November 2008 l International Centre for Trade and Sustainable Development (ICTSD)

The implications for Burkina Faso of the

July 2008 Draft Agricultural Modalities

By Abdoulaye Zonon

Centre d’Analyse des Politiques Economiques et Sociales (CAPES)
 November 2008 l International Centre for Trade and Sustainable Development (ICTSD)

The implications for Burkina Faso of the

July 2008 Draft Agricultural Modalities

By Abdoulaye Zonon
Centre d’Analyse des Politiques Economiques et Sociales (CAPES)

ICTSD
 ii

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Acknowledgements:

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ICTSD wishes to gratefully acknowledge the author of the paper, Abdoulaye Zonon.

This paper has been translated from the French original, which is also available from ICTSD
at www.ictsd.org.

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ictsd.ch

Citation: Zonon, A (2008). Implications for Burkina Faso of the July 2008 Draft Agricultural Modalities.
International Centre for Trade and Sustainable Development, Geneva, Switzerland.

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ISSN 1887-3551
iii Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities

Table of Contents

List of acronyms iv

List of tables v

List of figures v

Executive summary vi

INTRODUCTION viii

1. Domestic support 1
1.1. The situation of agricultural subsidies in Burkina 1
1.2. The status of cotton 3

2. Market access 8
2.1. Market access for cotton 8
2.2. The impact on preference erosion of different options for
the liberalization of tropical products 8
2.3. The situation of Côte d’Ivoire (non-LDC) and its impact on Burkina 9
2.4. Implications of special products, sensitive products and tropical products
and preference erosion 11
2.5. The impact of the draft text on Burkina’s major exports 12
2.6. Impact of the special agricultural safeguard (SSG), special safeguard
mechanism (SSM), sensitive products and special products on Burkina’s
exports 14
2.7. Implications of options for the Special Safeguard Mechanism 14
2.7.1. Milk 14
2.7.2. Meat 16
2.8. Impact of quota restrictions on Burkina’s exports 16

3. Export competition 17
3.1. Export subsidies and the structure of Burkina’s imports 17
3.2. Export companies 17
3.3. Export competition and cotton 17
3.4. Food aid 18

CONCLUSIONS 20

ENDNOTES 21

BIBLIOGRAPHY 22
 ICTSD Programme on Agricultural Trade and Sustainable Development
iv

List of acronyms
ACP: African, Caribbean and Pacific group

AFC: African Financial Community

AGOA: African Growth and Opportunity Act

AMS: Aggregate Measure of Support (the ‘amber box’)

CET: Common External Tariff

DAGRIS: Développement des Agro-Industries du Sud (now Geocoton)

DSB: Dispute Settlement Body

ECOWAS: Economic Community Of West African States

EPA: Economic Partnership Agreements

EWG: Environmental Working Group

FCFA: West African CFA franc (monetary unit)

FOB: Free on Board

FSF: Food Support Funds

GAO: Government Accountability Office

GATT: General Agreement on Tariffs and Trade

GDP: Gross Domestic Product

IFPRI: International Food Policy Research Institute

INSD: National Institute for Statistics and Demographics (Institut National de la

Statistique et de la Démographie)

LDC: Least Developed Countries

MDG: Millennium Development Goals

NCFS: National Council on Food Security (Conseil National de Sécurité Alimentaire)

NOET: National Office of External Trade (Office Nationale du Commerce Extérieur)

OECD: Organization for Economic Co-operation and Development

RMA: Risk Management Agency

SAP: Structural Adjustment Program

SFFS: Support Fund for Food Security (Fonds d’Appui à le Sécurité Alimentaire)

SONAGESS: National Society for the Management of Food Security Stocks (Société Nationale
de Gestion des Stocks de Sécurité)

SSG: Special agricultural safeguard

SSM: Special safeguard mechanism

US: United States

USDA: United States Department of Agriculture

WAEMU: West African Economic and Monetary Union

WTO: World Trade Organization

v Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities

List of tables
Table 1:  Development of public expenditures in agriculture in Burkina
(in millions $US).................................................................................................................... 1

Table 2:  Rate of growth compared to MDGs (in millions $US)................................................ 2

Table 3:  Summary of principal results of simulation models of the impact of

cotton subsidies................................................................................................................... 3

Table 4:  Growth of subsidies for cotton in EU from 1995 to 2004........................................ 4

Table 5:  Historic data on cotton and prices FOB.................................................................. 6

Table 6:  Domestic subsidies in US for cotton and cotton exports from 1995 to 2004........... 7

Table 7:  Domestic EU subsidies for cotton and cotton exports from 1997 to 2004
(in Euros).............................................................................................................................. 7

Table 8:  US production, consumption and imports (millions of tonnes)................................. 8

Table 9:  Formula to assuage tariff reductions for developing countries................................ 9

Table 10:  Côte d’Ivoire tariffs after the application of the new modality................................ 9

Table 11:  List of possible special products of Côte d’Ivoire................................................. 10

Table 12:  Main exports from Burkina.................................................................................. 12

Table 13:  Production of meat and poultry in Côte d’Ivoire and imports from
2000 to 2003..................................................................................................................... 13

Table 14:  Evolution of prices in FCFA per unit.................................................................... 15

Table 15:  Development of meat imports ($US).................................................................... 16

Table 17:  Food aid received by Burkina (in million $US)...................................................... 18

List of figures
Figure 1:  Exports of meat and poultry from Burkina (in equivalent tonnes of meat)............ 13

Figure 2:  Development of Burkina’s dairy imports (in $US).................................................. 15

