Written evidence submitted by the Fairtrade
Foundation
1. EXECUTIVE
SUMMARY
- European cotton farmers receive €786million
a year in subsidises, or 1.38% of CAP expenditure, equal to Estonia's
entire EU membership contribution.[4]
The EU Commission are proposing they continue post-2013.[5]
- Given their sensitivity and importance to certain
member states, cotton subsidies are likely to be a bargaining
chip in European negotiations, ultimately affecting the final
deal the UK and its farmers receive.
- 35% of cotton subsidies are coupled to production,
meaning that they distort trade by directly depressing the global
price of cotton[6].
This has a negative effect on the livelihood of West African
Farmers, who are amongst the poorest in the world.
- The Fairtrade Foundation is calling on UK Government
to act now to build a coalition of member states and MEPs to end
trade distorting cotton subsidies, and to press the Commission
to honour its commitment to end cotton subsidies as part of the
Doha Development Agenda.[7]
2. WHAT'S
WRONG WITH
EU COTTON SUBSIDIES?
2.1 In total, EU farmers currently receive €786
million a year in cotton subsidies, of which €280 million
is spent on subsidising production, depressing the global cotton
price. This is to the direct detriment of the seven million people
in West Africa who depend heavily on cotton production, and struggle
to compete against subsidised cotton.[8]
2.2 Subsidies that undercut West African cotton
farmers are undermining UK and EU development aims, as well as
bringing into question agricultural and development policy coherence.
For example, since 2004 the EU has spent €260 million on
the EU-Africa Cotton Partnership, whilst simultaneously funding
a subsidy that depresses the value of the primary cash crop of
West African farmers.
2.3 Whilst the EU accounts for only 2% of global
production, EU cotton subsidies represent a significant impasse
in WTO negotiations to end trade-distorting cotton subsidies,
most notably with the US - the world's largest exporter of subsided
cotton - which can cite European subsidies as justification for
its own.
2.4 The EU cotton subsidies policy undermines
European trade aims, and hopes of concluding the WTO Doha Development
Agreement. As a once every seven years opportunity, failure to
address cotton subsidies as part of post 2013 negotiations, will
cause irrevocable damage to West African cotton farmers' capacity,
based on current rates of decline in production.[9]
2.5 Funding EU cotton production undermines the
environmental aspirations of CAP policy because European production
is water intensive, relying heavily on manmade irrigation[10]
which impacts on Europe's water tables, is grown in monoculture,
rapidly depleting soil fertility and is a pesticide intensive
crop.
3. WHY DO
COTTON SUBSIDIES
MATTER TO
UK FARMERS?
3.1 EU cotton subsidies represent a significant
proportion of the agricultural subsidies of two member states,
Greece (€202 million) and Spain (€73 million), and therefore
heavily determines their negotiating position. This, in turn,
ultimately influences the final CAP settlement. Cotton subsidies
actually form part of these countries EU accession agreements,
rather than the CAP agreements, however it is inconceivable that
the future of cotton subsidies could be decided outside a wider
settlement on CAP. Evidence points to early success of this bloc
securing their interests, with the Commission already firmly committing
to the future coupled cotton subsidies in its proposals for post
2013.
3.2 Without laying the groundwork now, there
is a risk that Defra negotiators could be forced to sacrifice
any possibility of ending trade-distorting cotton subsidies for
a better deal for UK farmers and/or HM Treasury. We would argue
that both should be possible, through the UK indicating a red
line on cotton subsidies now, and investing sufficient political
capital early on in the process, through coalition building, to
prevent this scenario happening.
4. WHAT
SHOULD UK DO
ABOUT COTTON
SUBSIDIES?
4.1 Defra has already indicated its opposition
to trade-distorting cotton subsidies.[11]
However, it is yet to demonstrate that it has sought to directly
influence the EU Commission's proposals on the future of cotton
subsidies, or begun to build the necessary coalition amongst member
states and MEPs to end this subsidy. Other member states are
already building coalitions to secure their CAP policy aims, for
example, the joint Franco-German policy statement on the future
of CAP in September.[12]
4.2 We would urge the Committee to explore the
Government commitment to ending trade-distorting EU cotton subsidies.
In particular, the Committee may wish to pursue the following
avenues of inquiry:
- What priority has Defra given to ending EU trade
distorting cotton subsidies as part of post 2013 CAP negotiations?
- What representations has it made bilaterally
to start building a coalition against coupled cotton subsidies?
- What representation has it already made to the
Commission about changing its position?
- What efforts have been made to influence UK MEPs,
and supporting them to form wider support amongst European Parliament?
- What interdepartmental co-ordination has there
been on removal of trade distorting cotton subsidies?
ABOUT THE
FAIRTRADE FOUNDATION
The Fairtrade Foundation is a registered charity
(no. 1043886). It is also a company limited by guarantee, registered
in England and Wales (no. 2733136). Our vision is of a world
in which justice and sustainable development are at the heart
of trade structures and practices so that everyone, through their
work, can maintain a decent and dignified livelihood and develop
their full potential.
To achieve this vision, Fairtrade seeks to transform
trading structures and practices in favour of the poor and disadvantaged.
By facilitating trading partnerships based on equity and transparency,
Fairtrade contributes to sustainable development for marginalised
producers, workers and their communities. Through demonstration
of alternatives to conventional trade and other forms of advocacy,
the Fairtrade movement empowers citizens to campaign for an international
trade system based on justice and fairness.
December 2010
4 EUROPA, CAP
Reform: Commission proposes new cotton reform taking account of
Court of Justice ruling, http://europa.eu/rapid/pressReleasesAction.do?reference=IP/07/1669&format=HTML&aged=1&language=EN&guiLanguage=en Back
5
Commission Communiqué, "The CAP towards 2020"
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0672:FIN:en:PDF Back
6
Cotton: a development priority http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/75&format=HTML&aged=0&language=EN&guiLanguage=en
Jales, M (2010), "How Would A Trade
Deal On Cotton Affect, Exporting And Importing Countries?"
Issue Paper No. 26, ICTSD, May 2010, Geneva Back
7
WTO Ministerial Declaration,
Adopted on 18 December 2005, paragraph 11, http://www.wto.org/english/thewto_e/minist_e/min05_e/final_text_e.pdf
Back
8
p.11, "The Great Cotton Stitch-Up", The Fairtrade Foundation,
Nov 2010 Back
9
p. 9, "The Great Cotton
Stitch-Up", The Fairtrade Foundation, Nov 2010 "The
Great Cotton Stitch-Up", The Fairtrade Foundation, Nov 2010
http://www.fairtrade.org.uk/includes/documents/cm_docs/2010/f/2_ft_cotton_policy_report_2010_loresv2.pdf Back
10
p.11, idem. Back
11
Written Question, Greg Mulholland to Jim Paice, Hansard 10 Nov
2010 : Column 309W, http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm101110/text/101110w0001.htm#10111049000691 Back
12
Franco German position for a strong Common Agricultural Policy
beyond 2013 - New challenges and expectations for food, biomass
and environment http://agriculture.gouv.fr/IMG/pdf/100914_position_commune_FR-DE_anglais_.pdf Back
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