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Oxfam Welcomes US Move On Cotton

By Oxfam

WASHINGTON, DC -- International agency Oxfam today welcomed the Bush administration's proposal to eliminate all cotton export subsidies and urged Congress to enact these changes as soon as possible. Oxfam hailed the move as an important first step and a welcome signal of the US government's willingness to work through the WTO to make trade fairer for developing countries.<br/><br/>However, Oxfam said that further reforms would be necessary to fully resolve the case taken by Brazil to the WTO and successfully conclude the Doha trade negotiations. Full implementation of the WTO panel's recommendations would help millions of farmers in poor countries that suffer as a result of US cotton dumping.<br/><br/>"Secretary Johanns and the Bush Administration are doing the right thing, to comply with the WTO ruling," said Ray Offenheiser, President of Oxfam America. "This is an important step forward to reform an unfair farm subsidy that wastes taxpayer money and hurts farmers in poor countries."<br/><br/>The WTO ruled in March 2005 that the US cotton subsidy program violated international rules and imposed a deadline of July 1 for the US to eliminate the so called 'Step 2 program' and reform of export credit guarantees.<br/><br/>The WTO ruling calls for further reform to the domestic cotton subsidy program before the end of the year. A delay in reforming these subsidies would threaten to undermine the WTO system and could mean increased poverty for millions of struggling farmers in poor countries who depend on agriculture for their livelihood.<br/><br/>"The US Congress faces an important test.&#xA0; Either Congress can fully implement the reform in a timely manner so that farmers in Africa get a fair chance to trade their way out of poverty, or they can disregard the international trade system the US spent decades helping to create," said Offenheiser. "We urge Congress to quickly reform the cotton export subsidy program and move to fully implement the ruling by the end of the year."<br/><br/>Oxfam estimates that US cotton dumping caused losses of almost $400 million between 2001 and 2003 for poor African cotton-producing countries, where more than 10 million people depend directly on the crop to make a living.<br/><br/>According to a study by economists at the University of California Davis the full elimination of distorting cotton subsidies, bringing the US in full compliance with the WTO ruling, would increase the income of poor farmers in Africa by 12%.<br/><br/>"Ahead of the critical meeting of the WTO in December this year, the US has a chance to demonstrate goodwill by quickly implementing full reform of its cotton program. An agreement in Hong Kong won't happen without a full reform of trade distorting cotton subsidies," said Offenheiser.<br/><br/>

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