 ICTSD Programme on Agricultural Trade and Sustainable Development
Executive summary
In July 2008, the chair of the agricultural
negotiations, Crawford Falconer, presented a
new draft text with revised modalities for the
agricultural negotiations.
The draft text proposed by Falconer contains
changes which will have repercussions on the
Agreement on Agriculture. It also includes
revised modalities for the various key
sections of the Agreement on Agriculture. It
affects domestic support, market access and
export competition.
Falconer’s draft agriculture text is a step
forward in the agricultural negotiations.
In the area of domestic support, Burkina has not
notified any support to the WTO. The current
level of Burkina’s commitment is only 3.7 percent
of the value of agricultural production. With
riots over the cost of living, the government is
under growing pressure to increase its support
to agriculture so as to reach the Millennium
Development Goals (MDGs) (reduce by half the
proportion of people who suffer from hunger)
or to respect the Maputo Declaration, (commit
10 percent of the budget to agriculture).
Burkina, which has been the primary exporter of
cotton in Africa, will eventually gain from this
text insofar as cotton is given special treatment
in accordance with the position Burkina holds
in the C4 negotiating group (which includes
Benin, Burkina Faso, Mali and Chad). The
rise in prices expected from the reduction in
American subsidies as presented in the draft
text will probably be very limited, since the
reduction only involves a small part of American
support. The support that the US has notified
in fact represents only a small share of their
total subsidies. The good management of the
cotton production system by Burkina’s cotton
producers will result in significant production
increases if prices are profitable. The C4 may
want to review its position on the definition
of US subsidies and their proposals for
reducing these.
vi
After cotton, the principal exports of Burkina
are livestock, shea, fruits and vegetables,
cereals and sesame. The new text will probably
impact on a large number of these products.
Livestock exports, which are mainly to Côte
d’Ivoire and Ghana, will probably be competing
with animal products from Latin America and
the European Union. Tariff reductions by these
countries encourage meat imports, as these
will be relatively cheaper compared with
beforehand. This erosion of trade preferences
will also affect meat products.
Leathers and skins are primarily sold in the
European Union and already benefit from
import duties exemptions. Their situation will
not change greatly with the new text. However,
tariff reductions in other importing countries
may allow a diversification of Burkina’s
export markets.
Shea is sold primarily to Europe, and Burkina,
as well as its main competitors, will gain by
preferential access to this market. In principle,
the new text will not make a major change to
Burkina’s situation.
Sesame is exported from Burkina to the European
Union, and also to Asia (Near East, Japan and
India), where tariff reductions will increase the
competitiveness of sesame from Burkina.
Cereals exported from Burkina go the subregion
(Mali and Niger): these are mostly sorghum,
millet and corn. Nothing in the new text will
affect this trade. The same applies for peanuts,
which are also sold in the subregion.
For fruits and vegetables - mostly green beans
and mangos - the main export market is the
European Union. There is a risk of preference
erosion since the major competitors of
Burkina (India and China) do not benefit from
preferential access to the European market.
Burkina also exports fruits and vegetables
to European countries where it benefits from
vii Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities
import duty exemptions. The global reduction
of import duties in developed countries will
attract more products that will be relatively
more competitive. There is therefore a risk of
preference erosion for products from Burkina.
However, this situation will not affect Burkina
because its exports of these products are
marginal to date.
Côte d’Ivoire, which is the only non-LDC in the
WAEMU and is the major economic partner of
Burkina in the sub-region, will be required by
the new text to reduce its import tariffs. This
situation creates a problem for the WAEMU
which has a Common External Tariff (CET), and
will also create problems for Burkina’s exports
to Côte d’Ivoire. Concerning the first problem,
a reform of the CET must be considered so as to
maintain the unity of the sub-region. People are
not prepared for this eventuality, all the more
so because in the ECOWAS group a proposed
fifth tariff band is under consideration so as
to protect local products more effectively. In
the second case, it is feared there will be a
loss of preferences for Burkina’s exports to
Côte d’Ivoire. Livestock (cattle, sheep, goats
and poultry) compete with imports from the
European Union and Latin America which are
considerably cheaper even though the products
from Burkina are of higher quality.
For the moment, Burkina has not made use of
the existing safeguard mechanism. A special
safeguard mechanism would represent an
opportunity in this case. Given the development
of certain sectors, it is probable that Burkina
will try to protect itself from imports of certain
products, in particular subsidised milk and meat
from the European Union. In 2003, a kilogram
of imported poultry cost 350 FCFA compared to
1150 FCFA for local poultry, and in 2008, a kilo
of local meat cost 1670 FCFA. In 2006, the cost
of production of reconstituted milk from Europe
was 200 FCFA per litre while milk delivered to
the dairy cost 300–350 FCFA. This may result in
increases in production, generating instability
in the industries concerned.
With the Structural Adjustment Programme, all
marketing boards were dismantled. Companies
exporting raw products (shea nuts, peanuts)
and importing food products were dissolved.
As a result, Burkina has practically no
marketing boards involved in selling products.
The new text will not change the situation in
Burkina even if it provides some relief to the
government in its efforts to support the cotton
sector, which is experiencing a major crisis. To
rescue the system, which is almost bankrupt,
the government injected 198 million dollars
in 2007.
Faced with climatic changes and poor living
conditions, Burkina has frequently needed food
aid. An organized system is in place to manage
this food aid. So far, the greatest amount of
food aid has been sold in affected areas at
reduced prices. The new text does not allow
the monetization of food aid except in very
specific conditions. However, monetisation
allows a better distribution of aid by avoiding
partisan bias when the aid is shared out.
 ICTSD Programme on Agricultural Trade and Sustainable Development
Introduction
In July 2008, the chair of the agricultural
negotiations, Crawford Falconer, presented a
new draft text with revised modalities for the
agricultural negotiations. In April 2007, he had
circulated a document in which he proposed a
working hypothesis which, after discussion with
Members, would serve as a base for revising
the text of the agreement. The purpose of
the document was to encourage Members to
respond in order to resume the negotiations
since they seemed to be slowing down again. In
his text, Falconer discussed in order the state
of negotiations in each of three areas within the
agricultural committee’s brief, that is, domestic
support, market access and export competition.
Negotiations had resulted in February 2008 in a
first revision of the draft agriculture modalities.
The draft we are considering in this study is the
third revision.
The proposed draft calls for changes which
may have repercussions on the Agreement on
Agriculture. It will certainly have an impact on
Burkina as a least-developed country (LDC).
Burkina is basically a farming country with
more than 80 percent of its population working
in the agricultural sector. The Gross Domestic
Product for agriculture is about 40 percent of
the total. Farming is mainly cereal production
(millet, sorghum, corn, rice and fonio) which
represents about two thirds (63 percent) of the
value added in the sector. These are produced
in a rural subsistence farming system. About
15 percent of the production is traded. And a
tiny share of this production (1.5 percent) is
exported to neighbouring countries, or about
10 percent of the total amount traded. Cereal
production has increased slightly, except
for corn which has doubled in ten years,
partly because corn is rotated with cotton in
annual planting.
Cotton is the main source of revenue. It
occupies an area only 17 percent of that
covered by cereals, but its contribution in
agricultural value added is more significant (21
percent). The economic influence of cotton is
viii
also important in generating revenue. Cotton
represents more than 60 percent of export
revenues. These resources are the only source
of income for more than 250,000 small family
holdings, which thus obtain 35 percent of total
farming household revenues.
Almost all farmers are involved in raising
livestock to varying degrees, in an extensive
production system. The size of the herds is
significant (7.3 million cattle; 6.7 million sheep
and 10 million goats). To this can be added
around 37 million poultry. Livestock production
is estimated at 11 percent of GDP. Livestock
(live animal only) are exported to neighbouring
countries, representing an estimated 36 billion
FCFA ($72 million US) in 2005. Sales of livestock
are the primary source of income in rural
households. It creates 27 percent of their total
cash flow, compared to 16 percent for farming.
The draft proposal sets out modalities for
key sections of the Agreement on Agriculture,
affecting domestic support, market access and
export competition.
This study examines the impact these measures
will eventually have on the agricultural sector
in Burkina as well as on agricultural policies.
Specifically, it will focus on the follow-
ing issues:
i. Domestic support
● Will the draft involve changes in domestic support
in Burkina and what are the probable restrictions on
domestic support?
● What are the implications for Burkina of changes in
overall support levels in the US and Europe for specific
products such as cotton?
● Will Burkina gain from new flexibilities for developing
countries in Green Box support? Will it affect Burkina’s
policies in the future?
● Will export subsidies change the structure of Burkina’s
exports?
● Will this have a greater impact on cotton than other
crops? In what way?
ii. Market access
● What would be the implications for trade flows of the
various options for tropical product liberalisation and
ix Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities
preference erosion? Which products will be affected,
to what degree and in which markets?
● Given that other members of WAEMU and ECOWAS are
not LDCs and have to reduce their tariffs at the WTO,
will Burkina have to reduce its tariffs to meet the
conditions of the CET? Which products will be most
affected? How will Burkina be affected by certain
flexibilities for these countries, such as those for
special products and sensitive products?
● How will the overlap of sensitive and tropical products
be affected by preference erosion?
● How will the different elements proposed in the draft
text affect Burkina’s main exports?
● What might be the consequences of the special
agricultural safeguard (SSG), the special safeguard
mechanism (SSM) and sensitive products for
Burkina? Concretely, what will these flexibilities and
restrictions imply?
● What are the implications of the options for the special
safeguard mechanism? How will WTO commitments
interact with EPA commitments and flexibilities for
sensitive products?
● How will the commitment to duty-free, quota-free
market access affect Burkina’s exports?
● How would tariff escalation provisions, tariff rate
quota (TRQ) administration and tariff simplification
language affect Burkina Faso’s exports?
Export competition
How will Burkina be affected by the proposal
for new restrictions on export competition?
Specifically, what are the consequences for
food aid, export financing, export subsidies and
export marketing boards?
 ICTSD Programme on Agricultural Trade and Sustainable Development 

1. Domestic support

1.1 The situation of agricultural subsidies in Burkina

Burkina has not notified any domestic support
to the WTO. The country has no scheduled
domestic support within the WTO’s categories.
In fact, with structural adjustment programs
(SAPs) in place since 1991, the State has
withdrawn from the agricultural sector and has
liberalized it. Subsidies, notably for fertilizer,
have been almost entirely eliminated, even if
the government has in recent years occasionally
provided them. It is worth noting that these
subsidies were often just provided at specific
moments in time and were therefore not
included in the government budget.
With Burkina’s agriculture being under-
developed, the support of the State and of
donors has always been necessary for the
achievement of development goals related to
food security. This support is handled mainly
by the ministries of agriculture and livestock.
Projects and programs are regularly initiated to
promote certain industries, for food as well as
cash crops.
Some of these initiatives include machinery that
is provided at a subsidised price. No precise
estimate of the amounts exists, but the scope of
these projects is minor.
In general, only a small share of the budget is
allocated to agriculture. Before the ministry of
agriculture included some environmental issues
in its portfolio, the budgetary contributions to
agriculture did not exceed 7 percent. This was
primarily used for civil servant salaries and to
cover administrative expenses for agriculture.

