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February 11, 2008

African producers demand reduction of EU cotton subsidies

Three African cotton-producing countries called on the European Union on February 7 to do more to cut cotton subsidies as part of a new push for a global free trade deal, but Brussels said its hands were tied.

Ministers from Mali, Burkina Faso and Uganda said US subsidies posed a bigger problem for millions of African farmers dependent on cotton, but Europe could still cut its aid further.

"Europe produces very little cotton but this is a global problem and it requires a global solution," Malian Trade Minister Ba Fatoumata Nene Sy said after meeting EU officials.

Greece and Spain are the only EU countries where cotton farmers still get significant subsidies, which are worth a total of about 275 million euros a year.

The EU reformed its cotton subsidies in 2004, removing the link between production and aid for most of the sector. It says its cotton payments have a negligible effect on global trade.

Jean-Luc Demarty, the top civil servant at the EU's agriculture department, said the payments to Greece and Spain were guaranteed by the EU's governing treaty and could not be altered without unanimous support from EU member states.

Trade ministers are expected to meet in April in a last-gasp bid to settle the World Trade Organisation's long-delayed Doha round of negotiations for a global free trade deal, before the US presidential election delays the talks further.

The U.S. cotton industry earns between $2 billion and $4 billion in government subsidies each year. African countries want to cut that amount by 82 percent.

Asked if African cotton producers were ready to block a wider WTO deal if their demands were not met, Burkina Faso's Trade Minister Mamadou Sanou said: "Cotton is very important to us. Wait until April to see if we will use our veto."

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