Cotton Lint Export Trade in the Midst of Distortion: What are the Competitiveness Statuses of Major Players in the Industry? Case of 12 Selected Countries

The world’s cotton production and export industry has for some time now witnessed protests from various producers and exporters on distortionary measures (notably subsidies) instilled by some major players (including the United States, India and China) and the downward pressure such measures induce on world cotton prices. To complement research efforts made and findings so far following such protests, we sourced assessment of the competitiveness statuses of twelve major players in the industry amidst such distortions. In so doing, we made use of the logarithmic form of the comparative export performance index (ln (CEP)), basing our decisions on newly introduced thresholds founded on seven-year-mean performance indices. In addition, we used mean deviation for the last four of the seven years covered to identify recessions and improvements in export performancefor the respective countries. The results show that, although such distortionary measures (specifically production and export subsidies) are instilled with a purpose of protecting respective local industries, they sometimes turn-out not only harming players from other economies, but also “push-out” extra revenues that may have been earned by some of the countries (primarily larger exporters like United States) that instill them. Based on seven-year mean index values used for the period 2005-2011 and new thresholds employed, we found Burkina Faso, Uzbekistan, Mali, Chad, Benin, Cameroon, and India to be “Highly Competitive”. The United States (US), Australia, and Côte d’Ivoire were found “Competitive”. Upon the index values observed (limited however by our inability to incorporate economic prices and account for differences in domestic resource costs and market structure), Brazil and China were respectively found “Weakly Competitive” and “Uncompetitive”. In spite of these statuses however, we discovered that export performances for the United States, Uzbekistan, and all the WCA countries (except Burkina Faso) have receded in recent years. Performances for India, Australia, China and Brazil have however improved, with the latter two witnessing relatively higher improvements. By this, we conclude that distortions do not only harm countries from the WCA and other developing nations, but also adversely affectperformance of the United States. In countries like India, China and Brazil however, subsidies have yielded beneficial implications for export performance. These differences in effect of subsidies for the four subsidy-levying economies could be due to differences in resource, cost of production and exports, and market share.