PROCEEDINGS 63rd Plenary Meeting of the International Cotton Advisory Committee Mumbai, India November-December 2004 PROCEEDINGS OF THE 63rd PLENARY MEETING “Enhancing Cotton Competitiveness” ICAC Washington DC USA © International Cotton Advisory Committee, 2004 Price: US$50.00 FOREWORD At the invitation of the Government of India, the 63rd Plenary Meeting of the International Cotton Ad vi so ry Com mit tee was held in Mumbai, from November 28 through December 3, 2004. The International Cotton Advisory Committee is an association of governments having an interest in the pro duc tion, export, import and consumption of cotton. It is an organization designed to promote cooperation in the solution of cotton problems, particularly those of international scope and signifi cance. The functions of the International Cotton Advisory Committee, as defi ned in the Rules and Regulations, are • To observe and keep in close touch with developments affecting the world cotton situation. • To collect and disseminate complete, authentic, and timely statistics on world cotton production, trade, con- sump tion, stocks and prices. • To suggest, as and when advisable, to the governments represented, any measures the Advisory Committee con sid ers suitable and practicable for the furtherance of international collaboration directed towards developing and main tain ing a sound world cotton economy. • To be the forum of international discussions on matters related to cotton prices. MEMBER GOVERNMENTS Argentina Germany South Africa Australia Greece Spain Belgium India Sudan Benin Iran Switzerland Brazil Israel Syria Burkina Faso Italy Tanzania Cameroon Korea, Rep. of Togo Chad Mali Turkey China (Taiwan) Netherlands, The Uganda Colombia Pakistan United Kingdom Côte d’Ivoire Paraguay United States of America Egypt Philippines Uzbekistan Finland Poland Zimbabwe France Russia Offi ce of the Secretariat 1629 K Street NW Suite 702 Washington DC 20006 USA Telephone: (202) 463-6660 Fax: (202) 463-6950 E-mail: [email protected] Internet: http://www.icac.org/ CONTENTS STATEMENT OF THE 63rd PLENARY MEETING, ENGLISH 7 STATEMENT OF THE 63rd PLENARY MEETING, RUSSIAN 11 STATEMENT OF THE 63rd PLENARY MEETING, ARABIC 15 MINUTES Inauguration 19 Attachments Report of the Chairman of the Standing Committee 20 Report of the Executive Director 21 Plenary Sessions First Plenary Session 24 Statements by the International Organizations, Member Countries and non-Member Countries Second Plenary Session 27 Government Measures Open Sessions First Open Session 28 Economic Outlook and Cotton Prices Second Open Session 30 The Role of Importance of National Cotton Sector Associations Third Open Session 31 Trading Cotton on an Instrument Based Classing System Fourth Open Session 33 Strenghthening the Input Supply Chain to Small Holders Fifth Open Session 35 Facilitating Adoption of Best Agronomic Practices by Small Holders Sixth Open Session 37 How to Make Cotton Price Risk Management Effective Globally Seventh and Eighth Open Sessions 44 Report of the Chair of the Committee on Cotton Production Research Ninth Open Session 39 Improvement of Cotton Trading Practices Tenth Open Session 40 Strategies for Cotton Demand Enhancement Closing Session 42 Steering Committee First Meeting 43 Attachments Working Paper I: Election of Standing Committee Offi cers 44 Working Paper II: Proposals to Encourage Timely Payment of Assessments 44 Report of the Chair of the Committee on Cotton Production Research 44 LIST OF DOCUMENTS AND WORKING PAPERS 46 REPRESENTATION LIST 46 Statements of the Meeting, which are an integral part of the full record of the meeting, are published separately. PROCEEDINGS OF THE 63RD PLENARY MEETING 7 STATEMENT OF THE 63rd PLENARY MEETING “Enhancing Cotton Competitiveness” The International Cotton Advisory Committee met in Mumbai, India during November 29-December 3, 2004 for its 63rd Plenary Meeting since 1939. Representatives from 48 governments and 9 international organizations participated in the meeting. 1. The Secretariat estimates that world cotton production is at a record of over 24 million tons in 2004/05. Good weather and increased planted area explain much of the rise in production. However, advances in technology, including better tools of pest management, are helping to reduce input use, lower production costs and expand cotton production. The development of new technologies is causing cotton supply to expand faster than demand. Production and export subsidies in cotton distort fair trad- ing practices and dampen international prices. Consequently, the Secretariat estimates that average cotton prices are likely to be approximately 20 cents per pound lower during the next fi ve seasons than the average of the last thirty years. Lower real cotton prices will affect producers’ incomes and export revenues, especially in countries that are slower to adopt new technologies, and will result in additional pressures to lower production costs. 