Cotton's Week: April 2, 2004

Final action on the FY05 budget resolution is expected to be delayed until Congress returns from a spring district work period.

Conference negotiators are reportedly continuing to discuss Senate language that would require 60 Senate votes to approve tax cuts or extensions of mandatory spending unless costs are offset by raising revenue or reducing spending by an equal amount. Reports also indicate that the final budget resolution may include a provision that could require the respective agriculture committees take action to save about $100 million in FY05 and about $400 million over 5 years.

The House-passed budget included a similar provision while the Senate’s did not. There also are indications that the final budget could include Senate-approved provisions providing funds to facilitate passage of the child nutrition bill and to fund technical assistance for conservation programs.

NCC President/CEO Mark Lange attended meetings in Beijing, China as part of a delegation organized by the US Department of Commerce and led by Under Secretary of Commerce Grant Aldonas and Deputy Assistant Secretary James Leonard. Other US participants included Wilbur Ross, International Textile Group (formerly Burlington Industries and Cone Mills); Keith Crisco, Asheboro Elastics; William Chapman, Shaw Industries; John Miller, Carpet and Rug Institute; Tom Glaser, VF Corp.; and Rod Birkins, JC Penney. Sessions were held with China’s Ministry of Commerce, led by Vice Minister Gao and Deputy Director Sun, and a number of Chinese textile mill representatives also attended.

Discussions centered on US concerns regarding Chinese trade practices and potential market disruptions arising from an expected surge of imports in early ’05 when the US lifts textile and apparel quotas. US participants also stressed that there remains a significant lack of reciprocal access to the Chinese textile and apparel markets.

Lange also participated in the inaugural “Global Textile Economic Forum,” which was hosted by the China National Textile and Apparel Council in Beijing and attended by representatives from 18 nations. He noted the shifting fiber markets and loss of cotton’s position in the Chinese apparel market and urged China’s cotton and textile agencies to counter the declining per capita use of cotton by supporting cotton promotion to Chinese consumers.

Other meetings organized by Cotton Council International (CCI) involved the China Cotton Association, National Development and Reform Commission, China National Cotton Reserves Corp., and US Embassy officials. Lange also toured 2 Shandong province textile mills - both substantial US cotton users. Topics included recent trade trends, the outlook for the Chinese textile industry and its fiber demands, fiber quality issues, tariff rate quota problems, and the world production and supply outlook.

Lange also participated in CCI’s latest licensee launch. The JC Collection, conceived by actor Jackie Chan, was introduced to the Chinese public with a press briefing, fashion show and exhibition. The collection is a line of high-end men’s apparel, and the group hopes to have 30 stores up and running throughout China by year’s end. 

Representatives of the American Cotton Shippers Association and AMCOT also were in China to discuss rules for dispute settlement and arbitration. That delegation, led by Robert Weil, II, met with the China Cotton Association and the China National Textile and Apparel Council.  Talks will continue in order to find a mutually agreed protocol for dispute settlement.

USDA’s March Prospective Plantings Report indicates US producers intend to plant 14.40 million acres of cotton in ’04/05, up 6.8% from the previous year. Upland area is projected to be 14.18 million acres, up 6.5% from ’03/04 while ELS area is projected at 227,000 acres a 26.5% increase. The NCC’s planting intentions survey, released in early February, indicated US. farmers intend to plant 14.76 million acres in ‘04/05, 14.55 million acres to upland cotton and 212,000 acres of ELS cotton.

Projected upland area in the Southeast of 3.15 million acres represents an increase of 3.5% from the previous year. Only North Carolina shows a decline from last year with plantings projected to be 790,000 acres (-2.5%). In the Mid-South, projected plantings of 3.75 million acres represent an increase of 4.9% with Arkansas, Louisiana, Missouri, and Tennessee all showing increases in planted acres. An increase of 9.7% is indicated for the Southwest as Kansas growers report an increase of 44.4%. Prospective upland plantings in the West represent an increase of 2.3% from the previous year with New Mexico and Arizona increasing acres 7.1% and 2.3%, respectively.

Net export sales for the week ending March 25 were 57,600 bales, resulting in total ’03-04 sales of more than 12.5 million. Total sales at the same point in the ’02-03 marketing year were about 11.0 million bales. Total new crop (’04-05) sales are 787,200 bales.

