IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/5663.html

Cotton subsidies, the WTO, and the'cotton problem'

Author

Listed:
  • Baffes, John

Abstract

Following an 8-year long dispute over cotton subsidies, Brazil and the United States signed a Memorandum of Understanding on April 21, 2010, effectively paving the way for settling the dispute. This paper argues that cotton subsidies are just the tip of the iceberg while a number of other, perhaps more important, issues requireattention and, indeed, political will. Chief among them is the persistent divergence between cotton prices and the prices of other agricultural commodities, which reflects, for the most part, the large supply response by China and India, a direct consequence of con-version to biotech cotton varieties in these (and other) countries. Such response -- which kept cotton prices low, compared with other commodities -- imposes a competitive disadvantage to non-users of biotech cotton. The paper also highlights two additional constraints faced by the cotton producing countries of West and Central Africa, namely, the structural inefficiencies of their primary processing industries (also known as ginning) and the appreciation of the CFA franc against the US dollar. Without downplaying the importance of subsidy elimination, the paper concludes that these impediments should receive high priority in the policy agenda.

Suggested Citation

  • Baffes, John, 2011. "Cotton subsidies, the WTO, and the'cotton problem'," Policy Research Working Paper Series 5663, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5663
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/05/18/000158349_20110518123649/Rendered/PDF/WPS5663.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:wbk:wbpubs:7464 is not listed on IDEAS
    2. Falck-Zepeda, José B. & Horna, Daniela & Smale, Melinda, 2007. "The economic impact and the distribution of benefits and risk from the adoption of insect resistant (Bt) cotton in West Africa," IFPRI discussion papers 718, International Food Policy Research Institute (IFPRI).
    3. Kym Anderson & Will Martin, 2005. "Agricultural Trade Reform and the Doha Development Agenda," The World Economy, Wiley Blackwell, vol. 28(9), pages 1301-1327, September.
    4. John Baffes, 2005. "The "Cotton Problem"," The World Bank Research Observer, World Bank, vol. 20(1), pages 109-144.
    5. Anderson, Kym & Masters, William A., 2007. "Distortions to Agricultural Incentives in Africa," Agricultural Distortions Working Paper Series 48554, World Bank.
    6. Mercurio, Bryan, 2009. "Why compensation cannot replace trade retaliation in the WTO Dispute Settlement Understanding," World Trade Review, Cambridge University Press, vol. 8(2), pages 315-338, April.
    7. Bagwell, Kyle & Mavroidis, Petros C. & Staiger, Robert W., 2007. "Auctioning countermeasures in the WTO," Journal of International Economics, Elsevier, vol. 73(2), pages 309-332, November.
    8. Mattoo, Aaditya & Subramanian, Arvind, 2004. "The WTO and the poorest countries: the stark reality," World Trade Review, Cambridge University Press, vol. 3(3), pages 385-407, November.
    9. David Zilberman & Scott Kaplan & Gal Hochman & Deepak Rajagopal, 2014. "Political Economy of Biofuels," Natural Resource Management and Policy, in: Govinda R. Timilsina & David Zilberman (ed.), The Impacts of Biofuels on the Economy, Environment, and Poverty, edition 127, chapter 0, pages 131-144, Springer.
    10. Aksoy, M. Ataman & Beghin, John C., 2005. "Global Agricultural Trade and Developing Countries," Staff General Research Papers Archive 12228, Iowa State University, Department of Economics.
    11. repec:wbk:wbpubs:2604 is not listed on IDEAS
    12. repec:wbk:wbpubs:2581 is not listed on IDEAS
    13. Anderson, Kym & Martin, William J., 2007. "Distortions to Agricultural Incentives in Asia," Agricultural Distortions Working Paper Series 48557, World Bank.
    14. Arjunan Subramanian & Matin Qaim, 2010. "The Impact of Bt Cotton on Poor Households in Rural India," Journal of Development Studies, Taylor & Francis Journals, vol. 46(2), pages 295-311.
    15. Davies, Arwel, 2006. "Reviewing dispute settlement at the World Trade Organization: a time to reconsider the role/s of compensation?," World Trade Review, Cambridge University Press, vol. 5(1), pages 31-67, March.
    16. repec:wbk:wbpubs:9436 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Delpeuch, Claire & Vandeplas, Anneleen, 2013. "Revisiting the “Cotton Problem”—A Comparative Analysis of Cotton Reforms in Sub-Saharan Africa," World Development, Elsevier, vol. 42(C), pages 209-221.
    2. Bassett, Thomas J., 2014. "Capturing the Margins: World Market Prices and Cotton Farmer Incomes in West Africa," World Development, Elsevier, vol. 59(C), pages 408-421.
    3. Neha Bhardwaj Upadhayay, 2020. "Uncovering the proliferation of contingent protection through channels of retaliation, gender and development assistance," Erudite Ph.D Dissertations, Erudite, number ph20-02 edited by Julie Lochard & Catherine Bros, April.
