Economists welcomed WTO accord on cotton subsidies

Egyptians economists welcomed an agreement by the 149 members of the World Trade Organisation (WTO), to end state export subsidies to cotton farmers in developed countries. “This was a victory for Egypt,” said Cairo-based economic analyst Khaled Sewelam. “The cotton subsidies question was a key issue on the Egyptian agenda.” Cotton constitutes Egypt's largest agricultural industry, bringing in roughly US $500 million per year in export revenues, and employs some 1 million people. According to a final declaration issued at the close of the sixth WTO ministerial conference in Hong Kong on Sunday, developed nations will abolish all forms of export subsidies for cotton in 2006. "The particular kind of long-staple cotton grown by US farmers is the primary competitor for Egyptian cotton in the US market," said Sewelam. “The new WTO agreement, though, will result in bigger opportunities for Egyptian exports.” The final declaration also pledged to abolish all forms of farm export subsidies by the end of 2013, fulfilling a longstanding demand of the G20 group of developing nations. The G20 trade block includes countries such as China, India, Brazil and South Africa, as well as Egypt. At the same time, however, Egypt, along with Brazil, expressed reluctance regarding the guarantee of duty-free and quota-free market access for the Least Developed Countries (LDC) trade block, which will grant preferential trade treatment to the world’s poorest countries. Like Brazil, Egypt is not considered part of the grouping of least developed countries. “Cairo had major reservations about the LDC deal, because it means that Egypt will lose market share to countries like Bangladesh,” said Sewelam. While initial reactions to the WTO announcement were positive, the full implications of the agreement have yet to be fully digested, as the text of the final resolution has yet to be studied closely. When it is, said Sewelam, “We’ll be able to see the areas in which Egypt compromised.”