WORLD TRADE ORGANIZATION

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1 WORLD TRADE ORGANIZATION 1 December 2011 ( ) Original: French DIRECTOR GENERAL'S CONSULTATIVE FRAMEWORK MECHANISM ON COTTON Communication from the European Union The following communication, dated 3 November 2011, is being circulated at the request of the delegation of the European Union.

2 Presentation by the European Delegation at the 16 th Round of Consultations of the Director General's Consultative Framework Mechanism on Cotton Examples of projects financed by the European Union and its member States in the framework of the EU-Africa Partnership on cotton Page 2 I. Brief recap on the Partnership II. Projects financed under the All ACP Agricultural Commodities Programme (AAACP) III. Examples of projects financed by member States

3 I. Brief recap on the Partnership Since 2004, covers two aspects: "Trade" and "Development" "Trade": support for more equitable trade relations "Development": sustainable enhancement of the competitiveness and value addition of African cotton, optimizing the producer's income Through an Action Framework Page 3

4 No. I II III III.A III.B IV V VI Strategic priorities of the Action Framework Development of strategies (national, regional) Improvement of the institutional environment and the organization and efficiency of the sector Improvement of the competitiveness of the African cotton industries International trade aspect (WTO/Doha ) Productivity, market access, technological innovation, quality Reduction in the vulnerability of the industries (risk management, diversification of producers' income) Increase in value addition (local processing, quality labelled production, etc.) Coordination at the international, regional and national levels Page 4

5 The Comité d'orientation et de suivi du Partenariat UE-Afrique sur le coton (COS-coton) has been tasked with coordinating and monitoring the implementation of the Action Framework It is made up of five categories of stakeholders: 1. The ACP States 2. The European Union (EU, member States) 3. Regional integration organizations 4. EU-ACP organizations (CDE, CTA) 5. Private sector (producers, ginners, textile industry) Page 5

6 Breakdown of cotton-specific support funding % Page % % % CE EC Etats EU member membres States UE Autres Other States Etats Agences Multilateral multilatérales agencies Agences Regional régionales agencies % Total: : millions d'euros Source: COS-coton update of 20 June 2011.

7 II. Projects financed under the All ACP Agricultural Commodities Programme (AAACP) Budget: 45 million euros, A specific cotton component of 16.1 million euros with 39 interventions Implementation by five international organizations (ITC, WB, CFC, UNCTAD, FAO) Two priority components: - Development of the three regional cotton strategies - Improvement of competitiveness Page 7

8 Development of regional strategies (ITC) Region Strategy Validation WAEMU ECCAS COMESA Revised Strategy for the Implementation of the Agenda for Competitiveness of the Cotton-Textile Industry Development Strategy for the Cotton-Textile-Clothing Industry in Central Africa Regional strategy for the "Cotton-to-Clothing" value chain Final version currently being validated by the Commission Planned before end of 2011 June 2009 Page 8

9 Development of Regional Strategies (ITC) Implementation plans with: (a) Prioritization of activities (b) Defined progress indicators (c) Establishment of strategy coordination/monitoring committees (d) AAACP technical and financial support (e) Continental synergies - Pan African Road Map Page 9

10 Improving Competitiveness (FAO, ITC, CFC, WB) (a) Promotion of good agricultural practices/integrated pest management (FAO) Page 10 (b) Promotion of buyer-seller-producer relationships (ITC-CCI) (c) Prevention of seed cotton contamination in West Africa (CFC-WB) (d) Standardization of instrument testing of cotton (CFC)

11 (a) Good agricultural practices/integrated pest management (FAO) Four countries: Benin, Burkina Faso, Mali, Senegal Farmer Field School training Rational improvement of productivity while ensuring the sustainability of harvest More than 420 trainers and 21,000 producers trained Co-financed partnerships (other donors, governments, private enterprises) = increased impact Page 11

12 Agronomic and economic impact: improving yield Kg/ha Cotton yield in West Africa ( ) Rendement du coton en Afrique de l Ouest ( ) % + 55% % Mali Burkina Burkina Faso Benin Bénin Page 12 Agricultural Pratiques agricoles practices IPM GIPD Note: IPM = Integrated Pest Management Source: FAO summary report, October 2011.

13 /ha fcfa Reduction of production and protection costs, increase in gross margins Economic aspects of cotton in Mali Aspects économiques du coton au Mali , % + 179, , ,000 50,000-23% 81, ,564 24,507-71% + 7,138 92,736 - Coût Production production cost Coût Protection protection cost Marges Gross margins brutes PA GIPD IPM Page 13

14 (b) Promotion of buyer-seller-producer relationships (ITC) Improvement of the value chain through greater market knowledge and transparency Page 14 Development of direct and lasting links with traders and users in the importing countries Improvement of the image of African cotton Organized visits to six of the leading cotton importers: China, Bangladesh, Turkey, Indonesia, Thailand, Viet Nam With the representatives of producers, ginners and institutions of West, Central and Southern Africa

15 (c) Prevention of seed cotton contamination in West Africa (CFC/WB) Objectives: obtain better prices, both for seed cotton and lint, enhance the reputation of cotton produced in the region Pilot project in three countries: Mali, Burkina Faso and Cote d'ivoire and implementation by the IFDC 2.5 million euros of EU financing plus 2.5 million euros of co-financing (CFC, others) = a total of 5 million euros Training of 27,000 producers, 140 extension workers, 240 transporters, five ginneries 10,000 tonnes less lint contaminated ( ) Support for the development of a quality charter Page 15

16 (d) Standardization of instrument testing of cotton (CFC) Project covering two countries, but of regional scope: setting up of two regional technical centres (Mali for West and Central Africa, Tanzania for East and Southern Africa) Page 16 Fitting out instrument testing laboratories in conformity with international standards and ensuring their integration in the global certification network 2.6 million euros of EU financing plus 3.9 million euros of co-financing (CFC, others) = a total of 6.5 million euros Training of teams and providing support for several national cotton classification laboratories

17 III. Projects financed by member States France - Fonds de Lissage - FdL (Smoothing Fund) Aims to mitigate year-to-year cotton price volatility while maintaining sufficient income for producers Burkina Faso (created in 2008), under consideration in Cameroon Beneficiaries: producers, cotton companies, State In Burkina Faso, the FdL received a contribution from a loan to the State of 15 million euros which was reassigned to the AICB (inter-professional association), as well as a subsidy of 3 million euros. Managed by a commercial bank (BOA-Burkina) The calculation method is linked to past and future trends in world prices (medium-term trend) An adaption was discussed and proposed following the surge in prices between 2010 and 2011 Consideration of a mechanism to cover the price volatility risk at the regional level Page 17

18 III. Projects financed by member States Germany - "Cotton made in Africa (CmiA)" initiative Aims for more sustainable cotton production in Africa Countries concerned: Burkina Faso, Benin, Cote d'ivoire, Malawi, Mozambique and Zambia Component of COMPACI (Competitive African Cotton Initiative) Independent verification of criteria linked with the CmiA label (social, environmental and economic) More than 230,000 producers trained since ,000 tonnes of CmiA lint produced in 2010/2011 Possibility of boosting yield by up to 30 per cent with a cost reduction of 15 per cent First dividends for CmiA producers expected in 2013 based on the licence fees collected from sellers Page 18

19 Further information: EU-Africa Partnership on Cotton: AAACP: Support from the AFD for African cotton: Cotton made in Africa (CmiA) & Competitive African Cotton Initiative (COMPACI): Page 19