Shipments for the week were 417,700 bales, bringing total exports to date to 7.8 million, ahead of the 6.6 million at the comparable point in the ’02-03 marketing year.

The House accepted an amendment by Reps. Bereuter (R-NE) and Stenholm (D-TX) to the House highway reauthorization bill regarding Hours of Service (HOS) exemptions for agriculture.

Over the years, the Department of Transportation (DOT) has defined and redefined what qualifies as agriculture as it relates to the HOS exemption. This provision would clarify the agricultural exemption to HOS rules first established by Congress in ’95 and that prevents DOT from diminishing or revoking that exemption.

Recently, NCC and the National Cotton Ginners Association cosigned a letter to the House Transportation and Infrastructure Committee urging adoption of this amendment. Similar language was included in the Senate version of the highway reauthorization bill.

USDA’s Risk Management Agency (RMA) issued the second draft of the Standard Reinsurance Agreement (SRA). The SRA provides the basic framework for crop insurance delivery and is a cooperative agreement between all crop insurance companies and the Federal Crop Insurance Corp.

The initial draft was met with significant concern by companies and others. The second draft would allow companies to share more risks with RMA for pilot programs and would seek to ensure the availability and delivery of crop insurance programs. However, the second draft would attempt to balance costs by removing $41 million in reimbursements to companies.

NCC, which met with RMA on several occasions regarding the new SRA, will continue dialogue with them and crop insurance providers to ensure that crop insurance is available and delivered properly to NCC members.

The National Council of Textile Organizations (NCTO) has been launched and will serve as the central policy development and implementation body of the US textile industry and its allied product and service suppliers.

NCTO Chairman Allen E. Gant, Jr., president/CEO of Glen Raven, Inc., said, “This group will bring new resources to the fight for fair trade policies that continue to impact nearly one million workers in the US fiber, textile and supplier industry. Representing one of the largest manufacturing employers in the US, NCTO will press for fair trade for American textile workers and it will put forward a positive agenda to revitalize this industry.”

NCTO’s Vice Chairman Jim Chesnutt, CEO of National Spinning Company, said the new group is building a worldwide coalition of textile and apparel industries being hurt by unfair trade practices.

Headquartered in Washington, DC, with an office in the Gastonia, NC, area, NCTO is comprised of 4 separate councils: Fabric and Home Products Manufacturers, Fiber Manufacturers, Industry Support, and Yarn Manufacturers. Each will have its own representation on the NCTO Board. Cass Johnson, who has a long history of experience both with the industry and with Washington, DC, has been retained as NCTO’s president. NCTO’s launch comes on the heels of the recent dissolution of the American Textile Manufacturers Institute and the scheduled dissolution in August of the American Yarn Spinners Association.

The NCC joined a broad-based coalition led by the American Forest and Paper Assn. urging the House and Senate to promptly resolve the Foreign Sales Corp. (FSC)/Extraterritorial Income (ETI) export tax issue.

The European Union (EU) is now applying a 6% retaliatory tariff on selected US exports including agricultural products, jewelry, wood products and textile, apparel and footwear products. The EU took action after a WTO panel ruled the FSC and its replacement, the ETI, constituted illegal export subsidies.

The Senate debated legislation designed to remedy the situation, but it was pulled from the floor when the Senate failed to vote to limit debate and the number of amendments offered.  The legislation may be brought back to the Senate floor the week of April 5 if Senate leaders can agree on a limited number of amendments to be offered. The House is not expected to move until the Senate has acted.

The nomination of Stephen Johnson for EPA deputy administrator was blocked in the Senate Environment and Public Works Committee. The nominations are being delayed over a dispute with the EPA for information on a variety of issues which the EPA has not provided. Sen. Wyden (D-OR) has placed a hold on Johnson’s nomination until the EPA provides the requested documents, some of which have been requested since ’01.

Wyden also stated his opposition to other key appointments including Benjamin Grumbles as the director for the Office of Water and Ann Klee as the EPA’s general counsel.  Sen. Wyden and ranking committee member Jeffords (I-VT), along with others, contest a letter written by Grumbles while in the EPA’s congressional affairs office that stated the EPA was exempted from Freedom of Information Act requirements to provide documents to Congressional members.

Johnson has been a supporter of agriculture since joining EPA in’79. The NCC, which has expressed its support for Johnson, continues to back his nomination.