Table 1: Development of public expenditures in agriculture in Burkina (in millions $US)

2000 2001 2002 2003 2004 2005 2006 Average
Ministry of 28026 27872 50148
Agriculture
Ministry of 145620 169336 188405 222813
Agriculture + 
part of
environment
Ministry of 5235 5087 8337 13096 10690 10939 11968
Livestock
Total 33261 32959 58485 158716 180027 199344 234781 128225
Share 5,1% 5,0% 7,1% 15,0% 14,5% 13,3% 14,5% 11,9%
State Budget 647259 661746 827324 1060060 1245101 1494303 1621995 1079684
Public support 51600 50012 90549 79711 67968
for agricultural
development
Share 88,2% 31,5% 50,3% 40,0% 45,6%
Source : Statistics Annual of INSD (2006), Ministry of Economy and Finance (2005)

Apparently the public resources earmarked
for financing agriculture are insufficient
given the scale of need, at least according to
certain experts and farmers’ organizations.
Nevertheless, the country has undertaken a
number of international commitments requiring
a more substantial contribution to agriculture.
The Millennium Development Goals (MDGs)
commit Burkina to reduce by half the proportion
of people who suffer from hunger by 2015.
Burkina was a signatory to the Maputo Declaration
at the June 2004 Maputo summit, where the
heads of state and governments of ACP countries
committed themselves to allocate within 5
 Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities
years, 10 percent of their national budgets to
agriculture. In 2006, during the Abjua summit on
fertilizers, African countries including Burkina
committed to increasing the use of fertilizers
from 8 to 50kg/ha by 2015.
So far these different commitments have yet
to be implemented; according to a study by
IFPRI, the growth rate of agriculture in Burkina
Table 2: Rate of growth compared to the MDGs (in millions $US)
Current rate of growth in agriculture (1990–2004)
Annual rate of growth required to meet the MDGs
Annual amount of expenses required in agriculture to meet the MDGs
Annual expenditures required under Maputo Declaration (10% of national budget)
Source : IFPRI (See Tidiane Ngaido, 2006)
The riots this year over the high cost of living
woke the government from its inaction on
agricultural issues. This year, subsidies were
announced of more than 16 billion to aid cereal
producers to purchase improved seed, fertilizer
and pesticides as well as support services. Also,
another 6.5 billion will be granted to the cotton
sector, making a total of 22.5 billion in support
of agriculture in the 2008–2009 campaign.
This support, taken together, represents only 3.7
percent of the value of agricultural production.
In the case of cotton, the State committed a
total sum of 89,284 million FCFA, or around
$198 billion, in 2006–2007 to keep the cotton
industry from bankruptcy. The total value of
cotton production in 2005 before the crisis was
$292 million.
The government will remain under pressure
to increase its contribution to agriculture so
as to reach the millennium goals or respect
the Maputo Declaration. The government
has already promised to be more involved in
helping producers who use mechanized farming
by helping them to acquire tractors, powered
pumps, ploughs and sprayers.
The new modalities for the Green Box give new
opportunities to developing countries to support
is presently 5.4 percent while a rate of 6.8
percent would be needed in order to reach the
MDG that relates to the reduction of hunger.
To do this, $2,524 million would have been
needed for agriculture. To achieve the Maputo
objectives, annual disbursements of $282 million
are needed. It is obvious that Burkina is far from
reaching these figures.
5,2%
6,8%
2524
282
their agriculture. Burkina certainly does not have
the means to profit from these arrangements
in the short term despite pressure on the
Government to give more help to producers in
special circumstances.
For example, in disaster situations producers
have not benefited from any support other
than food aid. Yet in the mid term this
might be possible, for example through crop
insurance which is being studied by the national
government. The obvious risks in agricultural
production are such that the private sector
is not interested in this kind of market. The
government needs to take the initiative and
later transfer it to the private sector.
The government has been involved in several
timely interventions in investment support, but
wishes to expand this kind of activity in order to
modernize agriculture.
The new text makes it more interesting, from a
legal perspective, for the government to make
these types of intervention.
However, for the moment the government has not
announced any support programs in the short term
or medium term. There is no regulatory mechanism
or an obvious support program which might make
it possible to trace back State interventions under
 ICTSD Programme on Agricultural Trade and Sustainable Development 

specific categories of domestic support. The on an ad hoc basis to address certain needs or
subsidies which have been provided were done so respond to particular pressures.

1.2 The status of cotton

American subsidies lower world market
prices wherever they represent an important
share in exports (Sumner and Buck, 2007).
This is the case for cotton, as shown by a
number of studies (see Table 3). American
subsidies artificially inflate the supply on
international markets and depress export
prices. Consequently this reduces the export
revenues of countries heavily dependent
on cotton.

Table 3 : Summary of the main findings of simulation models of the impact of cotton subsidies
Authors Simulation Change in world
price (%)
Goreux (2003) Elimination of subsidies in the US, China and EU + 12
ODI (2004) Elimination of subsidies in the US, China and EU + 22 to 28
Reeves et al. (2002) Multilateral removal of support for cotton and restrictions on + 2.3
textile imports
Tokarick (2003) Elimination of American support + 2.8
Poonyth et al. (2004) Multilateral removal of support for cotton and tariffs + 3.1
FAPRI (2002) Multilateral liberalization of all products + 11.4
Summer (2003) Elimination of American support for cotton + 12.6
Pan et al. (2004) Elimination of American support for cotton + 2.43
Bonjean et al. (2006) Elimination of subsidies in the US and EU + 2.68 to 10.7
Source : based on Bonjean et al. (2006)

The new draft text proposes modalities which
seem at first sight to accommodate Burkina’s
interests. This is an initiative of the C4 of which
Burkina is a member. The new modality proposes
a reduction in American subsidies of about 82.2
percent over a period of 20 months. In the
base period of 1995–2000, the US notified an
average of $623 million. The application of the
new reduction formula would result in a drop
in American subsidies of about $510 million,
bringing them down to $113 million.
Most of the studies which conclude that a rise
in world prices would follow a reduction in
subsidies consider American support to be more
substantial than the AMS notified by the US.
According to the methods and scenarios used
by these studies, world prices will rise by 2 to
28 percent. According to a number of sources
(see Table 4) the American AMS will reach $5.102
billion in 2005. This amount includes production
flexibility contracts and fixed direct payments
which the WTO’s Dispute Settlement Panel on
cotton of 3 March 2005 placed in the Amber
Box, supplemented by certain supports notified
but not included in this database (support for
stockpiling and interest on commercial loans)
and by several subsidies that were improperly
notified as non product-specific AMS. As Table
4 shows, average trade-distorting subsidies for
cotton should have been $1,737 billion for the
period 1995–2000 (instead of the notified $623
million), $2,471 billion for the period 1995–2004
(instead of the notified $1,151 billion) and $2,710
billion for 1995–2005 (instead of the notified
$1,194 billion).
 Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities

Table 4 : Evolution of US cotton subsidies from 1995 to 2004

$ Millions 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Subsidies for farming
insurance for cotton
Cotton subsidies according 30 647 595 1163 1721 1850 3033 2389 2697 1654 3331
to EWG
Cotton subsidies/insurance 365 160 213 271 409 425 444 386 378 320 268
STEP 2 88 34 6 416 280 446 237 182 455 363 582
STEP 2 for exporters 180 113 185 91 106 198 158 253
Warehousing and marketing 9 12 11 111 216 63 87 270 552 500 782
subsidies
Value of cotton production 6570 6410 5980 4120 3810 4260 3120 3780 5520 4850 5700
Value of farming production 190 206 204 191 185 190 199 195 216 236 236
(VFP) (109of $)*
Cotton as % of VFP 3,5 3,1 2,9 2,2 2,1 2,3 1,6 1,9 2,6 2,1 2,4
Total of farm loan subsidies 719 713 610 610 610 610 610 610 610 610 610
Total of farm loan subsidies 25 22 18 13 13 14 10 12 16 13 15
for cotton
Total subsidies for farm fuel 2385 2385 2385 2385 2385 2385 2385 2385 2385 2385 2385
Total subsidies for farm fuel 83 74 70 52 49 54 37 46 61 49 58
for cotton
Subsidies for cotton 66 66 66 66 66 66 66 66 66 66 66
irrigation
Total subsidies for cotton 666 1015 979 2092 2754 2918 3914 3181 4225 2965 5102
Total subsidies for cotton 180 113 185 91 106 198 158 253
for exporters
Export subsidies /cotton 8,6 4,1 6,3 2,3 3,3 4,7 5,3 5,0
subsidies (%)
AMS notified for cotton 32 3 466 935 2353 1050 2810 1187 435 2238 1621
Sources : Environmental Working Group’s Farm Subsidy Database1); USDA, RMA, Summary of Business Reports and Data2;
US Notifications to the WTO; National Cotton Council3; Government Accountability Office (GAO)’s report of 7 June 20074 ;
(OECD, Producer and Consumer Support Estimates, OECD Database 1986–20055; USDA, Farm and ranch irrigation survey (2003),
November 2004; USDA, Table 35-Net outlays per commodity and function6

