Table 1: Subsidies on cotton as compiled by ICAC/Baffes
|
1997/98 |
1998/99 |
1999/20000 |
2000/01 |
2001/02 |
2002/03 |
Brazil |
29 |
52 |
44 |
44 |
10 |
n.a. |
China |
2 013 |
2 648 |
1 534 |
1 900 |
1 196 |
750 |
Egypt |
290 |
na |
20 |
14 |
23 |
33 |
EU |
870 |
864 |
795 |
716 |
980 |
957 |
Mexico |
13 |
15 |
28 |
23 |
18 |
7 |
Turkey |
na |
220 |
199 |
106 |
59 |
57 |
US |
597 |
1 480 |
2 056 |
1 020 |
3 001 |
1 996 |
Total |
3 812 |
5 279 |
4 764 |
3 822 |
5 287 |
3 814 |
Source: Table F11 from Baffes (2003), which itself is reported to be based on ICAC sources (ICAC 2002 and 2003). All numbers are expressed in $ million. 2001/02 and 2002/03 are preliminary estimates. The original ICAC data show estimates for Greece and Spain separately; they are added here for EU total.
Table 2: Subsidies on cotton as notified to the WTO
|
1997 |
1998 |
1999 |
2000 |
2001 |
2002 |
Brazil |
55.3 |
n.n. |
n.n. |
n.n. |
n.n. |
n.n. |
China |
- |
- |
- |
- |
- |
n.n. |
Colombia |
1.1 |
0.817 |
2.3 |
n.n. |
n.n. |
n.n. |
Egypt |
0 |
0 |
n.n. |
n.n. |
n.n. |
n.n. |
EU |
718 |
654 |
627 |
n.n. |
n.n. |
n.n. |
India |
0 |
n.n. |
n.n. |
n.n. |
n.n. |
n.n. |
Mexico |
0 |
0 |
n.n. |
n.n. |
n.n. |
n.n. |
Pakistan |
0 |
0 |
0 |
n.n. |
n.n. |
n.n. |
Turkey |
0 |
0 |
0 |
0 |
0 |
n.n. |
United States 1/ |
466 |
1 244 |
2 955 |
n.a. |
n.a. |
n.a. |
Total |
1 240 |
1 899 |
3 584 |
- |
- |
- |
Notes: A "-" means not applicable (e.g. China was not a member of WTO in that year), and n.n. indicates "not notified", as of January 2004
1/ For the United States, these figures include cotton-specific AMS as well as an estimated portion of Market Loss Assistance (MLA) payment (see Table 5 below for various support measures). The United States has notified the MLA payments as AMS but under non product-specific category and so the share to cotton is not explicit. For this paper, this share has been assumed to be 11 percent of the total MLA payment, which is the same proportion as the share of cotton AMS in total product-specific AMS. Our estimate is very close to the outlay shown in Table 4 by Baffes.
Source: Compiled from notifications to the WTO, as of January 2004.
Table 3: Cotton subsidies in the EU
|
Applied Administered Price (Euro/tonne) |
Production eligible to receive Applied Administered Price (000 tonnes) |
Equivalent measurement of support (million euro) |
Total support |
|||
Marketing year 1/ |
EC-14 |
Greece |
EC-14 |
Greece |
EC-14 |
Greece |
(million euro) |
1997/1998 |
831 |
903 |
379 |
1085 |
189 |
620 |
809 |
1998/1999 |
874 |
772 |
338 |
1211 |
183 |
532 |
715 |
1999/2000 |
721 |
676 |
410 |
1351 |
159 |
464 |
624 |
1/ September-August. Source: WTO notifications.
Table 4: Details of US subsidies on cotton as compiled by Baffes (in million US$)
Forms of assistance |
1996/97 |
1997/98 |
1998/99 |
1999/2000 |
2000/01 |
2001/02 |
Loan Deficiency Payments |
0 |
6 |
321 |
687 |
151 |
732 |
Marketing Loan Gains |
0 |
26 |
240 |
860 |
390 |
1 513 |
Forfeitures |
2 |
0 |
3 |
1 |
17 |
0 |
Production Flexibility Contract |
699 |
598 |
637 |
614 |
575 |
474 |
Market Loss Assistance |
0 |
0 |
316 |
614 |
613 |
524 |
Insurance |
157 |
148 |
155 |
223 |
216 |
266 |
Step-2 |
20 |
467 |
214 |
486 |
253 |
125 |
Total |
858 |
929 |
1 790 |
3 179 |
2 048 |
3 706 |
Source: Table 2 in Baffes (2003), which is said to have been compiled from USDA and ICAC sources.
