|US Files Arguments in Brazil WTO Dispute|
One week after filing its notice of appeal in the Brazil-US WTO dispute, the US filed a lengthy submission to the Appellate Body that will be hearing the case. The US submission targeted virtually every significant legal portion of the Panel's initial ruling stating that Brazil had overreached in several of its claims, stretched WTO disciplines beyond anything to which Members had agreed and that the Panel had made interpretive missteps that compel reversal of its findings.
The US stated: "The Panel's analysis of the key issue of causation reflects neither the reasoned analysis necessary for the Appellate Body to affirm the serious prejudice finding nor the reasoned analysis Members should expect from the WTO dispute settlement system. The United States demonstrates at some length that, with respect to numerous findings and conclusions of law, the Panel erred and took an approach that disregarded the text of the relevant provisions, lacked analysis, or made findings that were simply unexplained."
|Anderson Completes China Orientation|
NCC Chairman Woody Anderson completed an orientation trip to Beijing and Shanghai on Oct. 16-23. Anderson was accompanied by NCC Senior Vice President John Maguire.
While in Beijing, they met with the US agricultural counselor, attaché, and trade officer as well as with Under Secretary J.B. Penn, Assistant Under Secretary Chuck Lambert and Foreign Agriculture Service (FAS) Administrator Ellen Terpstra, who were in China for consultations on a variety of trade issues including cotton. With assistance from Jeff Coey, Cotton Council International’s (CCI) director, China and South East Asia, and Yuan Haijing, CCI China consultant, Anderson and Maguire also met with top officials of the China Cotton Assoc. (CCA); the National Development and Reform Commission; the China National Cotton Reserve Corp.; and the China National Textile Industry Council. They later traveled to Shanghai where they met the agricultural trade officer and toured Nan Song Textile Mill.
During various sessions, Anderson urged Chinese officials to administer tariff rate quotas (TRQs) in a manner that complies with China’s WTO accession agreement. Specifically, he discussed the importance of eliminating the distinction between processing and general trade, the importance of transparency, and of making TRQs available in commercially viable quantities. He acknowledged recent improvements in administration of TRQs, but urged officials to release a list of firms receiving TRQs. He also discussed the outlook for US production and conveyed appreciation for China’s purchases and excellent working relations between US and China trade agencies.
Chinese officials reviewed the situation and outlook for China’s cotton crop and development of the textile industry. They expressed serious concern about the US government’s approval of safeguard petitions limiting increases in certain Chinese exports. Anderson urged Chinese officials to engage US counterparts in consultations as provided in safeguard procedures and explained the importance of working to increase domestic consumption of cotton products in China.
A technical delegation of cotton classing and fiber measurements specialists met with China Fiber Inspection Bureau officials in Beijing. The Team’s objective was to learn more about China’s Cotton Classification Reform plan and to encourage use of standards that will facilitate US cotton exports. China’s plan for reform of its cotton grading system is expected to be complete by ’10 beginning with 4 test sites in ’04.
The team, led by Norma McDill, AMS Cotton Division deputy administrator, included USDA fiber analysis researchers, Cotton Incorporated and NCC staff. The basis of the proposed classification system will be instrument classification similar to the United States.
CCA executive intern Wang Jian Hong is getting an extensive US cotton industry orientation. Wang and his interpreter, Ms. Wu Hui Juan from CCI’s representative office in Beijing, began their tour in Memphis on Oct. 23 and will conclude it on Nov. 20 at CCI’s Sourcing USA Summit in San Diego, CA. Wang and Wu’s itinerary also includes meetings with NCC leaders and government and university officials in Washington, DC; the Mississippi Delta; Cary, NC; New Orleans, LA; Lubbock, TX; Phoenix, AZ; and California’s San Joaquin Valley.
|China’s Central Bank Bumps Rates|
For the first time since ’95, China’s central bank has raised interest rates in what most conclude is an attempt to avoid an overheated economy. The announcement by the People’s Bank of China indicates that the 1-year lending rate will rise from 5.31% to 5.58%.
Previously, banks also were limited on the amount by which actual rates could exceed the announced official rate. The recent move by China also abolished that limit, suggesting that borrowers now will face steeper increases in lending rates.
US Treasury officials welcomed the announcement as a sign that China is now using “more sophisticated, market-based management of their economy…” The immediate reaction of markets for commodities such as copper and oil was negative based on concerns that a slowing economy would limit China’s demand growth for these basic products.
It is unclear to what extent the change in interest rates will affect China’s exchange rate. Some analysts indicated an interest rate move could be a prelude to a revaluation of the yuan while others argue that the announcement may simply allow China to forestall a change in their currency values.
|Cotton Yarn Safeguard Petition Filed|
The National Council of Textile Organizations (NCTO), along with other textile associations, filed additional threat-based safeguard petitions with the Department of Commerce, Committee on the Implementation of Textile Agreements (CITA).
NCTO's President, Cass Johnson, said the organization filed safeguard petitions covering combed cotton yarn, and indicated that a few other petitions would be filed soon. NCTO and other textile organizations now have filed 7 petitions, and expect to file 3 more new "threat-based" petitions as well as petitions seeking to continue safeguards already in place on brassieres, knit fabric and dressing gowns.