Given this situation, there are reasons to fear
that the reduction proposal, as applied, will
not change global prices much even though it
originates with the C4. Some predict that if the
C4 and developing countries in general do not
fight to change the definition of export subsidies,
the difficult situation of producers in the C4 will
continue since the world price for cotton will not
change significantly if the US only has to reduce
the limited percentage of subsidies just at the
 ICTSD Programme on Agricultural Trade and Sustainable Development
export level - which was only 7.1 percent in 2005
(Berthelot7, 2008). In fact this is not a new idea;
since GATT we knew that certain definitions
(decoupled subsidies, dumping8 etc.) were not
exempt from criticism and would give rise to
disputes. It was for this reason that within the
WTO framework the peace clause9 was adopted,
so that certain Members would not trigger
hostilities which would certainly direct energies
towards undesirable goals that could lead to the
negotiations. The expiry of the peace clause in
2003 opened the way to numerous subsidies being
challenged, even those these had not previously
been considered as creating price distortions.
In the US, even Congress ended up convinced of
the distorting nature of various kinds of support
granted to farmers. Several reports presented to
the American Congress indicated support levels
far above those notified (Schnepf, 2008; Schnepf
Randy and Jasper Womach, 200810). Congress
thus became more aware of the well-founded
basis of challenges against the US, particularly
in the case of cotton. The Dispute Settlement
Body (DSB) of the WTO supported Brazil’s claim
by declaring numerous supports as having been
illegally classified as green box, whereas in
reality these should either have been considered
as export subsidies or as Amber Box payments
(the most distorting type of subsidies, which are
subject to a maximum ceiling commitment at
the WTO). This decision opens the door to other
challenges related to other types of support such
as those mentioned in Table 4 [no table ref].
It should also be noted that farm prices in
general have been rising. Cotton is not profiting
from this upturn: the reference price for cotton
(Index A of Cotlook) has only risen 24.1 percent
in July 2007 compared to 49.6 percent for palm

oil, 49.8 percent for cocoa and 97.3 percent
for corn.
However, production of cotton in Burkina is
sensitive to world prices. The supply elasticity
compared to price is estimated at between 0.4
and 0.8 (Bonjean et al, 2006). With the drop
in world prices, the Burkina cotton sector has
had problems during the last two cotton seasons
(2006–2007 and 2007–2008). Cotton production
fell by almost half in two years, to 360,000
tonnes in 2007–2008 compared to 750,000
tonnes in 2005. With production at these levels,
Burkina Faso - which had been the major cotton
producer in Africa since 2005 - has now been
supplanted by Egypt. This was primarily because
farmers lost interest in this sector because of
the drop in prices paid to producers. In 2004–
2005, they received 210 FCFA/kg (40 cents/kg).
In 2005–2006 and 2006–2007 they only received
175 and 165 FCFA respectively. In 2007–2008,
the farm price was only 145 FCFA.
The situation is worsened by the reduction in
price of cotton fibre per kilo FOB. Between
2004 and 2006, despite the rise in cost of
farm inputs, the FOB price for cotton fibre has
dropped from 768 FCFA per kilo to 631 FCFA, a
decline of about 18 percent.
One of the major problems for the cotton
sector is the drop in the dollar. The average in
the Cotlook Index A for the 2007–2008 season is
currently as high as 72.9 cents a pound, 13 cents
more than the previous season, an increase of 23
percent, and 16 cents more than the 2005-2006
season, or an increase of 27 percent. This rise in
the international price of cotton in dollars over
the last three seasons does not benefit Burkina’s
farmers, who are penalized by the drop in the
 Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities

dollar compared to the Euro. Over this period, The proposal to reduce cotton subsidies in
the improvement in price returns in FCFA is only Falconer’s new text should not allow for a
6 percent. substantial rise in prices because it involves
only a small part of the total subsidies that are
For the 2008–2009 season, cotton companies
in fact allocated. With the weak dollar, in order
have increased their purchase price to
cotton farmers. They are set at 180 and 155 for Burkina to profit from the price increases
FCFA respectively for first and second grade. there must be a much greater drop in American
However this is a long way from 210 FCFA for the subsidies than that notified by the US to
2005–2006 season. the WTO.

Table 5: Historic data on cotton and FOB prices

Years Index A Cent/pound Rate FCFA/$ Index A FCFA/kg FOB price FCFA/kg
94/95 86.3 541 1027 979
95/96 94.4 495 1028 980
96/97 79.3 522 913 865
97/98 76.6 596 1005 957
98/99 62.0 586 802 754
99/00 52.3 636 733 685
00/01 61.0 724 974 926
01/02 43.8 742 717 669
02/03 50.2 661 727 679
03/04 66.4 559 816 768
04/05 56.6 522 654 606
05/06 57.0 540 679 631
06/07 59.1 454 592 647a
07/08 72.9 415 667 692a
Source : Cotlook (a) Automatic forecast process (Ministry of Economy and Finance (June 2007); Interprofessional association
of Burkina cotton producers (2006)

Another problem affecting the situation of Although Falconer’s draft proposes a 50

countries like Burkina with regard to price
increases is the domestic support of the US and
EU for exported cotton. The inability of the US
and EU to face up to competition from Chinese
textiles will reduce considerably their domestic
consumption. This will logically increase their
exports, a pattern which is already apparent.
Table 6 shows that American exports are growing,
not reducing and in 2007 represented 85 percent
of all production. In the EU in 2007 they reached
86.3 percent. The two tables show that domestic
support on exported cotton has gone up and
continues to rise.
percent drop in export subsidies upon signing
the agreement, and the elimination of these
subsidies by 2013, this will not solve this broader
problem - which is one of the causes of the drop
in prices.
Countries like Burkina will continue to suffer
negative effects from these subsidies which
prevent prices from rising beyond their current
levels. Furthermore, the Burkina government
does not have the means to grant subsidies to its
own cotton farmers.
 ICTSD Programme on Agricultural Trade and Sustainable Development 

Table 6 : US domestic support for cotton and exported cotton from 1995 to 2004
$ Millions 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Exports 1673,2 1496,6 1635 936,96 1471,5 1469,3 2398 2594,2 2999,2 3147 3825,7 2836,2 3531,6
Exports/ 0,429 0,362 0,399 0,309 0,398 0,392 0,542 0,692 0,754 0,621 0,735 0,603 0,859
production
Total cotton 666 1015 979 2092 2754 2918 3914 3181 4225 2965 5102
subsidies
Step 211 88 34 6 416 280 446 237 182 455 363 582
Step 2 38 15 3 180 113 185 91 106 198 158 253
export
subsidies
Step 2 50 19 3 236 167 261 146 76 257 205 329
domestic
consumption
Domestic 628 1000 976 1912 2641 2733 3823 3075 4027 2807 4849
support
Domestic 578 981 973 1676 2474 2472 3677 2999 3770 2602 4520
farm support
Domestic 248 355 388 518 985 969 1993 2075 2843 1616 3322
subsidies for
exported
cotton
Total 286 367 391 698 1098 1154 2084 2181 3041 1774 3575
subsidies for
exported
cotton
Step 2 0,133 0,041 0,008 0,258 0,103 0,16 0,044 0,049 0,065 0,089 0,071
export
Source : Table 4

Table 7 : EU domestic support for cotton and exported cotton from 1997 to 2004 (in Euros)
1997 1998 1999 2000 2001 2002 2003 2004
Production  478 501 572 521 514 445 463 460
(1000 tonnes)
Imports  932 857 691 761 675 685 532 439
(1000 tonnes)
Exports  178 130 251 234 245 203 255 284
(1000 tonnes)
Exports en % 37,20% 25,90% 43,90% 44,90% 47,70% 45,60% 55,10% 61,70%
production
Consumption 1 232 1 228 1 012 1 048 944 927 740 615
Cotton subsidies 800 761 903 855 733 804 873 835
(106)
Subsidies for export 298 197 396 384 350 367 481 515
cotton (106)
Source : European Commission, Directorate-General for Agriculture and Rural Development
 Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities

2. Market access

2.1 Market access for cotton

Article 145 of the draft text says that
“Developed country Members and developing
country Members declaring themselves to
be in a position to do so shall give duty- and
quota-free access for cotton exports from least-
developed country Members from the first day
of the implementation period.”
The US has a tariff quota of 5 percent of domestic
consumption. Customs duties in the in-quota
tariff vary from 0 to 4.4 cents/kg, while duties
outside the quota are levied at a rate of 31.4
cents/kg. The Americans accept the import of
African cotton with zero duties but problems
arise in the application of this principle. Since
the import quota is a function of domestic
consumption, it is unlikely that this kind of
commitment by the US will produce meaningful
benefits for African cotton exporters. US domestic
consumption is dropping steadily. Between 2000
and 2007, it fell by about 48 percent because
of more competitive Chinese textiles. Table 8
shows that US cotton imports have remained
far below the quota of 5 percent of domestic
consumption. For example, between 2000 and
2007, they averaged 0.5 percent of domestic
consumption. In this situation, the Americans
will be obliged to increase their cotton exports.
A reduction in subsidies will lower American
production, but the fact that domestic demand
continues to drop means that there is no reason
to expect an increase in imports.
This new situation will not lead to gains in the
American market for countries like Burkina. The
same applies to the EU market, where, between
2000 and 2007, imports fell by 62 percent.