Table 5: Details of the United States AMS to cotton as notified to the WTO (in million US$)
Forms of assistance |
1997/98 |
1998/99 |
1999/00 |
2000/01 |
2001/02 |
Loan defiance payments |
3 |
303 |
685 |
n.n. |
n.n. |
Marketing loan gains |
26 |
230 |
815 |
n.n. |
n.n. |
User marketing payments |
416 |
280 |
446 |
n.n. |
n.n. |
Storage payments |
24 |
78 |
144 |
n.n. |
n.n. |
Commodity loan interest subsidy |
0 |
35 |
77 |
n.n. |
n.n. |
Miscellaneous |
-3 |
8 |
187 |
n.n. |
n.n. |
Market loss assistance 1/ |
0 |
309 |
601 |
n.n. |
n.n. |
Total AMS |
466 |
1244 |
2955 |
n.n. |
n.n. |
Source: Compiled by authors from US notifications to the WTO. Note that compared with the Baffes table above, this shows only AMS values subject to reduction - the former also includes some Green Box measures and non product-specific support estimated to be accrued to cotton (discussed in the text). The user marketing payments are the same as the Step-2 payments in table 4.
Table 6: Policy parameters used in the ATPSM runs 1/
|
Applied tariff 2/ (percent) |
Domestic subsidies $ million 3/ |
Ad valorem subsidy rate (percent) 4/ |
Brazil |
0 |
33 |
6.2 |
China |
1 |
0 |
0.0 |
Colombia |
10 |
2 |
4.4 |
Egypt |
0 |
0 |
0.0 |
EU |
0 |
794 |
129.7 |
Mexico |
0 |
0 |
0.0 |
Turkey |
0 |
0 |
0.0 |
United States |
1.6 |
1 555 |
33.2 |
Weighted average/total 5/ |
0.2 |
2 384 |
10.1 |
1/ The table only shows those countries that have one or more positive parameters (tariff and subsidy). For all the rest of the countries in the ATPSM both import tariffs and domestic subsidies on cotton were zero.
2/ As mentioned in the text, these are actual tariffs that cotton imports face, and are either applied MFN rates or in-quota tariffs where there are tariff quotas that are known to be not binding.
3/ The levels of domestic subsides are AMS values from WTO notifications, shown in Table 2. These are averages for the latest three years for which the data were available, typically 1997-99. For Brazil, the average is based on 1995-97 data.
4/ These are ad valorem equivalent subsidy rates computed as the ratio (in percent) of per unit subsidy rate to world market price of cotton, as explained in the text.
5/ The second column is the sum of the individual values, and the first and third columns are weighted averages. The weights used are import volumes (for 28 countries with 65 percent share of global import) for tariffs and cotton production shares for subsidy rates.
Table 7: Impact on world market price of cotton of complete elimination of domestic subsidies and import tariffs
|
Base scenario |
Alternative assumptions about price elasticities of supply and demand 1/ |
|||
S=1, D=1 |
S=3, D=1 |
S=3, D=0.25 |
S=1, D=0.25 |
S=0.5, D=1 |
|
Change in world cotton price (percent) |
3.1 |
4.1 |
4.8 |
4.3 |
2.3 |
1/ The numbers next to S and D indicate multiples of the elasticity values in the base scenario. For example, under S=3, D=0.25, the assumed supply and demand elasticities are 3 and 0.25 times their base values, respectively.
Source: ATPSM simulation results.
