By Ye Xingqing, Cheng Yu & Han Yang, Research Team on “Agricultural Strategic Adjustment in the Course of High-Level Opening-up”, Department of Rural Economy, DRC

Research Report, No. 215, 2019 (Total 5715) 2019-12-6

Abstract: The lawsuit raised by Brazil on US cotton subsidy policy has greatly enhanced the confidence of developing countries to challenge the agricultural subsidy policy of developed countries, and some least developed countries in Africa have taken a moral stance in boosting cotton subsidy reform. Some related stakeholders represented by the "four cotton growing countries" strived to achieve a positive result in reducing domestic subsidy for cotton export at the 12th ministerial conference of WTO to be held in 2020. As for China, the second round of targeted price subsidy for cotton growing farmers in Xinjiang Uygur Autonomous Region will soon become due and China is faced with the option of what kind of subsidy policy to implement starting from 2020. As the world's largest producer and importer of cotton, China needs to take a more forward-looking approach both in formulating a new round of domestic cotton subsidy policy and in the coming WTO negotiations on cotton subsidy policy. We need to adhere to the position that Blue Box measures are not included in the total volume of cotton export, and Green Box measures are not restricted. Given the conditions that cotton import to China could continue to increase, the non-quota tariff shall not be lowered. We need to actively respond to some countries’ inquires on China's cotton subsidy policy, and take their views as references in formulating a new round of cotton subsidy policy.

Key words: cotton, WTO, domestic subsidy, China