Table 8 : US production, consumption and imports (millions of tonnes)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Production 3902 4129 4097 3034 3699 3747 4426 3752 3980 5069 5208 4706 4112
Imports 88,94 87,85 2,834 73,9 21,15 3,488 4,578 14,61 9,81 6,322 6,104 4,142 4,36
Consumption 2321 2425 2474 2267 2222 1932 1678 1586 1366 1459 1280 1078 1003
Imports/ 3,8% 3,6% 0,1% 3,3% 1,0% 0,2% 0,3% 0,9% 0,7% 0,4% 0,5% 0,4% 0,4%
consumption
Source : USDA, 200712

2.2  T
 he impact on preference erosion of different options for the liberalization of
tropical products

Burkina exports green beans and certain fruits
and vegetables such as mangos to the European
Union and certain Middle Eastern countries. So
far the volume of these exports has been modest.
The major target market is Europe, where
tropical products from Burkina already benefit
from duty-free access. In this market, Burkina is
competing with a number of exporting countries
such as India, China and Latin American countries
which do not benefit from preferences in the
European market. The new arrangements in the
draft will increase slightly the competitiveness
of these countries, with consequent risk of
preference erosion for Burkina’s products. It is
worth noting however that Burkina’s exports of
tropical products remain modest. This should not
have serious consequences on the economy in the
short term.
 ICTSD Programme on Agricultural Trade and Sustainable Development 

2.3  The situation of Côte d’Ivoire (non-LDC) and its impact on Burkina.

Burkina is part of the WAEMU, along with Côte
d’Ivoire, which is the only country in the Union
that is not an LDC. Within the EPA framework,
because Côte d’Ivoire does not benefit from
concessions granted to LDCs, it had to sign an
interim agreement while waiting for the sub-
region to be prepared to sign a collective EPA.
Côte d’Ivoire is Burkina’s second-largest trading
partner, after France. Burkina exports live
animals (sheep, cattle and poultry) and fruit
and vegetables. It imports agricultural and agri-
food products from Côte d’Ivoire, as well as
mineral products.
WAEMU has put in place a Common External
Tariff (CET) and grants a community preference
for products coming from within the Union.
Despite these arrangements, trade within WAEMU
remains limited (14 percent of total trade).
The modalities for developing country tariff
reductions proposed in the draft text are given
in table 9:

Table 9 : Formula to assuage tariff reductions for developing countries

Tariff level Tariff in % % of reduction
I 0-30 32-34.6
II 30-80 36.6-40
II 80-130 41.3-43.3
IV >130 44-48.6
Average Max 36

The WAEMU CET, to which Côte d’Ivoire is also subject, will have to be reduced in accordance with
the figures in the following table:

Table 10: Côte d’Ivoire tariffs after the application of the new modalities
Current rates in % New rates in %
1 5 3,35
2 10 6,70
3 20 13,40

This situation will create problems for the
customs union. Normally WAEMU has observer
status with the WTO but does not meet the
conditions of article 24 of the GATT. In principle,
WTO decisions override those of the union - a
situation which was not foreseen by the WAEMU.
The union treaty stipulates that member
countries cannot have a trade agreement which
runs counter to its own accords.
the conditions of article 24 of GATT and thus
move from observer status to becoming the
representative of a regional group
To these two possibilities must be added that the
CET might be altered to take account of the new
situation of Côte d’Ivoire.
The reduction in tariffs in Côte d’Ivoire, in
principle, will not affect imports to Burkina

Several conceivable solutions could manage this
situation within the WAEMU:
● Côte d’Ivoire might use the special products
mechanisms for those products for which
trade distortion might be an issue;
● WAEMU might redouble its efforts to satisfy
originating in Côte d’Ivoire. However, the same
cannot be said for exports. Products from Burkina
will now be in competition with products from
outside the WAEMU. For example this will be
the case for meat, which could come from Latin
America and the European Union. Preference
erosion will accentuate this situation.
10 Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities

Côte d’Ivoire is part of the G33, also known as
the ‘friends of special products’, a coalition of
developing countries that would like developing
countries to be granted some flexibility by being
allowed to open their agricultural markets only
to a more limited degree. As such, it is among
the countries which have proposed an SSM to
which all developing countries would be able to
have recourse.
Meanwhile, since non-LDCs do not benefit from
the “Everything But Arms” initiative of the EU
that was established after the end of the ACP/EU
accords, Côte d’Ivoire has had to sign an interim
EPA with the EU. A list of “sensitive products”13
was attached to the Accord:
Table 11 lists the main elements of this. The
special products which Côte d’Ivoire will choose
will have to include at least the items in this list,
to which must be added certain products traded
with the rest of the world. With these conditions,
the erosion of preferences will be less marked
for Burkina’s exports to Côte d’Ivoire, which are
made up primarily of livestock, poultry and fruits
and vegetables.
It is important to nuance this analysis to some
extent, however, as the options set out in the
new text present some important restrictions on
the use of the SSM in developing countries. The
additional safeguard duty which these countries
can apply is only an additional duty of 15 percent
above the bound rate established in the Doha
Round, or 15 points ad valorem above the bound
rate established in the Uruguay Round, and only
for 2 to 6 products for a given period.
Since the bound rates14 of Côte d’Ivoire are not
high, even if this additional safeguard duty is
taken into consideration, the rate will not be
high enough to protect the country from the
import of certain products. Until now, it is the
additional tax on imported meats which has
limited imports. What will happen if a member
country challenges these taxes at the WTO? They
will probably have little chance of surviving.

Table 11 : List of possible special products of Côte d’Ivoire

Current Reduced
tariff tariff
Rice
100610 5 3,5
100620, 100630, 100640, 10 6,7
Bananas
080300 20 13,4
Manioc
071410, 071490 20 13,4
Corn
100510, 100590 5 3,5
170111 10 6,7
110220, 170112, 170191, 170199 20 13,4
Oils and Fats
150300, 150500, 150510, 150590 5 3,5
150100, 150200, 150410, 150420, 150430, 150600, 150710, 150810, 150910, 10 6,7
151000, 151110, 151190, 151211, 151221, 151311, 51321, 151410, 151411, 151419,
151511, 151521, 151530, 151540, 151550, 151560, 151590, 151620
150790 20 13,4
 ICTSD Programme on Agricultural Trade and Sustainable Development 11

150890,150990, 151219, 151229, 151319, 151329, 151490, 151491,151499, 151519, 20 13,4

151529, 151610, 151710, 151790, 151800
Sugar
170111 10 6,7
170112, 170191, 170199 20 13,4
Vegetables
070110 5 3,5
070190, 070200, 070310, 070320, 070390, 070610, 070700, 070990 20 13,4
Meat
020110, 020120, 020130, 020210, 020220, 020230, 020311, 020312,020319, 020321, 20 13,4
020322, 020329, 020410, 020421, 020422, 020423, 020430, 020441, 020442, 020443,
020450, 020500, 020610, 020621, 020622, 020629, 020630, 020641, 020649, 020680,
020690, 020711, 020712, 020713, 020714, 020724, 020725, 020726, 020727, 020732,
020733, 020734, 020735, 020736, 020810, 020820, 020830, 020840,020850, 020890
Milk
040210, 040221, 040229, 040390, 5 3,5
040110, 040120, 040130, 040291, 040299, 040310 20 13,4
Cocoa
180100 5 3,5
180200, 180310, 180320, 180400, 10 6,7
180500, 180610, 180620, 180631, 180632, 180690 20 13,4
Coffee
090111, 090112, 090121, 090122, 090190 20 13,4
Peanuts
120210,120220 5 3,5
Juice
200911, 200912, 200919, 200920, 200921, 200929, 200930, 200931, 200939, 200940, 20 13,4
200941, 200949, 200950
beverages
220110, 220190, 220210, 220290, 220300 20 13,4

