CURRENT ISSUE ARTICLES

Strong Textile Rules Urged in TPP Agreement

Successful Sourcing Fair Held

Scuse Confirmed as Undersecretary

Vilsack Names FAS, AMS Administrators

EPA Advisory Panel Discusses Bee Protection

House Bill Would Ban CWA Expansion

Sales Slip, Shipments Strong

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Strong Textile Rules Urged in TPP Agreement

The Textile and Apparel Alliance for the TPP (TAAT) expressed deep appreciation to the 76 US Representatives who sent a letter to US Trade Representative (USTR) Ambassador Ron Kirk stressing the need for job-creating textile rules in the Trans-Pacific Partnership Agreement (TPP). Led by Reps. Gowdy (R-SC) and Kissell (D-NC), the signatories -- many from Cotton Belt states -- pledged to work with USTR to ensure a positive outcome for the textile and apparel chapter in the negotiations.

In a news release, TAAT spokesman and National Council of Textile Organizations President Cass Johnson said, "Members of Congress have sent a strong message that they want textile rules in the TPP agreement that support U.S. jobs, develop new export markets, increase opportunities for private investment and entrepreneurship, and reinforce strong trade ties with existing FTA partners."

The TAAT coalition was formed in February after Vietnam, a TPP participant, proposed country-of-origin rules for textiles and apparel that are far weaker than those in current US free trade agreements (FTAs) and preference programs. The release stated that if adopted, the weak rules would allow Vietnam's state-owned enterprises (SOEs) to export textiles and apparel made from subsidized inputs produced by China's massive textile SOEs duty free to other TPP countries. The competitive advantage gained by Vietnam's SOEs would shift business to them at the expense of privately-owned and financed textile and apparel producers in the United States and elsewhere in the NAFTA, CAFTA and AGOA trade blocs, thereby harming potential for new textile and apparel export markets for US producers and those of FTA partners. Moreover, China, the largest textile and apparel exporter in the world and a country not participating in the TPP, would gain substantial new access to the US market without having to make trade concessions in return.

The TAAT coalition is supporting rules proposed by the US government which build on the free trade agreements that have been negotiated over the past 25 years. These include the "yarn forward" rule of origin, responsible market access provisions, and strong customs rules and enforcement. A yarn-forward rule of origin means that all yarn, fabric, and assembly production stages must be done in a TPP country for a textile or apparel product to be eligible for duty-free treatment, unless an exception applies. The US government has also insisted that the TPP agreement ensure "that state-owned enterprises compete fairly with private companies and do not distort competition in ways that put U.S. companies and workers at a disadvantage."

Johnson noted that the TPP will be the most significant US trade agreement since the negotiation of China's '01 accession to the World Trade Organization, if approved by Congress. In part, this is because the agreement is a 'plug and play' where other countries that wish to negotiate an FTA with the US will plug into the agreement and agree to its existing rules.

In addition to Vietnam, the TPP agreement also includes Chile, New Zealand, Singapore, Brunei, Australia, Peru and Malaysia. Vietnam, a non-market economy, exported $7.2 billion in textiles and apparel to the United States in '11, making it America's second largest supplier of those products. The Vietnamese government both owns and subsidizes textile and apparel production. Vinatex, Vietnam's state-owned textile and apparel conglomerate, is one of the largest garment producers in the world. In addition, Vietnam depends on China for much of its yarns and fabrics, importing $4.4 billion of textile components from that country in '10.

The TAAT coalition includes textile and apparel associations from the United States and 26 other free trade and trade preference countries. Coalition members represent nearly two million workers in the textile, apparel, and fiber production sectors, thousands of privately owned factories, and nearly $25 billion in two-way textile and apparel trade.

The next round of TPP negotiations is scheduled for May 8–18 in Dallas. The NCC, meanwhile, sent a letter to Ambassador Kirk asking him to discuss the cotton contract defaults in Peru and Vietnam during that round. The NCC noted that textile mills in those countries have defaulted on millions of dollars of raw cotton contracts that resulted in severe economic losses for US cotton merchants and marketing cooperatives.