Table 8: Impact on production of full trade liberalization, WTO subsidy scenario
|
Base production (000 tonnes) |
Base scenario S=1, D=1 |
Assumptions on supply and demand elasticities 1/ |
|||
S=3 D=1 |
S=3 D=0.25 |
S=1 D=0.25 |
S=0.5 D=1 |
|||
............................percentage change from base.......................... |
||||||
Australia |
709 |
2.4 |
9.9 |
11.5 |
3.4 |
0.9 |
BBCM 2/ |
530 |
2.4 |
9.9 |
11.5 |
3.4 |
0.9 |
Brazil |
421 |
-3.1 |
-5.5 |
-3.2 |
-1.7 |
-2.0 |
China |
4 311 |
2.8 |
12.2 |
14.6 |
4.2 |
1.0 |
Egypt |
275 |
1.2 |
6.2 |
7.8 |
2.2 |
0.3 |
EU |
488 |
-31.7 |
-92.5 |
-90.9 |
-30.7 |
-16.1 |
India |
1 991 |
3.7 |
14.8 |
17.2 |
5.1 |
1.4 |
Mexico |
190 |
3.1 |
12.4 |
14.3 |
4.2 |
1.2 |
Pakistan |
1 678 |
3.7 |
14.8 |
17.2 |
5.1 |
1.4 |
Turkey |
834 |
-1.9 |
-1.9 |
0.5 |
-0.5 |
-1.4 |
United States |
3 736 |
-14.2 |
-40.2 |
-38.6 |
-13.3 |
-7.4 |
World total |
18 813 |
-1.9 |
-2.7 |
-0.8 |
-0.7 |
-1.3 |
Memo item: percentage change in world cotton price |
3.1 |
4.1 |
4.8 |
4.3 |
2.3 |
1/ The numbers next to S and D are multiples of the elasticity values for the base scenario; the results under the column S=1, D=1 are those for the base scenario.
2/ BBCM sub-group indicates four West African countries (Benin, Burkina Faso, Chad and Mali).
Source: ATPSM simulation results.
Table 9: Impact on exports of full trade liberalization, WTO subsidy scenario
|
Base export (000 tonnes) |
Base scenario S=1, D=1 |
Assumptions on supply and demand elasticities 1/ |
|||
S=3 D=1 |
S=3 D=0.25 |
S=1 D=0.25 |
S=0.5 D=1 |
|||
------------------- percentage change from base ------------------------- |
||||||
Australia |
608 |
3.1 |
11.9 |
13.5 |
4.1 |
1.3 |
BBCM 2/ |
384 |
4.1 |
14.6 |
16.1 |
4.9 |
1.8 |
Brazil |
7 |
-3.1 |
-5.5 |
-3.2 |
-1.7 |
-2.0 |
China |
116 |
2.8 |
296.1 |
291.3 |
4.2 |
1.0 |
Egypt |
61 |
1.2 |
13.8 |
18.4 |
2.2 |
0.3 |
EU |
328 |
-31.7 |
-92.5 |
-90.9 |
-30.7 |
-16.1 |
India |
90 |
22.7 |
290.1 |
290.0 |
18.7 |
1.4 |
Mexico |
53 |
3.1 |
12.4 |
14.3 |
4.2 |
1.2 |
Pakistan |
105 |
32.3 |
226.7 |
218.3 |
23.8 |
1.4 |
Turkey |
53 |
-1.9 |
-1.9 |
0.5 |
-0.5 |
-1.4 |
United States |
1214 |
-14.2 |
-40.2 |
-38.6 |
-13.3 |
-7.4 |
World total |
5394 |
-2.0 |
8.4 |
9.5 |
-1.3 |
-1.7 |
Memo item: percentage change in world cotton price |
3.1 |
4.1 |
4.8 |
4.3 |
2.3 |
Notes: 1/ and 2/ - Same as in the above table.
Source: ATPSM simulation results.
Table 10: Impact of complete liberalization on welfare measures, WTO subsidy scenario 1/ (base scenario and two others with extreme values)
|
------ Base scenario (S=1, D=1) ------- |
Alternative assumptions on elasticities |
||||||
S=3, =0.25 |
S=0.5, D=1 |
|||||||
DPS |
DCS |
DGR |
DTS |
DPS |
DTS |
DPS |
DTS |
|
--------------------------------------- million US$ -------------------------------------------- |
||||||||
Australia |
28 |
-4 |
0 |
24 |
45 |
39 |
21 |
18 |
BBCM 2/ |
21 |
-6 |
0 |
15 |
34 |
25 |
16 |
11 |
Brazil |
-15 |
-31 |
34 |
-12 |
-6 |
-21 |
-19 |
-9 |
China |
128 |
-129 |
4 |
-5 |
235 |
4 |
87 |
-5 |
Egypt |
5 |
-1 |
2 |
2 |
12 |
3 |
3 |
1 |
EU |
-368 |
-42 |
795 |
385 |
-233 |
496 |
-406 |
357 |
India |
78 |
-76 |
0 |
2 |
129 |
10 |
59 |
1 |
Mexico |
7 |
-17 |
0 |
-9 |
12 |
-14 |
6 |
-7 |
Pakistan |
66 |
-62 |
0 |
3 |
109 |
11 |
49 |
2 |
Turkey |
-19 |
34 |
26 |
-11 |
-1 |
-18 |
-26 |
-8 |
United States |
-1014 |
-95 |
1556 |
447 |
-816 |
589 |
-1084 |
401 |
1/ Change in total welfare (DTS) = change in producer surplus (DPS) + change in consumer surplus (DCS) + change in government revenue (DGR), which is savings resulting from the policy reform. Details are shown for the base scenario only because DGR is same for other scenarios also; so, given the DGR, the remaining difference between DTS and DPS is DCS.