2.4  Implications of special products, sensitive products and tropical products and
preference erosion

Exports from Burkina being concentrated on
one single product, cotton, Burkina will not be
really affected by the reduction of preferences
for this product. But exports of green beans
and mangos may be affected by preference
erosion. The major export market for these
products is the European Union, and Burkina’s
competitors do not benefit from free entry on
the European market. The new modalities of the
text will increase the competitiveness of these
countries. It affects India which alone has nearly
46 percent of world production of mangos, China
(12.8 percent), Mexico (6 percent) and Thailand
(5.4 percent). For green beans, China, Indonesia
and India are affected.
Burkina is in the process of making major
investments in irrigation which should improve
the production of fruits and vegetables which
are largely intended for the European markets.
Preference erosion from the country on the
European market might affect this initiative.
In 2005, Burkina was selected to join the African
Growth and Opportunities Act (AGOA) by the
US. This offer allows Burkina’s exports duty-free
access to the American market. So far, Burkina
has not exported any agricultural products to this
market. However, by signing the accord, Burkina
hopes to export to the US products such as fresh
or frozen beans, fresh or dried mahogany beans,
sesame, cotton seed, cotton seed oil, sheep and
12 Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities
lamb skins, goat and kid skins, wooden carvings,
cotton, shea and shea butter.
It is hard to speak of preference erosion on
exports from Burkina to the US insofar as there is
2.5  The impact of the draft text on Burkina’s major exports
The major products exported from Burkina are listed in Table 12.
Table 12: Main exports from Burkina
Products Portion of
exports
Cotton 63,64%
Live animals 6.66%
Leathers and skins 5.68%
Shea 4.45%
Cereals 4.07%
Sesame 2.03%
Peanuts 1.50%
Meats and [giblets] 0.75%
Fruits and vegetables 0.66%
(beans, mangos)
Source : Burkina Ministry of Economy
The new text will probably have impacts on a
large number of these products.
Cotton, which is the main export crop of
Burkina, will eventually gain from a slight
rise in price which will follow the accelerated
reduction of American and European subsidies.
The efficient management of cotton production
by the Burkina cotton producers will generate
significant increases in production if the prices
are remunerative. Besides, the elasticity in
cotton production compared to price is high
(between 0.4 and 0.8).
Livestock exports, which are mainly to Côte
d’Ivoire and Ghana, will probably have to
compete with animal products from Latin
America. The tariff reductions by these countries
will encourage the import of meat which will
be relatively less expensive than to date. This
preference reduction will also affect meat. In
2003, three years after the application of the
Common External Tariff, imports of poultry to
practically no export from Burkina to this market.
This is mostly due to the weak marketing of these
export products. So far, other than cotton, the
country does not have an effective strategy to
promote exports.
Impact of new text
Will gain from price increase due to reduction in American
subsidies
Exported mainly to Côte d’Ivoire and neighboring coastal
countries, risk of losing competitiveness to its main buyer
(Côte d’Ivoire) due to preference erosion
Possibility of diversifying export markets
Neutral impact
Mainly traded in sub-region; neutral effect
Increase in competitiveness in Asian markets due to lower
tariffs
Neutral impact
Preference erosion in Côte d’Ivoire market
Preference erosion in European markets
Côte d’Ivoire from the European Union grew 442
percent, from 2 838 tonnes to 15 391 tonnes
(Table 12). Such imports are detrimental to local
production, but also to imports from Burkina.
However, in comparison to frozen products,
meats from Sahel are considered better tasting
and benefit from a price for prime quality. In
2003, a kilo of imported meat in Abidjan sold
for 1200 FCFA (1.83€) while local meat from the
Sahel was 1600 to 1800 FCFA (2.44 to 2.74€).
In 2005, Côte d’Ivoire officials responded to
this loss in competition from massive imports in
low cost meat and poultry. To help the national
poultry industry, they instituted an import tax
on meat and poultry. This tax of 700 FCFA per
kilo of imported meat was imposed on all meat
imported by non-members of the Economic
Community of West African States (ECOWAS).
The current customs duty for these products is
20 percent and, with the new Falconer modality,
will move to 13.4 percent.
 ICTSD Programme on Agricultural Trade and Sustainable Development 13

Table 13: Production of meat and poultry in Côte d’Ivoire and imports from 2000 to 2003
Years 2000 2001 2002 2003
Production (in tonnes) 12 360 13 240 10 000 7 500
Imports in tonnes 2838 2152 5676 15 391
Source : Annual report of the activities of the Ministry of Agriculture and Animal Resources 2004

Such a decision, even if it does not conform to
the WTO (equal treatment) prevents the loss of
preferences for meat from Burkina which will
continue to benefit from competitive prices.
Furthermore meat exports from Burkina to
countries on the coast have been increasing
steadily since 2003 (Figure 1). However, an
examination of trade in Côte d’Ivoire (the last
report dates from 1995) will eventually put
the tax on non-ECOWAS meats in debate and
lead to its elimination. If this happens, meat
exports from countries such as Burkina will be in
difficulty, unless Côte d’Ivoire includes meats in
its special products, which is likely.

Figure 1 : Exports of meat and poultry from Burkina (in equivalent tonnes of meat)

70000
60000
50000
40000
30000
20000
10000
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Poultry Beef S h e e p /G o a t s Total

Source : Automatic forecast process (Ministry of Economy and Finance)

Leather and skins are mainly sold into the EU
and are already duty-free. Their situation will
not change much with the new text. However,
the reduction in tariffs in other importing
countries may allow a diversification of
export markets.
Shea is exported mostly to Europe, and with the
AGOA it is likely that it will also be exported
to the US. Burkina and its main competitor
countries benefit from preferential access in
these different markets. A priori, the new text
will not imply great changes for Burkina.
Sesame from Burkina is exported to the European
Union and Asia (Middle East, Japan and India).
Tariff reductions for the latter will increase the
competitiveness of Burkina’s sesame.
Cereals (sorghum, millet and corn) are exported
by Burkina to the sub-region (Mali and Niger).
Nothing in the new text affects this trade.
Peanuts, which are also sold in the sub-region,
will similarly remain unaffected.
Fruits and vegetables, mainly green beans and
mangos, are exported largely to the European
14 Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities
Union. There is a risk of preference erosion
since the primary competitors for Burkina (India,
China) do not have preferential access to the
2.6  Impact
 of the special agricultural safeguard (SSG), special safeguard mechanism
(SSM), sensitive products and special products on Burkina’s exports.
The requirements which limit recourse to
sensitive products as well as to the safeguard
mechanism might give some assurance to
Burkina, which for the moment is working to
target the tropical product markets of developed
countries and some developing countries.
However, for the moment, Burkina does not
export much except cotton. Moreover, the
2.7 Implications of options for the Special Safeguard Mechanism
For now, Burkina has not decided to have
recourse to a safeguard mechanism, although in
a number of cases it would have had the right to
do so. Burkina is amongst those countries which
have access to the special safeguard under the
Agreement on Agriculture (SSG)15 . According to
a study by the FAO, Burkina could have invoked
the right almost 50 times between 1984 and
2000; these cases correspond to a sudden influx16
of imported food products.
The special safeguard mechanism now supports
Burkina in its claims. Given development in some
sectors, it is probable that Burkina will try to
2.7.1  Milk
Burkina has a large dairy herd estimated in 2002
at 1.6 million head with a total production of
167 000 tonnes of milk. For a long time this local
milk was not exploited commercially and was
consumed locally (85 percent). Milk consumption
in the cities was mostly from imports, which
reached 14 000 tonnes in 2002.
In recent years, there has been an important
development in local milk marketing groups with
European market. They will now have lower
customs duties although their products are
already more competitive.
country’s exports are only 8 percent of GDP
compared to 25 percent for the countries of
the subregion. The Government is aware of this
situation and is putting in place measures which
will encourage the production of exportable
products by an improved organization of the
industry and the creation of new industries,
especially ones for tropical fruits.
protect itself against certain imports. Already,
within the framework of the EPA - where an almost
total liberalisation of trade between Burkina
and the European Union is anticipated, with the
exception of “sensitive products” - pressure is
building for the government to eventually use
these mechanisms for certain products which
were not selected to be included in the list of
sensitive products.
Two product groups could be immediate
candidates for the special safeguard mechanism:
dairy products, and meat (especially poultry).
the creation of mini dairies throughout the country.
These dairies offer a product which replaces the
dairy products imported mainly from the EU, so
that there was a significant drop in dairy imports
between 1999 and 2002 (Figure 2). These dairies
have an important potential because currently it
is estimated that only 15 percent of the milk from
this huge dairy herd is marketed. Local milk has to
face strong competition from imported milk: the
cost price of this reconstituted milk is 200 FCFA
 ICTSD Programme on Agricultural Trade and Sustainable Development 15

per litre while milk delivered to the dairy cost
300 to 325 FCFA. It is estimated that imported
milk products to Burkina were subsidized to a
minimum amount of 470 FCFA per kilo in 2002–
2003, a subsidy equivalent to 30 percent of the
value of a kilo of the product imported in 25 kilo
bags. Between 2000 and 2007, before the price
explosion in 2008, the price of dairy products
was dropping. This situation threatens the milk
sector, which has a significant potential. The
tariff protection of the CET is only 5 percent for
most dairy products and is considered insufficient
by the industry players. They propose classifying
milk in the top band, which would mean a 20
percent tariff. Concentrated milk is already in
this level; the imposition of an excise tax on this
milk should resolve the question of competition
for local milk.
With the support of the government, a major
program of milk production is under way, in
addition to existing initiatives. Burkina has
therefore an overriding interest in protecting
this sector.

