Cotton is a fibre much in demand. At present it can command a high price yet many cotton farmers in some of the poorest regions of the world are struggling to make a living. They are unable to compete on equal terms with their counterparts in America who receive subsidies from the US government.
As the country prepares for the arrival of President Obama later this month on a state visit to London, campaigners concerned about blatant injustice in the cotton industry are demanding that the President ends the plight of some of the world’s poorest farmers. Those who live in developing countries can no longer afford to lose out on vital income which would help them to help themselves, therefore reducing their dependence on aid.
Traidcraft is calling on President Obama to do the right thing and cut US cotton subsidies immediately.
Head of Policy at Traidcraft, Liz May, says: "Given such a lack of respect for the agreed rules of the game and the fact that there has been zero progress on the long-held concerns of poorer countries, it is little wonder the WTO talks are on the brink of collapse. The world needs to focus on re-building trust in the multilateral trade system. Urgent action from the United States on cotton subsidies would be a great start."
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For more information contact: Di Harper on 020 7242 3955 or by email at dianneh@traidcraft.co.uk
NOTES FOR EDITORS
World Fair Trade Day
World Fair Trade Day is a global event that takes place once a year to highlight social, economic and environmental benefits to buying Fair Trade.
Traidcraft
Traidcraft fights poverty through trade, helping people in developing countries to transform their lives. Established in 1979 as a Christian response to poverty, we are the UK's leading fair trade organisation. We run development programmes in some of the poorest countries in the world, and campaign in the UK and internationally to bring about trade justice.
Traidcraft comprises a trading company, with annual sales of £15m and some 5,000 shareholders, as well as a £4m charity, Traidcraft Exchange. Traidcraft Exchange is the UK’s only development charity that specialises in making trade work for the poor in developing countries.
Traidcraft is planning a campaign to highlight the injustice of US cotton subsidies. The launch of the campaign will co-incide with President Obama’s state visit to the UK.
What are US Subsidies?
Payments designed to shield US farmers from the volatility of cotton prices.
The payments that have been ruled illegal by the WTO include.
- User Marketing Payments (Step 2)
- Supplier Credit Guarantee Programme
- Marketing loan programme payments
- Market Loss Assistance Payments
- Counter-cyclical Payments
- Intermediate Export Credit Guarantee Programme
These should have been reformed already as part of the Uruguay Round.
What is the problem with US Subsidies?
Poor countries have lost a total of $250 million each year through the price dampening effect of US and EU subsidies. Over the last nine years US subsidies have totalled $24,456 million. Oxfam calculated that removing US subsidies would increase world prices by 6-14%. The International Centre for Trade and Sustainable Development (ICTSD) calculates if the US complied with the WTO ruling the price of cotton would rise by 3.5%.
According to the US-based Environmental Working Group, from 1995 to 2009, the top 10 percent of cotton subsidy recipients were paid 81 percent of cotton subsidies.
