Doha development agenda: implications for the US and world cotton markets

This study analyzed two scenarios that considered a reduction of the US aggregate measure of supports (AMS) payments by 60% over a five-year period. In the first scenario, which considered a unilateral action by the US, the targeted AMS payments reduction would require a 12% cut in the US target price and an 8% cut in the loan rate. This would lead to a 3% decline in US cotton production, a 3% rise in world cotton price, and a 26% decline in US cotton net farm income at the end of the implementation period. The second scenario analyzed the case in which the US AMS payments reduction is concomitant with multilateral tariff and subsidy eliminations from the rest of the world. Under this scenario, fewer cuts in the US loan rate and target price (i.e. 9 and 4%) were required to achieve the 60% AMS reduction because of market liberalization from the from the rest of the world. However, US cotton producers' net farm income still declined by 18%.