Table 14 : Evolution of prices in FCFA per unit

Variation Variation
2003 2007 2008 2003-2007 (%) 2007-2008 (%)

Powdered milk (25 kg bag) 8074 8203 10111 1,60 23,30

Local live chickens 17
1037 1263 1504 21,80 19,10
Sweetened yogurt (jar) 175 175 200 -2,80 14,30
Fresh beef (kg) 777 1011 1110 30,10 9,80
Fresh mutton (kg) 996 1401 1439 40,70 2,70
Sweetened concentrated milk (1kg can) 1233 1100 1233 -10,80 12,10
Source : Institut national de la statistique et de la démographie (INSD)

Figure 2 : Development of dairy imports to Burkina (in $US)

Dairy Products

25 000 000

20 000 000

15 000 000

10 000 000

5 000 000

0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Source : FAO stat

16 Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities

2.7.2  Meat

Burkina has a significant livestock sector: cattle
are estimated in 2007 at about 8 million head,
goats and sheep at 19 million. Poultry for the
same period is about 35 million birds. The
productivity of this sector is poor, while demand
is constantly rising. Production is not following
the same trend, leading to rising prices. For
poultry, the situation is worsened by the
systematic slaughter organised in the wake of
the avian flu epidemic. Between 2003 and 2007,
the price of poultry, beef and veal, and mutton
and lamb rose respectively by 21.8 percent,
30.1 percent and 40.7 percent (Table 14). These
various increases were continued in 2008, and
for poultry an increase of 19.1 percent was
recorded between February 2007 and February
2008, making a total increase of 45 percent.
Faced with this situation, importers tried to
bring in frozen poultry from Europe but the
government vigorously opposed this move. Also,
the import of cheap cuts stopped officially in
2003 following meat seizures. Table 15 indicates
that between 2002 and 2003 meat imports fell
89 percent. The reaction of the government
was motivated by the need to protect farmers
for whom raising poultry constituted their main
source of income. If these imports had continued
the entire industry would have been in danger,
because low income households tended to buy
this meat at 350 FCFA per kilo versus 1150 FCFA
per kilo of local poultry meat.
In the long term, if the imports had continued the
poultry industry would have been destabilised,
since middle class households were beginning to
prefer frozen birds. The continuing rise in price
does not protect the industry from competition
with frozen European meats.
It is highly likely that in these conditions meat
in general will become a protected area through
the safeguard mechanism.

Table 15 : Development of meat imports ($US)

1996 1997 1998 1999 2000 2001 2002 2003 2004
Duck 0 3000 0 0 2000 1000 0 0 0
Turkey 2000 1000 13440 1000 0 4000 17000 0 0
Other fowl 3000 1000 13440 24000 0 1000 2000 2000 12000
Total 5000 5000 26880 25000 2000 6000 19000 2000 12000
Source: FAO stat

2.8  Impact of quota restrictions on Burkina’s exports

The only major market for Burkina which and their implications will not have much
applies tariffs is China, for which Burkina impact on Burkina because Burkina’s cotton
has become the third largest supplier after is sold there under the lowest tariff,
the US and Uzbekistan. Quota reductions 1 percent.
 ICTSD Programme on Agricultural Trade and Sustainable Development
3. Export competition
3.1  Export subsidies and the structure of Burkina’s imports
Burkina’s export structure is highly concentrated,
with cotton representing 63.64 percent of total
farm exports. This is far ahead of the second
most significant agricultural export, animal
products, which represent 6.64 percent.
As noted above, existing subsidies have been
almost completely abolished with Structural
Adjustment Programmes (SAPs). Loans available
for agriculture are also low. The same situation
applies for support structures for exporters. The
National Office of External Trade (NOET), which
3.2 Export companies
With the Structural Adjustment Programmes, all
state marketing boards were dismantled. Export
boards for raw products (shea nuts, peanuts) and
import boards for food products were eliminated.
The result is that today Burkina has practically
no state marketing boards.
The cotton export boards were also gradually
privatised. This process has left three cotton
companies with a minority government share in
ownership. In 2007, all three of these companies
reported large losses and were on the edge of
bankruptcy because their cumulative losses
exceeded their capital resources.
Due to the importance of the cotton industry
to the country, the government had to rescue
the ailing firms. Faced with the challenges
associated with a drop in global cotton prices
and a rise in input costs, the government, with
the aid of donors, took measures to protect
producers and avoid a collapse of the industry.
These actions included:
3.3 Export competition and cotton
Annex J of the draft text shows which forms of
export subsidies are unacceptable:
“These export credits, export credit guarantees
and insurance programs (hereinafter referred to
as “export financing support”) shall comprise:
17
before the SAPs was partially financed by the
volume of external trade, does not have a large
enough budget to finance activity to promote
export trade.
With these considerations, it may be said that in
the short term, and even in the medium term,
it will be difficult to change this structure,
no matter what changes are made in export
subsidies. Cotton will continue to be the
country’s largest export by far.
● State underwriting to increase the capital of
the cotton companies by US$26.75 million;
● State underwriting to divide parts of DAGRIS
(majority shareholder now retired) of US$26
million;
● Financial aid by the State to producers
to allow them to participate in the
recapitalisation to the amount of US$27.8
million;
● Guarantee of US$111 million given by the
state to banks for the discharge of credit
arrears for the season;
● Special subsidy of US$6.6 million to assist
with the cost of fertilizer transportation.
In sum the Government injected $198 million
into the cotton sector in 2007. It must be noted
that this State intervention is intermittent, and
over a number of years farmers waited in vain
for State input subsidies.
a. direct financing support, comprising direct
credits/financing, refinancing, and interest
rate support;
b. risk cover, comprising export credit
insurance or reinsurance and export
credit guarantees;
18 Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities
c. government-to-government credit agree-
ments covering the imports of agricultural
products from the creditor country under
which some or all of the risk is undertaken
by the government of the exporting
country; and
d. any other form of governmental export
credit support, direct or indirect, including
deferred invoicing and foreign exchange
risk hedging.”
This way of considering export subsidies does not
take account of domestic subsidies for products
which will be exported. Once these subsidies
benefit exports, it seems logical to consider any
3.4 Food aid
As a country in the Sahel with irregular rainfall
and low water supply, Burkina faces recurrent
food problems. In almost one year out of every
five, harvests are poor and the Government has
Table 16: Food aid received by Burkina (in million $US)
2000 2001
Food aid 6235 4324
Source : Burkina Ministry of Economy and Finance 2003 et 2005
To manage the food aid efficiently, the
Government established a National Council of
Food Security (NCFS) to supervise setting up a
strategy for food security. A Support Fund for
Food Security (FASA) was also established. This
allows Burkina to establish a food supply of
35 000 tonnes of local cereals, from a financial
fund representing an exchange value of 25 000
tonnes of cereals and an emergency supply
entirely financed by the government. Annually,
the volume of food aid is an average of about
49 000 tonnes and emergency aid is estimated at
4000 tonnes per year.
About 80 percent of food aid received by the
country is as cereal products, primarily imports.
However Burkina’s authorities have often wanted
to procure food products on the domestic market
or in the sub-region, but only 17 percent of the
products are local. This situation often creates
domestic support to an exported product as an
export subsidy. However, the new draft text does
not go this far. It is noteworthy in this respect
that one of the arguments which the US used
before the Dispute Settlement Body in the case
brought by Brazil was that American exports was
falling as a share of total world exports, and
therefore it was not fair to say that US exports
caused a drop in world prices.
Tables 6 and 7, which analyze this question,
show that for cotton, these types of subsidies
are important not only for the US but also for
the EU. It will certainly have a negative impact
on prices.
to ask for food aid. The following table gives the
value of food aid in $US from 2000 to 2005. Over
this period the average value of food aid given
was $2.3 million.
2002 2003 2004 2005
2238 1953 1946 3327
perverse effects. For example, in 2003, 1000
tonnes of dates delivered as aid from Saudi
Arabia to people returning from Côte d’Ivoire
were traded in the south and southwest regions
for millet, sorghum or corn. This aid would have
been more useful if the Saudis had bought cereals
directly on the local market for redistribution.
When there is a food problem, the National
Society for the Management of Food Security
Stocks (SONAGESS) - which is responsible for
national security supplies and food aid as well as
the management of information on agricultural
markets - releases cereal supplies at supported
prices for the zones affected. For example, in
2008, 11000 tonnes of cereals were supplied to
affected zones at a supported price of $21 US
(9 000 FCFA) per 100kg bag compared to a market
price which is often $47 US (20 000 FCFA).
 ICTSD Programme on Agricultural Trade and Sustainable Development
According to the new Falconer text, “the
monetization of food aid in kind will be
prohibited except when it is necessary to
finance internal transportation and delivery of
the food aid...”18.
To date, in practice food aid has been mostly
sold at lower than market prices. There has
been very little direct distribution of food aid.
This is explained by the fact that there is no
19
effective policy to identify the individuals who
are in need of food. The risk of fraud is also high
in distribution directly to communities. Also,
in recent years many local officials have been
charged in proven food aid corruption cases.
It would not be realistic to exclude the
monetisation of food aid, since this allows
equality of access to food aid.
20 Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities
Conclusion
The Falconer draft text on agriculture is a step
forward in agricultural negotiations. Burkina,
as the largest exporter of cotton in Africa, will
gain from this text insofar as cotton is treated
in a specific manner in accordance with the
positions which Burkina has taken as a member
of the C4. Cotton is a national issue in Burkina,
unleashing energy and also strong emotions.
The rise in prices that can be expected from the
reduction of American subsidies as presented in
the draft text will probably be slight, especially
as the reduction concerns only a small part of
American subsidies.
Burkina also exports fruits and vegetables to
European countries where they benefit from
duty-free status. The general reduction in
developed country tariffs will result in more
products becoming more competitive. It is likely
that there will be some erosion of preferences
for Burkina’s products. However, this situation
will not affect Burkina significantly since to date
the export of these products is marginal.
Burkina has not notified support to the WTO for
the good reason that, since the implementation of
structural adjustment programmes, all subsidies
have been dismantled. Nevertheless, subsidies
have been offered on an ad hoc basis to farmers
and the cotton industry that are bankrupt
because of the fall in prices in CFA francs. The
new text provides a basis for assisting producers
in a more predictable manner.
Côte d’Ivoire, which is the only non-LDC in the
WAEMU and Burkina’s main trading partner in the
sub-region, will be required to reduce its customs
duties by the new text. This creates, on the one
hand, a problem for WAEMU which has a common
external tariff (CET) and on the other, will cause
problems for Burkina’s exports to Côte d’Ivoire.
Firstly, a reform of the CET must be considered to
safeguard the unity of the sub-region. People are
prepared for this eventuality, especially because
within the ECOWAS group a proposed fifth band
is under consideration so as to protect local
products more effectively. Secondly, it is feared
there will be a loss of preferences for Burkina’s
exports to Côte d’Ivoire. This is especially an
issue for livestock (cattle, sheep, goats and
poultry), which must compete with products
imported from the EU and Latin America which
are significantly cheaper even though Burkina’s
products are of higher quality.
For the moment, Burkina does not have
recourse to any safeguard mechanism. The
special safeguard mechanism currently offers
this possibility. It is now likely that, given the
development of certain sectors, Burkina will
try to protect itself from imports of certain
products, particularly subsidised milk and meat
from the European Union.
With the Structural Adjustment Programmes, all
state marketing boards have been dismantled.
Export boards for raw products (shea nuts,
peanuts) and import boards for food products
have been dismantled. As a result, Burkina has
practically no state boards involved in marketing
products. The new draft text will not change the
situation in Burkina even if it does provide some
relief to the government in its efforts to support
the cotton sector, which is experiencing a
major crisis.
Faced with climatic difficulties and low food
production, Burkina has often needed food aid.
An organised system is in place to manage this
food aid. To date, most food aid has been sold
in affected areas at reduced prices. The new
draft text only allows food aid to be monetised
in exceptional circumstances. However,
monetisation of aid allows a better distribution
of aid by avoiding partisan bias when the aid is
shared out.
 ICTSD Programme on Agricultural Trade and Sustainable Development 21

