Cotton's Week: November 19, 2004

House and Senate negotiators have worked with White House officials to hammer out an acceptable agreement on the $388 billion omnibus bill before the Continuing Resolution expires Nov. 20, but final details may not be known until the bill is passed.

Senate appropriators, who had pressed for an additional $8.1 billion in spending before the election, relented on the extra funding in review of the negotiations which were stalled in face of a threatened veto. Appropriators reportedly have managed to finance about $4 billion in extra spending using an offset generated by an across-the-board cut of between .75% and 1%. In addition to reaching agreement on the spending level, the negotiators also had to resolve the fate of numerous controversial legislative riders including a plan to make country-of-origin labeling for food products voluntary instead of mandatory; a provision to extend certain dairy supports; limits on competitive sourcing by government agencies; immigration issues related to temporary visas for high tech workers; nuclear waste disposal in Nevada; overtime regulations; and a Cuba travel ban.

While the lame duck session for the 108^th Congress is wrapping up, members have begun organizing for the 109^th. House freshmen, in town for orientation, have elected Louisiana Republican Bobby Jindal as president of the Republicans Freshman Class. Democratic House freshmen will choose their officers on Nov. 19.

House Republicans selected their leaders for the next Congress by re-electing the current leaders: Speaker Hastert (IL); Majority Leader DeLay (TX); Majority Whip Blunt (MO); Conference Chairman Pryce (OH); and Conference Vice Chairman Kingston (GA). Republican Senators re-elected their leaders returning Frist (TN) as majority leader; McConnell (KY) as majority whip; Santorum (PA) as conference chairman; Hutchison (TX) as conference vice chair; Kyl (AZ) as policy chairman; and Bennett (UT) as chief deputy whip. They also elected Dole (NC) to head the National Republican Senatorial Committee – the fundraising committee for Senate Republican candidates.

Also, by a single vote margin, they voted for a partial reduction in the seniority system by giving the Republican Leader more power over committee assignments.

House Democrats also reelected their leaders: Pelosi (CA), minority leader; Hoyer (MD), whip; Menendez (NJ), conference chair; Clyburn (SC), caucus vice chairman; and Spratt (SC), assistant to the minority leader. They elected Reid (NV) to serve as minority leader replacing Daschle (SD), who was defeated by Thune. Durbin (IL) was elected minority whip.

NCC joined the Coalition for a Sound Dollar in expressing concern about reports that the European Union and Japan may intervene in international currency markets to maintain their exports’ competitiveness. The Coalition urged US Treasury Secretary Snow to remind US trading partners that interventions and manipulations of currency values are viewed as market distorting by the WTO and International Monetary Fund.

The Coalition released data documenting that the dollar rose 25% against other currencies, peaking in ’02, but even with recent adjustments is still 10% higher than when the run-up began. The Coalition said, “Because China, Japan, Korea, Taiwan and other Asian nations are intervening or threatening to resume intervention in order to keep their currencies artificially weak against the US dollar, Europe, Canada, Australia and other major US trading partners are shouldering a disproportionate share of the adjustment burden for global economic stability.”

The Coalition for a Sound Dollar includes 98 member organizations representing US manufacturing, agriculture and business interests.

A special subcommittee was established to focus specifically on cotton trade issues within the context of the overall agricultural negotiations. The new panel was formed as a result of language contained in the Framework Agreement reached this past July that continued the Doha trade negotiations. The subcommittee is to "work on all trade-distorting policies affecting the cotton sector in all three pillars of market access, domestic support and export competition." All Member countries can participate in the subcommittee and it is to report to the agriculture negotiating group.

NCC Chairman Anderson said that while the establishment of the committee was agreed to in the Framework Agreement and could be beneficial to the overall Round, he hoped the subcommittee would not be turned into a sideshow that will take away from the overall goal of comprehensive agricultural trade reform.

"The Framework calls for a comprehensive agreement involving all three pillars of trade policy affecting agriculture - domestic support, export subsidies and market access,” he said. “A comprehensive agreement on agriculture will lead to reforms by all Members in all commodities across all three pillars. The U.S. cotton industry supports a comprehensive agreement; we cannot support an inequitable approach to the agriculture negotiations that seeks to single out our industry unfairly.

"It would be a serious error for the subcommittee on cotton to become another tool for self-serving non-governmental organizations to target the US cotton program to the exclusion of all other trade policies that impact world agricultural trade and those that impact trade in cotton products, such as textiles and apparel. Singling out one country or one commodity is counter-productive to the Doha goal of obtaining a comprehensive agreement in agriculture."

OXFAM International continues its campaign against the US cotton program, recently issuing a report, "Finding the Moral Fiber, Why Reform is Urgently Needed for a Fair Cotton Trade." The report is comprised mostly of the same flawed economic analysis that permeated previous publications by this organization and is a repackaged attempt to generate additional attacks on rural America.

