lack of sufficient transparency at the WTO.

We have also contributed to the ongoing data collection process of the Quad-Plus group.

Further, we are currently researching and doing analysis on other factors which impact global cotton trade and hope to make additional submissions to the WTO in the near future.

With MC12 quickly approaching, we must all focus our engagement and efforts in finding what is doable for MC12 rather than reiterating previous positions of what we each would ideally want as an outcome.

While some portfolios, including cotton, have received strong support from Members to find an outcome for MC12, there remains deep and divergent differences in what that means.

The reasons an outcome on cotton remains elusive today are not substantially different than why there was no outcome at the last Ministerial.  Members’ positions have not changed.

The C4 put forward a proposal which includes significant cuts in product specific cotton domestic support for mostly developed Members with bound commitments, but does not require some of the largest subsidizers of cotton to undertake any new disciplines.

Further, the C4 proposal is made in isolation of any broader proposal on agriculture.

Further, transparency with regards to cotton remains a major obstacle.  At this point, we do not even know how much support is provided by other major producers like India and China, so how can we discuss any limits if we do not know what to limit?

Our counternotification on India’s market price support for cotton validates my point.  India notified zero support while the United States counternotified $8 billion in market price support for cotton in 2016.  U.S. domestic support reached only $800 million for the same year without the use of one of the most trade distorting forms of support, market price support.

Further, the United States reminds Members that per the Hong Kong Ministerial mandate, cotton negotiations are to be pursued in the context of an overall agricultural negotiation, not in isolation or in advance of one.  To be clear, the United States reiterates there is no mandate to negotiate cotton in isolation of broader agricultural negotiations.

Since we do not realistically see Members willing to find consensus on any new disciplines on domestic support or market access at MC12, it is premature to consider outcomes on cotton.

Therefore, the United States believes that Members should focus their efforts, as with the broader agricultural negotiations, on what is doable.  For us, that remains transparency.

I hope that today’s forum provides an opportunity for a robust discussion on a range of trade measures that affect cotton and on technological advances that can significantly improve production and competitiveness.

Before attempting to develop new disciplines on cotton, we should understand what the real problems that impact cotton trade are, including a lack of access to new technologies, proper inputs on a timely basis, and the lack of credit to finance operating costs.  In addition, competition from other fibers, in particular man-made fibers and the policies that impact their production and pricing, also has a profound impact on cotton markets and trade.

We hope that our experts can engage constructively on identifying the challenges that farmers face today and identify where the WTO can help to address these challenges.