2. World cotton consumption in 2004/05 is being stimulated by lower prices, stronger world economic growth and ongoing ef- forts to promote consumption. World cotton mill use is forecast to grow by 5% in 2004/05 to more than 22 million tons for the fi rst time. World trade in cotton rose 24% between 2000/01 and 2003/04 and reached a record of 7.3 million tons. According to the Secretariat, world cotton use and trade will benefi t from the full elimination of quotas on textile and apparel trade among World Trade Organization (WTO) members on January 1, 2005, and continue to benefi t from consumer promotion programs. 3. The Committee strongly supports the trade and development aspects of the Initiative on Cotton under the auspices of the WTO, and expects they will contribute to a successful outcome to the talks on agriculture in all three pillars of reform. The overwhelming majority of member governments reaffi rmed that production and export subsidies distort cotton production and trade causing negative impacts on cotton farmers, especially in the developing and least developed countries. The Committee urged that these subsidies be removed. The Committee directed the Secretariat to communicate these views to the WTO. The Committee urged governments to look for ways to reduce tariff and non-tariff barriers on raw cotton, cotton textiles and apparel in order to expand real market access, and therefore increase trade in cotton products. The Committee directed the Secretariat to reactivate the Working Group on Government Measures. The Working Group on Government Measures will make recom- mendations to the ICAC conducive to the elimination of cotton export subsidies and all other subsidies and government mea- sures that distort cotton production and trade. The Committee determined that the ICAC should seek Observer Status with the Subcommittee on Cotton of the WTO. The Working Group is directed to report on an ongoing basis to the Standing Committee and to the 64th Plenary Meeting. 4. The Committee received a report from its Expert Panel on Commercial Standardization of Instrument Testing of Cotton (CSITC). In previous meetings, the Committee had been informed that instrument-based evaluation systems are superior to traditional hand-classing methods of grading cotton. The Expert Panel recommended seven actions to encourage worldwide testing of cotton with standardized instrument testing methods and procedures. The actions include defi nition of specifi cations for cotton trading, defi nition of international test rules, implementation of test rules, certifi cation of testing laboratories, defi ni- tion and provision of calibration standards, specifi cation of commercial control limits for laboratories, trading and establishment of arbitration procedures. The report from the Expert Panel includes specifi c actions and identifi es responsible parties for the achievement of each recommendation. The Committee endorsed the report of the Expert Panel and instructed the Secretariat to encourage the responsible parties to implement the recommendations gradually. The Committee expressed its appreciation to members of the Expert Panel on CSITC for their service to the cotton industry and authorized continued operation of the Expert Panel on CSITC. 5. The Committee received a report from its Second Expert Panel on Biotechnology of Cotton. The Committee was informed that biotech cotton varieties are planted on an estimated 24% of world cotton area, accounting for 35% of world production and 31% of world exports. The Expert Panel cited fourteen key fi ndings. The Committee also noted that a growing number of countries have been successfully introducing biotech cotton, and in these countries experience is showing that some of the fears associated with these crops may have been unjustifi ed. In addition, the Expert Panel provided some recommendations for the adoption of biotechnology for developing countries. The Expert Panel recommended that novel gene characteristics be introduced through local varieties as a component of an integrated pest management system, and that biotech not be seen as a replacement or alternative to sound pest management practices. The Expert Panel noted that the existence of a centralized regulatory process to evaluate and control biotech varieties, the capacity to educate farmers in the use of biotechnology, and 8 NOVEMBER-DECEMBER 2004 legislation to protect germplasm and technology are pre-requisites for the successful evaluation and adoption of biotech cotton. The Committee expressed its appreciation to members of the Expert Panel for