Cotton's Week: November 7, 2003

Cotton's Week: November 7, 2003

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Senate Skirts Payment Changes in Approving Appropriations Bill

A fiscal year ’04 Agriculture Appropriations measure that provides $77.5 billion for agriculture and related agencies, of which $17 billion is for discretionary spending, was approved by the Senate on a 93-1 vote. The bill does not include any change to cotton’s Step 2 program, the 3 entity rule, certificate redemptions or to payment limitations for direct, counter-cyclical or loan deficiency payments/marketing loan gains.

The approval on Nov. 6 came following debate on several contentious amendments, including adoption of a sense-of-the-Senate resolution urging timely implementation of a country-of-origin labeling provision included in the ’02 farm law. The House-passed appropriations legislation includes a provision to delay implementation for one year.

The Senate rejected an amendment that would have prohibited the use of funds from 4 conservation programs to pay for technical assistance for the Conservation Reserve Program. A number of amendments were accepted on voice vote, including an amendment by Sen. Grassley (R-IA) to lower payment limits on Environmental Quality Incentive Program benefits from $450,000 to $300,000. The limit applies to the aggregate payments to an individual for all contracts entered into during the period FY02-07. There is no similar provision in the House-passed bill.

The Senate and House-passed versions will now be considered by a conference committee. Congressional leaders have indicated that if the committee does not act quickly, the legislation would be combined into an omnibus bill with other unfinished appropriations measures. The White House has threatened to veto the final measure if it includes language that would make it easier to trade with Cuba.



CAFTA Access Provision Draws Opposition
 
The NCC joined national and state textile organizations in expressing opposition to the inclusion of a “special regime” provision in the Central America Free Trade Agreement (CAFTA) that would constitute an exception to the yarn-forward rule of origin. The provision would allow garments assembled with fabric formed with 3rd-country yarns to be eligible for preferential access.

The NCC, American Textile Manufacturers Institute, American Yarn Spinners Assn. and state textile manufacturing organizations advised Under Secretary of Commerce Aldonas of their serious concern about any consideration of a so-called special regime.

The organizations said if any serious consideration is being given to including a special regime in CAFTA, they want an opportunity to meet with US officials prior to the next scheduled CAFTA negotiations Dec. 8-16.



Business Interests Urge Repeal of FSC-EI Law

The business community urged the House to take up legislation to repeal and replace the Foreign Sales Corporation-Extraterritorial Income (FSC-EI) law. HR 2896, the American Jobs Creation Act, as reported by the Ways and Means Committee, will reduce tax rates for manufacturers and small companies; reduce “double taxation” on corporations by allowing use of foreign tax credits; increase equipment write-offs; and provide relief from the corporate alternative minimum tax (AMT) and eliminate AMT for some small companies.

The legislation replaces an export-based tax benefit that goes to only 1,800 companies, with an across-the-board tax cut for all US manufacturers.

Failure to act will result in European Union (EU) sanctions against US products beginning in March because the World Trade Organization has ruled that the FSC-EI violates trade agreements and must be repealed. The EU has published a list of products targeted for retaliation including wool, cotton, textiles, carpets and footwear products.

A call-in for manufacturers interested in learning more about the legislation is being organized by the National Assn. of Manufacturers for Thursday, Nov. 13. Check the NCC web site for details.



Planned Legislation Would Extend AGOA

A bipartisan group announced its intention to introduce legislation to extend the Africa Growth and Opportunity Act (AGOA), but no timetable was provided. AGOA, which provides trade benefits to qualifying countries in Sub-Saharan Africa, is set to expire in ’08.

The proposal, unveiled by Reps. Royce (R-CA), Jefferson (D-LA), Conyers (D-MI), Payne (D-NJ) and McDermott (D-WA), would extend AGOA to ’15 and expand coverage to include trade in agriculture products. It also would extend the period during which the “poorest” African nations could use 3rd-country fabrics in their duty-free exports to the US. The so-called AGOA 3 Action Committee said action is needed quickly because the World Trade Organization Agreement on Clothing and Textiles is scheduled to end in ’05, which will “prematurely expose Sub-Saharan Africa’s nascent, AGOA-spurred textile and apparel sector to better-established Asian competition.”

The AGOA 3 Action Committee, organized by a former Clinton Administration Office of US Trade Representative official, includes businesses, non-governmental organizations, faith-based groups and representatives of African countries brought together to “draft, promote and work for enactment and implementation of enhancements to AGOA 2.”



Cotton Belt Members Co-Sponsor Immigration Reform Bill

A bipartisan immigration reform bill for the agricultural industry entitled “Agricultural Jobs, Opportunity, Benefits, and Security (AgJOBS, S. 1645) Act of ’03” was introduced and received wide support throughout the Cotton Belt. Co-sponsors of the bill include Sens. Bingaman (R-NM), Boxer (D-CA), Breaux (D-LA), Cochran (R-MS), Domenici (R-NM), Edwards (D-NC), Graham (D-FL), Lincoln (D-AR), Pryor (D-AR) and Roberts (R-KS). Reps. Cannon (R-UT) and Berman (D-CA) have introduced companion legislation (H.R. 3142) in the House that drew 18 Cotton Belt co-sponsors.

The NCC has worked with the Agricultural Coalition for Immigration Reform on this initiative. The legislation will reform the existing H-2A guest worker program to provide a long-term labor safety net and allow adjustment of status provisions. This will allow a long-term solution for H-2A and allow legal documentation of current workers. The National Council of Agricultural Employers and other farm worker advocates support the plan. The NCC will continue to work with the coalition as the legislation moves forward.