ENDNOTES
1. http://farm.ewg.org/farm/region.php?fips=00000

2. http://www.rma.usda.gov/data/sob.html;

3. http://www.cotton.org/econ/world/detail.cfm?year=1999

4. http://www.gao.gov/new.items/d07944t.pdf;

5. http://www.oecd.org/document/55/0,2340,fr_2649_33775_36956855_1_1_1_1,00.html

6. http://www.ers.usda.gov/Publications/AgOutlook/AOTables/; 
http://www.nationalaglawcenter.org/assets/crs/RL33697.pdf.

7. Berthelot had previously defended these ideas in “L’Agriculture, talon d’Achille de la

mondialisation”, L’Harmattan, Paris, 2001.

8. Dumping is defined in the General Agreement on Tariffs and Trade (GATT) of the WTO as
the export of a product at a price which is less than domestic market price, not production
cost.

9. Option under Article 13 of the WTO Agreement on Agriculture which provides that
agricultural subsidies applied under the agreement may not be contested under another
WTO agreement, in particular, agreements on subsidies and the General Agreement on
Tariffs and Trade.

10 This book is based on the report to Congress by the authors in 2006 (Randy Schnepf and
Jasper Womach, Potential Challenges to U.S. Farm Subsidies in the WTO, CRS Report for
Congress, October 25, 2006, http://www.nationalaglawcenter.org/assets/crs/RL33697.pdf)

11.  US subsidies to Upland cotton exporters

12. See: http://cottonusa.files.cms-plus.com/economicData/CWS-yearbook-12-10-2007.pdf

13. “Sensitive products” here are products excluded from liberalisation. This definition does
not correspond to the definition for sensitive products within the WTO framework.

14. For most agricultural products, the maximum bound rate of Côte d’Ivoire is around
15 percent.

15. The right to apply the SSM is reserved to the 38 WTO Members (22 are developing countries)
who have applied tarification (the process of converting non-tariff barriers into customs
duties during the Uruguay Round) for a limited number of products.

16.  sudden increase is defined as an increase of 20 percent in imports (by volume) compared
A
to the five-year rolling average.

17. A local chicken carcase weighs 0.9 kg

18. TN/AG/W/4/Rev.3 (ANNEX L , paragraph 12)

19. TN/AG/W/4/Rev.3 (ANNEX L , paragraph 12)

22 Abdoulaye Zonon — The implications for Burkina Faso of the July 2008 Draft
Agricultural Modalities

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ICTSD’s Programme on Agricultural Trade and Sustainable Development aims to promote food security, equity
and environmental sustainability in agricultural trade. Publications include:

• Implications for Brazil of the July 2008 Draft Agricultural Modalities, by Andre Nassar, Cinthia Cabral da
Costa, Luciane Chiodi, September 2008

• Implications for Japan of the July 2008 Draft Agricultural Modalities, by Kazuhito Yamashita,
September 2008

• Implications for Mauritius of the July 2008 Draft Agricultural Modalities, by Gowreeshankursing Rajpati,
September 2008

• Implications of the Agriculture Chair’s Draft Modalities for the Treatment of Special Products, Maria
Dolores Bernabe, June 2008

• An Overview Assessment of the Revised Draft WTO Modalities for Agriculture. By Mike Gifford and Raul
Montemayor, June 2008.

• Implications for the European Union of the May 2008 Draft Agricultural Modalities. By Sébastien Jean,
Tim Josling and David Laborde, June 2008

• Implications for the United States of the May 2008 Draft Agricultural Modalities By David Blandford,
David Laborde and Will Martin, June 2008

• Implications for India of the May 2008 Draft Agricultural Modalities, Munisamy Gopinath and David Laborde,
June 2008

• Tropical and Diversification Products Strategic Options for Developing Countries.

Issue Paper No. 11 by Santiago Perry, 2008.

• Trade Effects of SPS and TBT Measures on Tropical and Diversification Products.
Issue Paper No. 12 by Anne-Célia Disdier, Belay Fekadu, Carlos Murillo and Sara A. Wong

• How Will the May 2008 “Modalities” Text Affect Access to the Special Safeguard Mechanism, and the
Effectiveness of Additional Safeguard Duties, by Raul Montemayor, June 2008. Issue Paper No.15

• Implications of the July 2008 Draft Agricultural Modalities for Sensitive Products. By Ariel Ibañez,
María Marta Rebizo and Agustín Tejeda, ICTSD Issue Paper No 16

For further information, visit www.ictsd.org.

ABOUT ICTSD

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