The Doha Round Declaration on Cotton: A Catalyst for Poverty Reduction in Africa?

Cotton plays a strategic role in the development policies and poverty reduction programs of a number of African countries. Several African countries have introduced reforms in the cotton sector to improve its quality and competitiveness. The impact of these reforms has to date been virtually nullified by the fact that certain WTO Members continue to apply support measures and subsidies that distort global market prices. These are the arguments behind the Cotton Initiative raised in 2003 in the World Trade Organization (WTO) by Benin, Burkina Faso, Chad and Mali, which reflects the position of the African Group countries until the Sixth WTO Ministerial Conference in Hong Kong recently. In this conference two important policy changes were agreed in international trade of cotton. First, all forms of export subsidies for cotton will be eliminated by developed countries in 2006. Second, developed countries will give duty and quota free access for cotton exports from the least-developed countries (LDCs). This paper uses a computable general equilibrium (CGE) model of the Zambian economy with a three fold purpose: (a) to study the impact of the Doha Round agreement on the cotton sector in Zambia, (b) to analyze the reality of the Doha agreement versus the African countries’' cotton initiative during the WTO Hong Kong conference, and (c) to contribute to the analysis of further agricultural trade liberalization and its implications for poor countries. The results show the extent of the benefits of implementation of both, the Doha WTO Round and the African Countries Proposal in Zambia. We quantify the impacts of both policy initiatives on the Zambian cotton sector (production, exports, prices), and agrarian population welfare. The results show that the positive effects of the Cotton Initiative in Zambia are higher than the Doha Round polices benefits.