Sweden helps African cotton defend itself

Sweden will help four African countries defend their interests at a World Trade Organisation summit in Mexico in September, the foreign ministry said on Thursday.

    Subsidies prevent African countries from dominating cotton markets

    Benin, Burkina Faso, Chad and Mali will receive $56,000 to help them oppose the support given by the European Union, China and the United States to their own cotton-producing farmers.

    The four countries are heavily dependent on income from cotton, but US, EU and Chinese subsidies put the African nations at a serious disadvantage, the ministry said.
      
    Swedish Industry Minister Leif Pagrotsky and Development Cooperation Minister Jan O Karlsson said in a joint statement: "Joining forces in this way in a challenging initiative for free and fair trade is a very rare occurrence and something Sweden warmly welcomes."
      
    "To actively pursue an issue in international negotiations requires resources. We have therefore chosen to give these countries economic assistance," they said.

    Cotton and dumping

    Last year 25,000 US cotton farmers received $3.9 billion in subsidies - more than the entire GDP of Burkino Faso where two million people depend on cotton farming, according to one international charity.

    Oxfam says half of the population there live below the poverty line but still produce cotton at a third of the cost of US producers.

    The effects are felt right across central and western Africa where 10 million people depend on cotton production.

    The impact of subsidies has been to boost production in the US, leading to a slump in the price which has devastated countries like Burkino Faso, Benin, Chad and Mali.

    They have all lost over 1% of GDP and significant export earnings, which threaten their balance of payments and capacity to repay debt, not to mention the provision of basic services.

    Big subsidies

    At the level of the individual farmer, and unlike farmers in first-world countries, African cotton farmers cannot easily diversify into other crops.

    Removal of the US subsidies would lift cotton prices by around 11%, according to the London-based charity.

    US Cotton subsidies are three times the entire US AID budget for Africa's 500 million people.

    Brazil, another looser to the slump in the price of cotton, will also challenge the subsidy policies at the Mexico WTO meeting.

    SOURCE: Agencies


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