CPSC to Expand Flammability Rulemaking for Upholstered Furniture

The Consumer Product Safety Commission (CPSC) voted to consider expanding the upholstered furniture rulemaking to address the risk of residential fires ignited by cigarettes as well as small open flames (e.g., matches, lighters and candles). This follows letters from the fabric coalition and furniture industry supporting this action and a September CPSC public meeting in which the National Assn. of State Fire Marshals, the upholstered furniture industry and a fabric coalition of textile industry suppliers requested that CPSC consider a federal standard to address both fire ignition sources.

CPSC has had a standard-setting process underway since ’94 to address small open flame sources only, and there already is an industry voluntary standard for cigarette ignition resistance. There is a California upholstered furniture flammability standard (TB117) that is being revised, but there is no nationwide standard or voluntary industry program addressing open flame ignition of upholstered furniture.



Agreement Reached on Biosafety Protocol

Mexico, Canada, and the US signed a trilateral agreement concerning section 18.2(a) of the Biosafety Protocol (BSP). The BSP is the recently implemented international agreement signed by more than 60 countries requiring the labeling of trans-boundary shipments of living modified organisms (LMOs), applying to cottonseed for planting and feed. Section 18.2(a) of the BSP details the labeling requirements that are necessary to be in compliance with this treaty.

The agreement spells out how exporters must document shipments by stating when the “may contain” language is appropriate and where it should be documented. In particular, the treaty outlines that the labeling should apply only when a shipment of LMO-containing product that is more than 6% of a total shipment is sent to a country where its use has been approved. Furthermore, this labeling should have a simple statement that the shipment “may contain” LMOs and should be placed on the commercial invoice that is to be accepted and maintained by the importer.

While the US is not a signatory of this treaty, Mexico has signed and Canada is considering signing, requiring the US to comply with these laws once the BSP is ratified domestically in those countries. This language is an attempt to simplify the process in advance of the initial meeting of parties (MOP1) in February ’04 where countries that have ratified the treaty will meet to discuss the particulars of how it will be implemented. The US hopes to provide these treaties as working documents that can be adopted by the parties and prevent more draconian documentation requirements from being adopted. Similar discussions with Japan and Korea recently failed to yield an agreement, and now the US will focus its efforts on Latin America in an attempt to garner more support for their views.



Chemical Security Bill Clears Committee

The Chemical Security Bill (S. 994), designed to require the chemical industry to provide security assessments and vulnerability reports to the Department of Homeland Security (DHS), was approved by the Senate Environment and Public Works Committee.

As approved, the bill affects the pesticide and fertilizer industries that supply agriculture because of the heavy use of such chemicals as anhydrous ammonia. Provisions are made for small businesses to prevent unreasonable burden on the agricultural community, but some reporting requirements may still apply depending on an operation’s volume of usage, particularly those with large nitrogen storage facilities.

Cottonseed oil mills most likely would be affected because of their use of hexane in oil extraction.



Cotton Town USA Communities Named

Bayer CropScience and the National Cotton Women’s Committee named 3 communities as recipients of the ’03 Cotton TownUSA grants. Moultrie, GA; Ropesville, TX; and Somerville, TN, will each receive a $10,000 grant to fund community improvement projects.

The towns indicated specific community projects for the grant dollars. Moultrie plans to put the funds toward the completion of Moss Farms Aquatic Center, a state-of-the-art diving facility established by local cotton farmer Moose Moss; the West Texas community of Ropesville will use its grant money to preserve and maintain the town’s oldest historic building; and Somerville proposes the grant be matched by town funds to contribute to the restoration of the historic Fair Theatre.

Cotton TownUSA grants were available to towns that rely on cotton production as a cultural and economic cornerstone. The towns were selected out of more than 70 applications received.



Cotton Foundation Adds 2 Members

Cotton Foundation membership increased to 72 with the recent addition of InTime, Inc., and Samuel Jackson, Inc. InTime, based at the Stennis Space Center in Bay St. Louis, MS, provides crop management services that target a reduction of input/chemical costs by providing its clients with prescription maps that enable the spatially variable application of agricultural chemicals. For more information, go to www.gointime.com. Samuel Jackson, Lubbock, TX, manufactures cotton humidification, drying and moisture measurement systems. Visit www.samjackson.net.



Export Sales for Week Ending Oct. 30

Net export sales for the week ending Oct. 30 were 324,500 bales (480-lb.), resulting in total ’03-04 sales of over 6.7 million bales. Total sales at the same point in the ’02-03 marketing year were almost 5.4 million bales. Total new crop (’04-05) sales are 208,900 bales (480-lb.).

Shipments for the week were 146,000 bales, bringing total exports to date to 1.9 million bales, ahead of the 1.7 million bales at the comparable point in the ’02-03 marketing year.



Prices Effective November 7-13, 2003

Adjusted World Price, SLM 1 1/16

64.64 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

3.01 cents

Marketing Loan Gain Value

0.00 cents

Import Quotas Open

 1

Step 3 Quotas (480-lb. bales)

 128,590

ELS Payment Rate

16.23 cents

*No Adjustment Made Under Step I
 
Five-Day Average
 
Current 3135 c.i.f. Northern Europe

78.04 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

76.11 cents

Current US c.i.f. Northern Europe

81.05 cents

Forward US c.i.f. Northern Europe

No Quote

 
Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-September)

52.38 cents

**

**August-July average price used in determination of counter-cyclical payment

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