The organization’s goal, as stated in its publication summary, is "Oxfam calls for the implementation of the Brazil-US cotton panel ruling and a timetable for the elimination of all trade-distorting cotton subsidies by the time of the Hong Kong WTO ministerial conference in December 2005." This report coincides with recent inflammatory rhetoric from certain ambassadors to the WTO insisting the US live up to the "spirit of a deal with poor countries" and remove its subsidies on cotton.

NCC Chairman Woody Anderson, noting that it was unfortunate that OXFAM has chosen to continue this campaign with the knowledge it is based on faulty economics, said, "This constant effort to slander the US cotton program undermines the mission and stature of the WTO."

The interagency Committee for the Implementation of Textile Agreements (CITA) accepted for review a safeguard petition seeking to impose quota limits on imports of combed cotton yarn from China, valued at $4.5 million in ’03. That brings the total number of petitions the interagency group has accepted for review to 7 with a final determination on many of the threat-based petitions expected in February.

The National Council of Textile Organizations and other industry associations are targeting some $1.96 billion in imports from China for continued quota restraints. To date, the coalition has filed 9 petitions, 7 of which have been accepted for consideration. Safeguard quota reapplication petitions also will be filed soon on bras, dressing gowns and robes and knit fabric set to expire at year’s end.

In July, the Senate passed S. 2261 to allow many apparel items assembled in Haiti to enter the US on a duty-free basis, but unlike products from other Caribbean countries, the components in Haitian products would not have to be sourced from the US or Haiti. As the 108^th Congress moves to complete its business, efforts are being made to move similar legislation in the House, which would then be sent to the Senate for possible approval prior to adjournment.

The NCC joined textile and fiber organizations in urging members not to approve legislation that would provide preferential access to Haitian products regardless of the source of the components. Such preference likely would displace products from other North American sources, which contain US cotton, yarn and fabric.

Though mindful of the humanitarian aid needed in Haiti, the coalition of US fiber and fabric groups, joined by Mexican industry groups, have expressed opposition to the legislation as drafted. NCC Vice President Stephen Felker presented testimony earlier this year outlining the industry’s concerns and providing suggestions for alternative ways to assist Haiti without undermining US fiber and textile manufacturers and their partners in the Caribbean.

Cotton Council International (CCI) President Robert Norris and Cotton Incorporated Chairman Bill Weaver welcomed some 200 cotton buyers from 30 countries – customers who purchased 5 million bales of US cotton last year – to the Sourcing USA Summit III in San Diego, CA, Nov. 18-20.

The event featured 5 business forum sessions covering economic and new technology updates, business trends and strategies, and global textile industry outlooks, which was moderated by NCC Chairman Woody Anderson. Presentations were given by NCC leaders as well as staff from NCC and other US cotton interest organizations.

The event also included a Supima Seminar and the “Cotton Innovation Hall,” which featured innovations by Cotton Incorporated and allied industries.

NCC Chairman Woody Anderson said Secretary of Agriculture Ann Veneman offered dedicated leadership for US agriculture and served with distinction during her 4-year tenure in the Bush Administration.

He noted that she: 1) provided keen insight and timely implementation of the ’02 farm law, including sweeping, new conservation programs, 2) guided the agricultural biotechnology regulatory process, which helped foster the timely introduction of those important tools and 3) played a key role in the formation of and implementation of the Department of Homeland Security.

Texas Department of Agriculture officials announced that cotton producers and landowners in the Lower Rio Grande Valley (LRGV) approved the Boll Weevil Eradication Referendum. The proposed eradication program, to be conducted in the 250,000-acre zone encompassing  Brooks, Cameron, Hidalgo, Jim Hogg, Kennedy, Maverick, Starr, Webb, Willacy and Zapata counties, passed with a 74% ballot approval and 60% of the acres in favor. In a companion referendum, the proposed program finance assessment received 71% approval. Harlingen producer Sam Simmons was elected to represent the zone on the Texas Boll Weevil Eradication Foundation board.

Producers in the neighboring state of Tamaulipas in Mexico initiated an eradication program in the 9,000-acre area just across the border. With approval of the LRGV referendum, Texas’ northern Blacklands is the last remaining US area without an eradication program.

Net export sales for the week ending Nov. 11 were 275,000 bales (480-lb.), resulting in total ’04-05 sales of slightly more than 7.0 million. Total sales at the same point in the ’03-04 marketing year were about 7.7 million bales. Total new crop (’05-06) sales are 200,100 bales.

Shipments for the week were 153,100 bales, bringing total exports to date to 1.9 million bales, below the 2.2 million at the comparable point in the ’03-04 marketing year.