"The U.S. government should carefully consider allowing preferential trade provisions for countries whose corporations willfully ignore commercial commitments," NCC President/CEO Mark Lange said. "Contract sanctity is a fundamental building block of trade relations and widespread disregard of the principle should sound a loud warning to the extension of trade preferences."

Regarding the Congressional Members' letter to Kirk, Lange noted that the NCC has consistently pursued a yarn forward rule of origin for textile and apparel products. He said this rule was adopted in the several hemispheric trade agreements during the past 15 years. The goal was to stem the losses in the US cotton spinning industry, as textile import quotas were phased out beginning in '95 and China was granted full accession rights to the World Trade Organization in '01.

Lange said the yarn forward rule encouraged the formation of textile and apparel manufacturing facilities across C. America and Caribbean regions creating several hundred thousand hemispheric jobs as the US spinning industry adjusted to the onslaught of Chinese products in the US domestic market. He noted that since '01, Cotton Council International has successfully promoted the export of US cotton yarns and fabrics through the COTTON USA Sourcing Program. For example, in '11, the program led to US exports valued at more than $30 million in the W. Hemisphere, where the Sourcing Program and US industry participants have benefited from proximity and FTAs.

"The U.S. and hemispheric textile and apparel investment, jobs and trade relations will be severely damaged if the trade preferences created by the yarn forward rule of origin are undermined in wider trade agreements," Lange stated.

Successful Sourcing Fair Held

Cotton Council International's recent COTTON USA Western Hemisphere Sourcing Fair connected US mills with retailers and apparel manufacturers. The Fair was the second to take place in Colombia and was organized to take advantage of the recent free trade agreement between Colombia and the United States.

The Fair included a conference session with a panel of experts who addressed important textile and apparel agreements for Latin America and Europe, the cotton price situation and an outlook on W. Hemisphere textiles, US retail/apparel, and Latin American retail/apparel.

Following the seminar, the US mills and retailers met with Mexican and Andean textile/apparel executives in private meetings to discuss business opportunities. About 700 meetings took place. Cotton Incorporated also supported the event by answering questions on cotton product developments.

Scuse Confirmed as Undersecretary

The Senate on April 26 confirmed Michael Scuse as USDA's Under Secretary for Farm and Foreign Agricultural Services and to serve as a member of the board of directors of the Commodity Credit Corp. Scuse has served as acting Under Secretary since Jim Miller left to join the Senate Budget Committee staff to work on the '12 farm bill.

Before joining the Obama administration, Scuse was Delaware's agriculture secretary and served as president of the Northeast Assoc. of State Departments of Agriculture. The Under Secretary for Farm and Foreign Agricultural Services supervises the Farm Service Agency, which distributes domestic subsidies, the Foreign Agricultural Service, which promotes US exports and analyzes production in other countries, and the Risk Management Agency, which oversees the crop insurance program.

In a letter to Scuse, the NCC congratulated him and conveyed its appreciation for his full cooperation and assistance in his roles as Deputy Under Secretary and Acting Under Secretary. The letter also thanked him for meeting recently with members of the Texas Cotton Producers Assoc. and noted that the NCC "looks forward to continuing to work with you on matters of mutual interest and concern."

Vilsack Names FAS, AMS Administrators

Agriculture Secretary Tom Vilsack has named USDA career employees as administrators of two agencies, the Foreign Agricultural Service (FAS) and the Agricultural Marketing Service (AMS).

Suzanne Heinen was appointed as FAS administrator after she served 11 months as the agency's acting administrator. Heinen will continue to serve as the general sales manager, a position that has usually been separate from the administrator.

Before becoming acting administrator, Heinen, a 25-year Foreign Service officer, worked on food security issues in Vilsack's office and before that as minister-counselor for agriculture at the US Mission to the United Nations Agencies for Food and Agriculture in Rome. Heinen has served at FAS posts around the world, including Mexico, China, Russia and Guatemala. In Washington, she served as FAS deputy administrator for international cooperation and development and as assistant deputy administrator for foreign agricultural affairs.

Vilsack also named David Shipman as AMS administrator. Shipman had held that post in an acting capacity and before that was deputy administrator of USDA's Grain Inspection, Packers and Stockyard Administration.

