On September 22, 2015, the special meeting of the Cotton Subcommittee of the WTO Committee on Agriculture issued documents TN/AG/GEN/34/Rev.2/Add.1, TN/AG/SCC/GEN/13/Rev.2 /Add.1, concerning statements made by China regarding its cotton reserve policy.
China pointed out in the document that, first of all, China supports the position of the four cotton countries (C-4) and their resolution of related issues in accordance with the ministerial decision on cotton issues adopted at the Ninth WTO Ministerial Conference in December 2013. requirements, and also supports the solution to the cotton issue based on the 2008 Agricultural Implementation Measures (TN/AG/W/4/Rev.4). China stated that it will continue to work with all WTO members to find a solution to the problem.
Secondly, China stated in the statement that China’s cotton industry is subsistence agriculture. China is the world’s largest cotton producer, but cotton production is mainly based on small-scale and subsistence agriculture. The average cotton planting area is only 0.3 hectares per household. Moreover, China’s cotton production areas are mainly located in ethnic minority areas with poor resources and underdeveloped economies, and are regarded as the only means for local livelihood security and poverty alleviation. After China’s accession to the WTO, China’s cotton production has been on a downward trend, with cotton planting area reduced from 4.8 million hectares in 2001 to 4.3 million hectares in 2013. The main reason is the increase in production costs corresponding to low cotton prices, which are mainly caused by subsidies from developed members.
Third, China’s cotton subsidies are still at a low level. Compared with other WTO members, China’s agricultural support toolbox is for short-term supply and does not include comprehensive support volume (AMS) including cotton. China’s subsidies are minimal subsidies, and the subsidy level (8.5%) is even lower than that of other developing members (10%). Whether in terms of absolute quantity or per capita quantity, China’s cotton support level is at a low level. In absolute terms, China’s support for cotton is US$480 million; but in per capita terms, China’s support for each cotton farmer is only US$16.
Fourth, China’s cotton subsidy policy is a passive response. China has always been the victim of cotton subsidies from developed members. Since joining the WTO, China’s cotton imports have increased significantly from 113,000 tons to 4.2 million tons, while the cotton planting area has actually decreased.
Fifth, China’s cotton subsidy policy has not distorted international trade. China’s temporary cotton reserve policy aims to eliminate the impact of international market turbulence caused by subsidies from developed members. The policy will not cause production distortions or trade distortions. From a production perspective, China’s cotton output has not increased significantly; from an import perspective, China’s area imports continued to grow from 2.8 million tons in 2010 to 4.2 million tons in 2013; if cotton yarn imports are included, then Total cotton imports will increase to 6.5 million tons. In addition, China’s cotton reserves are mainly used in the domestic textile industry rather than for export, so they will not distort the international cotton market.
Sixth, China has made great contributions to solving the cotton issue. China has always been the largest cotton importer, accounting for more than 50% of global cotton imports, creating a large number of market access opportunities for cotton exports from developing members. China also imports a large amount of cotton from African cotton-producing members (including the four cotton countries). During 2001-2013, China’s cotton imports from Africa increased from 3,700 tons to 442,000 tons. From the perspective of development assistance, China has been committed to providing technical and financial assistance to the four cotton countries to improve their production and export capabilities. In 2011 and 2013, China and the four cotton countries signed cooperation communiques, which covered agricultural input, training, technology transfer, etc. In addition, China also provides various cotton-related assistance to the four cotton countries through bilateral channels.
China issued a statement at the WTO saying that its cotton reserve policy did not distort the global market.