Also, CITA announced this week that it had approved a safeguard petition on imports of Chinese cotton, wool and man-made fiber socks. CITA determined that the US market for socks (Categories 332/432 and 632 part) "is being disrupted and that there is a threat of further disruption due to imports from China...and that this situation threatens to impede the orderly development of trade in these products." As a result, quotas now can be imposed on Chinese sock imports which would only permit 7.5% growth (6% for wool socks) unless the US and Chinese governments negotiate a different level.
|CRP Bids Total 1.188 Acres|
USDA accepted bids to enroll 1.188 million acres of the 1.672 million acres offered by landowners into the Conservation Reserve Program (CRP). The 29th general signup ran from Aug. 30 to Sept. 24.
The agency also announced that the environmental benefits index (EBI) used to rank CRP offers is based on 3 environmental factors as well as a cost factor. All offers were ranked and an EBI score of 248 was established as the base for this signup. The average EBI was 287 and the average rental rate per acre was $50.24.
The additional acreage increases total CRP acreage to 35.6 million. The ’02 farm bill authorizes enrollment of up to 39.2 million acres. About 3 million acres are reserved for special incentives including a continuous signup.
|NCC Concerned With NAFTA Biotech Report|
The NCC, in partnership with the AgBiotech Planning Committee, sent a letter to EPA Administrator Mike Leavitt detailing concerns about a report scheduled to be released by the North American Commission of Environmental Cooperation (CEC).
At issue is a report conducted by the CEC secretariat on the effects of transgenic corn in Mexico. NCC and other groups are concerned regarding reported recommendations in the report that would include, among other non-science based recommendations, the use of the "precautionary principle" with regard to exports of biotech-derived commodities to Mexico. In addition, the report has not been peer-reviewed properly or made available for adequate public review.
In the letter to EPA, the groups call on the U.S. government to reject the report or address the scientific shortcomings that conflict with longstanding US agriculture and food biotech policy.
NCC was alerted to the report's potential shortcomings by a letter from the CEC’s Joint Public Advisor Committee (JPAC) to Canadian, Mexican and American environmental regulatory agencies advocating a moratorium on biotech corn imports into Mexico sent in the summer of ’04.
The NCC will continue to oppose the use of unscientific methods of regulation as well as irresponsible and unfair trade practices that could affect the trade of cotton or cottonseed products into Mexico or other parts of the world.
|Mill Consumption Jumps|
According to the Commerce Department, September (5-week month) total cotton consumption in domestic mills was 302.2 million pounds for a seasonally adjusted annualized rate of 6.45 million 480-pound bales. Last year’s September annualized rate was 6.25 million bales. The August (4-week month) estimate of domestic mill use of cotton was raised by 447,000 pounds to 242.1 million. The revised seasonally adjusted annualized rate of consumption for August is 6.52 million 480-pound bales – more than last year’s August annualized rate of 6.39 million bales.
Preliminary October domestic mill use of cotton and revised September figures will be released by the Department of Commerce on Nov. 24, ’04.
|Sales Keep Last Year’s Pace|
Net export sales for the week ending Oct. 21, ’04 were 119,300 bales (480-lb.), resulting in total ’04-05 sales of slightly more than 6.4 million and bringing total sales to roughly the same level at the same point in the ’03-04 marketing year. Total new crop (’05-06) sales are 178,800 bales.
Shipments for the week were 118,600 bales, bringing total exports to date to 1.5 million bales, below the 1.7 million at the comparable point in the ’03-04 marketing year.
|Step 3 Import Quota Opened|
Competitiveness provisions triggered a Step 3 quota based on price conditions for the week ending Oct. 28. When the Friday through Thursday weekly average US northern Europe price, adjusted for the value of the cotton market user certificate (Step 2), exceeds the northern Europe price ("A" Index) for 4 consecutive weeks, a special Step 3 import quota is triggered.
The quota is for 122,752 bales (480 lb.), equal to 1 week of mill use based on the most recent 3 months’ seasonally adjusted data. The quota will be established as of Nov. 4 and applies to upland cotton purchased no later than Feb. 1, ’05 and entered into the US no later than May 2, ’05.
|Step 2 Payment Announced|
A Step 2 payment equal to 2.32 cents will be made the week of Oct. 29 – Nov. 4. For the week ending Thursday, Oct. 28, the Friday – Thursday 5-day average quote for US cotton delivered to Northern Europe (NE) (54.25 cents/lb.) exceeded the 5-day average “A” Index (51.93 cents/lb.). This marked the 4th consecutive week that the USNE quote has exceeded the “A” Index.
US cotton’s competitiveness provisions stipulate that the Friday-Thursday 5-day average quote for US cotton delivered to NE must exceed the 5-day average “A” Index for 4 consecutive weeks to trigger Step 2 payments. Step 2 user payments resumed Friday, Oct. 29. This will mark the first Step 2 payments since week ending Aug. 12.
|Prices Effective Oct. 29-Nov. 4, 2004|