AMS, a division of USDA's Marketing and Regulatory Affairs division, establishes quality standards and delivers grading services for cotton, meat, poultry, eggs, vegetables and a variety of other products; reports daily commodity prices; and oversees the operation of industry-funded research and promotion programs.

EPA Advisory Panel Discusses Bee Protection

The Pesticide Policy Dialogue Committee (PPDC), an advisory panel to EPA comprised of registrants, commodity groups, NGOs, academics, and others, met to discuss a variety of topics regarding pesticide regulations.The Workgroup on Pollinator Protection, of which NCC's Dr. Don Parker is a member, reported on their latest discussions.

The goal of this workgroup is to minimize pollinator damage while controlling crop pests. They reported on a number of discussion topics including: 1) best management practices including flexible timing of applications to flowering crops to result in the least amount of harm be employed; 2) increased training and education on pollinators to crop advisors and applicators; 3) providing bee toxicity information on the pesticide label; and, 4) improved enforcement of bee kills.

Bee protection is now threatening to affect crops not dependent on bees for pollination and has become increasingly important to the registration of pesticides used on cotton. Beekeepers have become aggressive in their demands that applications not be made during bloom which would severely affect cotton production. In March, commercial beekeepers and environmental organizations in California submitted a petition requesting EPA to revoke the registration of clothianidin, a neonicotinoid used in cotton for control of thrips, aphids, cutworms, plant bugs, stink bugs and white flies.

In January, NCC's Environmental Task Force (ETF) met with government and industry officials to discuss the issue of pollinators and cotton pesticide registrations. The ETF recommended policy language, which was subsequently adopted, instructing NCC staff to work with EPA, USDA and industry to help resolve questions about bees and cotton production.

House Bill Would Ban CWA Expansion

Leaders of the House Transportation and Infrastructure Committee and the Agriculture Committee introduced H.R. 4965, a bill to prohibit the Administration from finalizing or implementing guidance which would significantly broaden the scope of federal jurisdiction under the Clean Water Act (CWA).

The bill, introduced on April 27, would require a formal rulemaking for any attempt to change the definition of "waters of the United States" under the CWA. Statutory changes to the CWA must be submitted to Congress for legislative action and regulatory changes require a notice and comment rulemaking, according to the Administrative Procedure Act.

The guidance, developed jointly by EPA and the Army Corps of Engineers, was sent to the White House for final review in February over industry, Congressional, and states' objections. The document is intended to clarify legal uncertainty, stemming from competing Supreme Court opinions, on when marginal waters are subject to regulation under the law.

A key component of the new policy is that small streams and wetlands can be considered together, or in the aggregate, in determining whether they play a significant role in a watershed's health.The logic is that even though damaging or polluting a small tributary stream may have little effect on the overall health of a large waterway, the damaging or polluting of all streams would have an impact. Therefore, even small tributary streams and wetlands should be afforded protection based on the value that others like them lend to the total watershed.

Opposition to a draft version of the document has been intense. Industry groups and other critics charged that key provisions in the guidance are at odds with past Supreme Court precedent and the CWA. State and local governments charged that the guidance could impose huge new unfunded mandates, undermining a host of local water quality control programs. In Congress, lawmakers unsuccessfully pushed amendments to various EPA spending bills seeking to block the guidance.

Earlier, it was thought that EPA intended to issue the guidance as interim. EPA, however, stated that "it is a final guidance," not interim. If finalized, the policy could have broad implications in stream and wetland protection and on the agriculture, homebuilding, mining and oil industries, all of which have cited the fragile economic recovery in pressing the White House to exercise regulatory restraint.

The House press release is at http://agriculture.house.gov/press/PRArticle.aspx?NewsID=1577.

Sales Slip, Shipments Strong

Net export sales for the week ending April 26 were -14,600 bales (480-lb). This brings total '11-12 sales to about 12.0 million bales. Total sales at the same point in the '10-11 marketing year were approximately 15.7 million bales. Total new crop ('12-13) sales are 1.1 million bales.

Shipments for the week were 346,500 bales, bringing total exports to date to 8.3 million bales, compared with the 11.6 million bales at the comparable point in the '10-11 marketing year.

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