    4. Nazif Durmaz, 2014. "Inventories of Asian Textile Producers, US Cotton Exports, and the Exchange Rate," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 61(4), pages 397-413, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kym Anderson, 2009. "Krueger/Schiff/Valdes Revisited: Agricultural Price and Trade Policy Reform in Developing Countries since the 1980s," Adelaide Economics Working Papers 2009-22, Adelaide University, School of Economics.
    2. Anderson, Kym & Valenzuela, Ernesto, 2006. "WTO's Doha Cotton Initiative: A Tale of Two Issues," CEPR Discussion Papers 5567, Centre for Economic Policy Research.
    3. Kym Anderson & Ernesto Valenzuela, 2007. "The World Trade Organisation's Doha Cotton Initiative: A Tale of Two Issues," The World Economy, Wiley Blackwell, vol. 30(8), pages 1281-1304, August.
    4. Miet Maertens & Liesbeth Colen & Johan F. M. Swinnen, 2011. "Globalisation and poverty in Senegal: a worst case scenario?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 38(1), pages 31-54, March.
    5. Unknown, 2007. "Journal of International Agricultural Trade and Development, Volume 3, Number 1, Spring 2007," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 3(01).
    6. Maertens, Miet & Swinnen, Johan, 2015. "Agricultural trade and development: A value chain perspective," WTO Staff Working Papers ERSD-2015-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    7. Baffes, John, 2010. "Markets for cotton by-products : global trends and implications for African cotton producers," Policy Research Working Paper Series 5355, The World Bank.
    8. Leudjou, Roland R., . "The Doha Round and Food Security in the Dairy Sector in Cameroon: A Global Simulation Model (GSIM) Approach," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 13(01), pages 1-16.
    9. Ernesto Valenzuela & Kym Anderson & Dominique van der Mensbrugghe, 2009. "Welfare and Poverty Effects of Global Agricultural and Trade Policies Using the Linkage Model," World Bank Publications - Reports 28155, The World Bank Group.
    10. Anderson, Kym & Brückner, Markus, 2011. "Price Distortions and Economic Growth in Sub-Saharan Africa," CEPR Discussion Papers 8530, Centre for Economic Policy Research.
    11. Pitoro, Raul & Walker, Thomas S. & Tschirley, David L. & Swinton, Scott M. & Boughton, Duncan & de Marrule, Higino Francisco, 2009. "Can Bt Technology Reduce Poverty Among African Cotton Growers? An Ex Ante Analysis of the Private and Social Profitability of Bt Cotton Seed in Mozambique," 2009 Conference, August 16-22, 2009, Beijing, China 51633, International Association of Agricultural Economists.
    12. Anderson, Kym & Jackson, Lee Ann & Valenzuela, Ernesto, 2006. "GM Cotton Adoption, Recent and Prospective: A Global CGE Analysis of Economic Impacts," CEPR Discussion Papers 5568, Centre for Economic Policy Research.
    13. Anderson, Kym & Croser, Johanna L., 2009. "Distribution of Agricultural NRAs across Countries and Products, 1955-84 and 1985-2007," Agricultural Distortions Working Paper Series 50307, World Bank.
    14. M. Maertens & J. Swinnen, 2012. "Private Standards, the Organization of Global Supply Chains, and their Impact on Developing Countries," Chapters, in: Axel Marx & Miet Maertens & Johan Swinnen & Jan Wouters (ed.), Private Standards and Global Governance, chapter 6, Edward Elgar Publishing.
    15. Nicolas Hérault & James Thurlow, 2009. "Agricultural Distortions, Poverty, and Inequality in South Africa," World Bank Publications - Reports 28151, The World Bank Group.
    16. Nuno Limão & Kamal Saggi, 2018. "Size inequality, coordination externalities and international trade agreements," World Scientific Book Chapters, in: Kamal Saggi (ed.), Economic Analysis of the Rules and Regulations of the World Trade Organization, chapter 16, pages 357-374, World Scientific Publishing Co. Pte. Ltd..
    17. Johanna L. Croser & Peter J. Lloyd & Kym Anderson, 2010. "How Do Agricultural Policy Restrictions on Global Trade and Welfare Differ Across Commodities?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 698-712.
    18. Kym Anderson & Ernesto Valenzuela & Lee Ann Jackson, 2008. "Recent and Prospective Adoption of Genetically Modified Cotton: A Global Computable General Equilibrium Analysis of Economic Impacts," Economic Development and Cultural Change, University of Chicago Press, vol. 56(2), pages 265-296, January.
    19. Swinnen, Johan & Kuijpers, Rob, 2020. "Inclusive Value Chains to Accelerate Poverty Reduction in Africa," Jobs Group Papers, Notes, and Guides 31809214, The World Bank.
    20. Kym Anderson & Will Martin & Dominique van der Mensbrugghe, 2006. "Doha Merchandise Trade Reform: What Is at Stake for Developing Countries?," The World Bank Economic Review, World Bank, vol. 20(2), pages 169-195.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:5663. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.