The Chairman’s report will be merged with a special video presentation covering the Council’s activities for the past year.
The National Cotton Council faced some familiar foes as well as new ones in 2004. Regardless of the foe that we faced, the Council’s biggest and most consistent battle since passage of 2002 farm legislation has been protecting it against attacks from those who want to dismantle it, especially its cotton provisions. As usual, the program had to be protected from efforts to single out agriculture for disproportionate cuts as Congress wrestled with a worsening budget deficit. There were the usual efforts to impose stricter payment limits. And, as always, there were media attacks on the cotton program, driven by continuing, misleading allegations of the Environmental Working Group.
Supported by a number of international organizations, including OXFAM International, the U.S. cotton program was also singled out for special scrutiny in a framework agreement reached by WTO participants to move the Doha Round forward. Containing four separate references to cotton, this evolved from a proposal tabled by several African nations.
Also in the international arena, the WTO dispute settlement panel issued its ruling which supported Brazil in most of its challenges of the U.S. cotton program. Unless overturned on appeal, which is underway, the ruling could have significant implications for the current cotton program.
Meanwhile, virtually all new bilateral and regional trade agreements completed in 2004 include 3rd country participation provisions that make it more difficult for the U.S. textile industry to compete in the global arena. And, significantly, on January 1, 2005, all remaining U.S textile and apparel quotas were removed, further opening the U.S. consumer market to foreign products.
As the video will show, the Council has led the industry’s efforts to protect its flanks against all of these attacks, including:
- Testimony before Congressional committees and in meetings with key lawmakers and USDA officials in support of the current farm program,
- Cooperation with the office of the U.S. Trade Representative (USTR) and USDA to help defend the U.S. cotton program from the Brazil challenge and to protect it from unfair targeting in the WTO Doha Round,
- Cooperation with the U.S. textile industry to achieve workable provisions in new trade agreements and to persuade the U.S. government to implement threat-based China textile safeguards,
- Working in partnership with the U.S. government in its USDA/USAID program to help West African countries in ways that do not require damaging changes to the U.S. cotton program,
- Working through Cotton Council International to strengthen key markets for U.S. cotton and textiles in Europe, Asia, Latin America, the Middle East and Africa, and
- Redoubling efforts through the Council’s Technical Services Department and The Cotton Foundation to improve quality and reduce costs.
Among the more encouraging developments in 2004 was the industry’s support for initiatives to ensure that the Council continues to have the necessary resources to address challenges on all fronts.
The Board approved a new finance plan that was adopted earlier today by the delegate body. This will be only the fifth finance plan in the Council’s 66-year history, and was considered only after some $2 million was cut from the Council’s operating budget.
A special committee, chaired by Bobby Greene, has also been appointed to review Council programs and operations to determine whether additional spending reductions are feasible.
Another committee, chaired by Kenneth Hood, oversaw the successful merger of the crusher and whole cottonseed interests into a new “cottonseed” segment, providing the Council with a new source of dues revenue and new members and Council representation for another important part of our industry.
And, the Council’s Board also adopted an American Cotton Producers recommendation for implementing a two-tier Council membership plan that rewards high participation level states with greater ACP and Council representation.
To more fully report on the wide scope of Council activities this past year, I invite your attention to a special video presentation. In preparation for this, I will ask the platform group to move off the stage to my left.
As we look ahead to the challenges we face in the coming months, our focus will remain a “Capitol Agenda.”
With a federal budget proposal that will likely place a top priority on funding for defense and tax reform, the Council will work with all groups with interests in farm programs, conservation, nutrition, risk management and trade to ensure that agriculture is treated fairly in the budget process. Council leaders have already initiated efforts to reactivate coaltions, which have been successful in the past. Agriculture must remind Congress that the 2002 farm law has cost considerably less than projected and that agriculture is a miniscule portion of the Federal budget. Consistent farm policy, without major amendments, has allowed farmers to make sound investments and marketing decisions; consequently, farm income and the rural economy have improved.
