The Cotton Dilemma A case study on what proceedings less powerful Members use in order to carry out challenges and discuss their economic interests within the configuration of WTO

Abstract

Cotton has great importance to the global trade market, and could be a solution of economic improvement in developing countries. Although, African cotton is generally cheaper to produce, Benin, Burkina Faso, Chad, and Mali have experienced difficulties to maintain competitiveness on the market. The reason is cotton subsidies, which are stimulus of price settings, and therefore prejudicing for cotton production in smaller economies. Thus, the sector has caused economic issues due to distribution of subsidies, which has also resulted in a politic value of the crop. There are several studies that relate the institutional theory on institution structure, legislation and decision-making processes within the WTO, but not many are directly applied on the cotton dilemma. Still, the cotton issue is a case study that demonstrates something greater; being a very central issue on the WTO agenda - it is an example on WTO multinational structures, and demonstrates how less powerful Member countries put their interests on the WTO agenda. The first formal complaint at the WTO on US cotton subsidies was carried out by Brazil in 2002, asserting that the US subsidies on cotton ignored the global trade agreements. Subsidies were declared to cause reduction in export profit and recession in price, which made it difficult for minor producers to be competitive on the global cotton market. In the end of April 2003, the C4 laid out a proposition on how to resolve the issues of cotton subsidies. However, the C4 proposition failed, with no outcome. In December 2013, C4 forwarded a second proposal for cotton during the WTO Ministerial Conference in Bali. It was grounded on developing countries progress and ability in the trade of cotton. The meeting agreed on implementation of the so-called Bali-package, where the C4 proposal was included. The WTO dispute mechanism purpose is to provide countries to solve disagreements through discussion rather than war. Cotton is currently very much a part on the WTO agenda, and the gradual change of attitude towards the cotton issue will hopefully give the Bali-package prospects and efficiency. However, it is difficult to evaluate legal aspects against political, and legal decision-making have to be implemented in order to make a difference.