2/ BBCM sub-group includes Benin, Burkina Faso, Chad and Mali.
Source: ATPSM simulation results.
Table 11: Impact on export earnings of complete liberalization, WTO subsidy scenario
|
Base values (million $) |
Base scenario |
Assumptions on supply and demand elasticities 1/ |
|||
S=1, D=1 |
S=3, D=1 |
S=3, D=0.25 |
S=1, D=0.25 |
S=0.5, D=1 |
||
------------------ percentage change from base values ---------------------- |
||||||
Australia |
763 |
6.3 |
16.6 |
18.9 |
8.5 |
3.7 |
BBCM 2/ |
482 |
7.2 |
19.3 |
21.6 |
9.4 |
4.2 |
Brazil |
9 |
-0.2 |
-1.6 |
1.4 |
2.5 |
0.3 |
China |
145 |
5.9 |
312.4 |
309.9 |
8.7 |
3.3 |
Egypt |
76 |
4.3 |
18.5 |
24.1 |
6.5 |
2.7 |
EU |
412 |
-29.6 |
-92.2 |
-90.5 |
-27.8 |
-14.2 |
India |
112 |
26.5 |
306.2 |
308.6 |
23.8 |
3.8 |
Mexico |
67 |
6.2 |
17.0 |
19.8 |
8.7 |
3.5 |
Pakistan |
132 |
36.4 |
240.2 |
233.5 |
29.1 |
3.8 |
Turkey |
67 |
1.1 |
2.2 |
5.3 |
3.7 |
0.9 |
United States |
1522 |
-11.6 |
-37.7 |
-35.7 |
-9.6 |
-5.2 |
1/ and 2/: See Table 10 for the notes.
Source: ATPSM simulation results.
Table 12: Sensitivity analysis - effects of assumed higher levels of US domestic subsidies on cotton (assumed higher level = $2..5 billion)
|
Production |
Export volume |
Export earnings |
|||
Base scenario 1/ |
Sensitivity scenario 2/ |
Base scenario |
Sensitivity scenario |
Base scenario |
Sensitivity scenario |
|
------------------------- percentage change from base period values ------------------------- |
||||||
Australia |
2.4 |
3.0 |
3.1 |
3.8 |
6.3 |
7.7 |
BBCM 3/ |
2.4 |
3.0 |
4.1 |
4.9 |
7.2 |
8.8 |
Brazil |
-3.1 |
-2.3 |
-3.1 |
-2.3 |
-0.2 |
1.3 |
China |
2.8 |
3.6 |
2.8 |
3.6 |
5.9 |
7.4 |
Egypt |
1.2 |
1.8 |
1.2 |
1.8 |
4.3 |
5.5 |
EU |
-31.7 |
-31.2 |
-31.7 |
-31.2 |
-29.6 |
-28.6 |
India |
3.7 |
4.5 |
22.7 |
52.0 |
26.5 |
57.7 |
Mexico |
3.1 |
3.7 |
3.1 |
3.7 |
6.2 |
7.6 |
Pakistan |
3.7 |
4.5 |
32.3 |
55.2 |
36.4 |
60.9 |
Turkey |
-1.9 |
-1.1 |
-1.9 |
-1.1 |
1.1 |
2.6 |
United States |
-14.2 |
-19.5 |
-14.2 |
-19.5 |
-11.6 |
-16.5 |
1/ Base scenario results are from previous tables (with US subsidy of $1.6 billion).
2/ Sensitivity scenario refers to the scenario with US subsidy of $2.5 billion, all other parameters being the same as in the base scenario.
3/ BBCM sub-group includes Benin, Burkina Faso, Mali and Chad.
Source: ATPSM simulation results.