Mark Lange Letter to Trade Ambassador Schwab and Agriculture Secretary Johanns Regarding Doha

May 31, 2006

The Honorable Susan Schwab
Deputy U.S. Trade Representative
600 17^th Street, NW
Washington, DC 20508

The Honorable Mike Johanns, Secretary
U.S. Department of Agriculture
1400 Independence Avenue, SW
Washington, DC  20250

Dear Ambassador Schwab and Secretary Johanns:

Thank you for your strong support for U.S. agriculture throughout the prolonged WTO Doha negotiations.  Your leadership, and that of your predecessors, has demonstrated to the rest of the world that the U.S. is committed to achieving a Doha Agreement that is a break from the past.

Even though the Doha negotiations are supposed to be conducted as a single undertaking, cotton is being treated differently, and China, the world’s largest cotton market, is not fully participating.  As the negotiations intensify over the next several weeks, we unfortunately expect that there will again be an attempt to divert attention from the core issues in the Doha agriculture negotiation to cotton.  This pattern has been played out repeatedly starting with the Cancun ministerial and has resulted in little progress on market access or other critical areas.  It is critically important that negotiators and trade ministers concentrate on achieving a comprehensive package without undue distraction. 

It is revealing that countries and NGOs that highlight cotton as the economic lynch pin for farmers in developing countries only identify farmers from West Africa.  Many small farmers in parts of the world other than West Africa are farming with virtually identical practices but are not struggling to the degree reported by the C-4 countries.

The single largest problem facing West African farmers lies within their own countries, not subsidies of developed countries.  The Doha negotiations alone will not significantly impact the livelihood of the West African farmer. Unlike farmers in Asia, Brazil and even some other African countries, West African farmers continue to be burdened by the vestiges of a colonial European economic system.

Cotton was unnecessarily and inappropriately singled out in the WTO July 2004 framework.  In June 2005, the U.S. Department of Agriculture offered legislative language to terminate the Step 2 cotton program. A termination provision was incorporated in the 2006 budget reconciliation bill and signed into law.  Cotton was again singled out in the Hong Kong ministerial text in December 2005.  The least developed countries are to be provided accelerated duty free, quota free access in advance of implementation of any other agriculture provision.  The U.S. and other developed nations also enhanced funding for previous development offers focused on improvements in West Africa. These concessions are neither minor nor without effect within the United States.

Meanwhile, China, the largest cotton market in the world effectively sits on the sidelines in the WTO negotiations. The U.S. and West African cotton farmer, as well as most other cotton farmers, would be well served by a Doha agreement that obtains increased market access in China.  However, China continues to hide behind its accession agreement and its self-proclaimed status as a developing country (despite having nuclear weapons and a space program) to avoid providing increased market access.  China’s imports represent 45% of the world trade in raw cotton and China accounts for 43% of the world’s production of cotton textiles. China’s tightly managed market access for cotton systematically depresses world cotton prices while artificially supporting Chinese domestic cotton prices.  China’s erratic administration of the cotton TRQs places an emphasis on very tight delivery periods, severely constraining countries with logistical challenges from being able to sell to China.

Concessions already granted by the United States in Hong Kong with respect to cotton are significant and sufficient.  Additional inequitable concessions on cotton and attempts to expansively interpret the Hong Kong Ministerial text not only miss the economic mark, but seriously threaten any gains on other fronts for the economically fragile C-4.  There should be no misunderstanding of the folly of asking the U.S. cotton producer to accept a grossly inequitable Doha agreement.

No doubt there will be another round of attempts to distract Ministers from the crucial business of comprehensive negotiations.  The U.S. cotton industry appreciates your leadership and your dedication to these negotiations. We are available at any time to discuss these matters with you and your colleagues.

Sincerely,

 

Mark D. Lange
President and CEO

Cc: Ambassador Dick Crowder, USTR
Under Secretary J.B. Penn, USDA
Deputy Under Secretary Ellen Terpstra, USDA
Mark Manis, USDA-FAS
Jason Hafemeister, USTR
Janet Shannon, DoS