Trade policy’s impact on the U.S. cotton industry increased in 2005 as international trade negotiations, free trade agreements and even international public opinion influenced the industry’s future as never before.
WTO Doha Round
NCC Chairman Woods Eastland and American Cotton Producers (ACP) Chairman John Pucheu were joined by senior NCC staff in Geneva to share concerns with World Trade Organization officials regarding the Doha Round of trade talks. Support was declared for a balanced and comprehensive agreement, but one that would not single out cotton for treatment that is different from agriculture as a whole, including an “early harvest.” Eastland and NCC staff also shared that concern with the U.S. Trade Representative’s office.
Likewise, NCC Vice Chairman Allen Helms told the Senate Agriculture Committee that the U.S. cotton industry was willing to support U.S. negotiators and fully participate in the Doha Round, provided cotton is treated equitably and not singled out and if meaningful improvements are made in market access.
Helms and Eastland were joined by NCC President/CEO Mark Lange in another Geneva meeting with Crawford Falconer. The newly appointed WTO chair of the agricultural negotiations and of the special cotton subcommittee expressed his desire to keep the subcommittee in a monitoring capacity only.
The NCC joined with the USTR and Congressional members in reacting against European Commission for Trade Peter Mandelson’s call for singling out cotton for an early harvest. NCC responded to a similar proposal by a group of African countries saying, “The U.S. cotton program is not the source of economic hardship for farmers in African countries.”
NCC staff, attending the WTO ministerial meeting in Hong Kong, conveyed industry concerns to U.S. negotiators about the continued efforts to single out cotton from the broader agricultural negotiations. Upon conclusion of the ministerial, NCC Chairman Eastland expressed appreciation to Ambassador Rob Portman and Agriculture Secretary Mike Johanns for their diligent efforts, but also noted the industry’s extreme disappointment at the ministerial’s declaration that calls for larger and quicker cuts for cotton.
Lange joined representatives of several commodity groups and general farm organizations in a roundtable discussion aimed at closing a loophole whereby the Subsidies Code rules can undermine the WTO negotiations.
The NCC expressed its disappointment with the WTO appellate body’s ruling in the Brazil/U.S. cotton dispute – a decision that upheld the dispute panel’s determinations regarding the upland cotton program’s Step 2 component, the export credit guarantee program, classification of direct payments and serious prejudice.
Following the ruling, NCC staff met with the USTR’s office, key Congressional members and other commodity and general farm organizations regarding the NCC’s plans for a response. Later, NCC Chairman Woods Eastland stressed to USTR and USDA officials the importance of their consulting with the U.S. cotton industry on a U.S. response and its implementation.
The NCC registered its opposition with USDA’s proposal submitted to Congress in early July that called for the immediate elimination of Step 2. That move, the NCC pointed out, would alter a fundamental piece of the sales and marketing structure for U.S. cotton in mid-stream, harming many U.S. cotton producers, merchants and textile manufacturers. Eventually, a budget reconciliation package that included an August 1, 2006 termination of the Step 2 program passed the Congress and was signed into law.
|Participants from the C-4 West African countries, accompanied by leadership from Tuskegee University, hear about advances in cotton biotechnology during a stop in Mississippi as part of an integrated pest management training program.|
The NCC lauded the USDA and the USTR’s office for their launch of “The West Africa Cotton Improvement Program” in November. The program, aimed at helping African cotton farmers improve farm income, emanated from a year of preparatory work by USDA and US AID working cooperatively with the U.S. cotton industry.
Among the 2005 activities was a U.S. delegation accompanied by ACP Chairman Pucheu that talked with officials from five West African cotton-producing countries on ways to improve their cotton yields and quality. A follow-up conference in Mali enabled U.S. officials to discuss other technologies that could improve the Africans’ crops. Later, West African officials participated in Cotton Incorporated’s Engineered Fiber Selection conference, observed the Universal Cotton Standards conference and participated in three NCC co-sponsored training programs covering fiber classification, entomology, soil conservation and fertility.
Immediately following the Board’s decision to support the Dominican Republic-Central America Free Trade Agreement (CAFTA), the NCC began an extensive effort to help secure the legislation’s passage. Working in cooperation with the National Council of Textile Organizations (NCTO), the NCC pressed the Bush Administration on implementation issues such as cumulation and limiting third country participation.