If the budget ultimately passed by Congress requires reductions in future agriculture spending, some members of Congress will resurrect proposals to cut spending by lowering payment limits, eliminating the three entity rule and eliminating marketing loan redemptions with certificates.
Trade legislation will be a dominant item on the 2005 Congressional agenda. In addition to determining continued US membership in WTO and legislation providing the President with fast track negotiating authority, Congress will likely take up legislation to implement the CAFTA agreement which was signed last year.
Current policy calls for the Council to work for a CAFTA that the cotton industry can support. We believe there are opportunities to work with the Administration to improve the competitive situation confronting the U.S. cotton and textile industries. Our textile leadership is innovative and determined. We look forward to working with the National Council of Textile Organizations and the Administration both in developing a sound implementation plan for CAFTA and in taking other steps that will improve the competitive situation confronting the U.S. cotton textile industry.
The elimination of all textile and apparel quotas on January 1 threatens millions of jobs. The Council will continue to work closely with our domestic textile manufacturers to support use of special textile safeguards authorized under the China WTO accession agreement. We believe it is this Administration’s goal to build bridges to the U.S. textile manufacturing community and find solutions to many of its economic difficulties. The next several weeks will be critical in the process.
The Council will remain actively involved in the Fair Currency Alliance to ensure China’s currency is set by the market rather than being maintained at artificially low values.
Recognizing that China is also an important customer for raw cotton, the Council will continue to work closely with USTR and USDA to insist that China continue to honor her market access commitments under the WTO and to not establish fiber quality standards or other barriers to market access.
The Council’s top trade concern is the successful resolution of the Brazil WTO case. A ruling on the appeal to the initial decision could be issued in March. I must recognize and commend the highly effective job that USTR and USDA have done in developing a credible defense in initial ruling and their strong appeal. The cotton industry looks forward to a reversal of the initial decision but we must be prepared for any eventual outcome of this ruling.
The Council will continue to be active in the WTO Doha round of negotiations.
The agricultural framework agreement, adopted last summer, established a special subcommittee on cotton and the Council will be closely monitoring the subcommittee’s activities to ensure it does not become a forum for separate negotiations outside the rest of agriculture.
The Council will also continue its active involvement with US government agencies in the outreach efforts that were initiated last year with several cotton-producing countries in West Africa. We believe that these efforts will pay positive dividends to both U.S. cotton and our West African counterparts as we enter the next round of WTO agricultural negotiations.
CCI’s crucial role will continue to grow with our industry’s increasing dependence on exports. And I would note that this year marks the 50th anniversary of a Council program devoted to export promotion and next year – 2006 - will mark the golden anniversary for CCI, which is the longest running promotion program in cooperation with USDA.
Cotton’s research and promotion program is also critical to cotton’s future. I am pleased that our industry is taking a direct role in its defense to the current legal challenges. As a direct result of this program, the U.S. leads the world in per capita consumption of cotton products. We are the cotton market of the world and our annual consumption of cotton textile and apparel products exceeds our own level of cotton production. The program is crucial to maintaining growth in cotton demand.
We must build on the last two years of significant industry support for CAC with a renewed commitment from every leader for cotton’s political action committee. This is critical to all of our livelihoods.
There will be no shortage of challenges for agriculture and cotton in the coming year. We will be working hard for the successful resolution of the Brazil case, a successful defense of the court challenge of the research and promotion program, for a fair and equitable federal budget for agriculture, for trade agreements which benefit our domestic textile manufacturers, and a comprehensive and balanced WTO-Doha round agreement, just to name a few.
In closing, I want to express my sincere appreciation for the opportunity to serve as Chairman of the Council and convey to the delegate body my thanks for your leadership and commitment to our industry. The coming year – like so many years in the past - will be one with a “Capitol Agenda.” I have no doubt that the Council will continue - like so many years in the past - to successfully address the needs of its members.