Later, NCC Vice Chairman Allen Helms participated in an NCTO news conference that provided the NCC with the opportunity to publicly join with the Administration in urging Congress to adopt CAFTA. NCC leaders promoted the trade pact’s passage through Congressional contacts, which included distribution of state CAFTA fact sheets for industry members to relay to their respective Congressmen. NCC staff and leaders also conducted meetings with the USTR office, generated letters to the editor, participated in other news conferences and offered Congressional testimony. That included former NCC Chairman Bob McLendon’s appearance before the Senate Agriculture Committee and Southeast producers Sam Spruell’s and Jimmy Webb’sparticipation in a news conference of five Republican Congressmen from textile districts, who announced their CAFTA support.
Early in 2005, the NCC joined with the National Council of Textile Organizations and several other textile, fiber and labor organizations in support of a 2005 “platform” that called for actions to strengthen domestic manufacturing and the preservation of American jobs. That platform included a commitment to the continuation of WTO-consistent restraints on imports of Chinese textile and apparel through either a bilateral agreement with China or special safeguards.
The NCC also participated with key textile, trade and labor organizations in a news briefing that shed light on the tremendous surge of Chinese apparel/textile products after quotas were lifted January 1, 2005. The NCC notified the USTR and the Committee for the Implementation of Textile Agreements (CITA) of government data, including U.S. Customs documents. The NCC then worked closely with the U.S. textile industry and the Administration to ensure appropriate safeguards be imposed against surging China imports.
Chinese combed yarn (301) was among several textile and apparel products on which safeguard petitions were affirmed by the Committee for the Implementation of Textile Agreements.
In November, the United States and China signed a broad agreement on Chinese textile imports that went into effect on January 1, 2006 and is slated to end on December 31, 2008. The pact placed quotas on a broader range of textile and apparel products (34) than were covered by safeguards (19). This agreement was widely seen as constructive by U.S. textile and fiber leaders. The NCTO also called for a separate textile sectoral negotiation in the WTO Doha Round to deny another opportunity for China to dominate trade in textile and apparel products.
The NCC was vigorous on additional activities related to China.
- It worked with the Administration, which conducted numerous meetings with Chinese officials about the way China allocates its raw cotton import quotas. An additional concern has arisen with the variable duty announced by China on imports in excess of its WTO commitment. This duty places the price of imported cotton above that of Chinese domestic polyester.
- The NCC capitalized on two opportunities to provide Congressional testimony on China trade issues. Bobby Weil testified before the House Ways and Means Committee and Tom Stallings appeared before the House Small Business Committee. In addition to quota allocation and textile safeguard issues, the testimony conveyed concerns regarding China’s WTO raw cotton accession agreement compliance, including market access, contract sanctity, quality standards and evolving trade terms. Industry concerns also were shared about the cooperative efforts with the Chinese government as it endeavors to reform its cotton classification system.
- In June, NCC Chairman Eastland participated in a Cotton Council International-sponsored trip to China. He addressed the China Cotton Association’s third international conference on the importance of global cotton promotion. The presentation also explained the advantages of U.S. cotton and fostered a better understanding of the U.S. cotton research and promotion program, as well as the need for China and other cotton-producing countries to establish similar self-help programs.
- NCC staffers went to China in the fall to interact with the China Cotton Association, an NCC-modeled organization. This endeavor was aimed at helping China reform its processing and classing systems but also to promote U.S. cotton with this important trading partner.
- The Coalition for a Sound Dollar, of which the NCC is a member, commended President Bush and Treasury Secretary John Snow for assertions that China should act immediately on currency reform. The Coalition also urged the Treasury Department to cite China for currency manipulation and expedite negotiations for putting it to an end. The NCC also remained active in the Fair Currency Alliance that urged the U.S. government to insist that China revalue and ultimately float its currency.
In other trade-related issues:
NCC Chairman Woods Eastland exhorted China and other major cotton-producing and consuming countries to join together in promoting cotton and increasing demand for the fiber on a global basis. Eastland stressed this need in two key presentations, the China International Cotton Conferences and the International Cotton Advisory Committee's plenary session.
NCC President/CEO Mark Lange was named to the Agricultural Policy Advisory Committee for Trade. Named to the Tobacco, Cotton, Peanuts, and Planting Seeds Agricultural Technical Advisory Committee for Trade were: Mississippi producer Kenneth Hood, Texas producers Dale Artho and Kenneth Dierschke, Missouri producer Chuck Earnest, and Alabama merchant Robert Weil, II. Also named to that ATAC panel were Billy Carter, Jr., North Carolina Cotton Producers Assoc.; Thomas W. Smith, AMCOT; Gary Adams, NCC’s vice president, Economics and Policy Analysis; and Bill Gillon, NCC’s counsel and advisor on trade issues.