Trade

World Trade Organization

Doha Negotiations

NCC Chairman John Pucheu expressed concern about the timing and potential bias of a high profile session on cotton scheduled as part of the Doha negotiations – within two weeks of oral arguments in the Brazil-U.S. cotton compliance dispute. NCC leaders, including American Cotton Producers Chairman Jay Hardwick and former NCC Chairman Woody Anderson, participated in a NCC-coordinated telephone briefing for news media to explain those concerns.

By mid-2007, agriculture remained a major obstacle for negotiators in the WTO Doha Round even though the United States had tabled a proposal for reducing subsidy ceilings by 60 percent provided it would receive commensurate increases in market access.

The NCC supported the U.S. proposal, even though cotton had less to gain from market access than most other commodities. The NCC also made it clear to U.S. negotiators that a successful Doha Round for cotton must include significant increases in market access to China. In a letter to Chief Agricultural Negotiator Dick Crowder, Chairman Pucheu said, “The access should be not less than 16 million bales annually and should be administered in a way that provides uninterrupted access for all potential buyers regardless of mill ownership or the end-market for products manufactured at the facility. The NCC also expressed continued support for a sectoral agreement covering textiles that would address “tariff equalization and maintain safeguard provisions.”

Chairman Pucheu also responded to and criticized two “challenge” papers issued by Crawford Falconer, chairman of the WTO agricultural negotiations. The second paper was seen as containing flexibilities that would allow countries such as China to avoid any meaningful commitments on market access.

Throughout the year, the NCC monitored attempts to isolate cotton in the Doha negotiations, including WTO Director General Pascal Lamy’s “cotton day” in Geneva and its inflammatory statements about the U.S. cotton program. The NCC circulated a paper rebutting Oxfam’s unfounded criticisms of the program. A letter also was sent to U.S. Trade Negotiator Susan Schwab commending her efforts to negotiate a workable agreement. A NCC paper in response to Falconer’s modalities text stated that approval of that language would assure that U.S. farm policy was written in Geneva and not in Washington, and the NCC called on the Administration to oppose the text and any subsequent text that included inequitable, cotton-specific language.

As Doha Round negotiations continued into the fall, the United States signaled its willingness to reduce the ceiling on “trade distorting” farm subsidies from $48.2 billion to between $13 billion and $16.4 billion. The offer was said to be contingent upon other countries reducing their agricultural tariffs. Such a trade, if accepted, would produce a major net loss for U.S. cotton. Working in cotton’s favor, however, was a widely held view that international trade agreements, in general, had not served the United States very well in recent years. Accordingly, 2008 candidates for the White House and Congress were expected to be extremely reticent to support a WTO agreement that could put a significant number of votes at risk.

A bipartisan group of Senators urged the Bush Administration to reject the deep cuts proposed for cotton. Ten Cotton Belt Senators warned that treating cotton differently than all other agricultural products would “further erode support in the U.S. Congress for the WTO and the Administration’s trade agenda.” The Senators also linked the cotton issue to their support for renewal of Trade Promotion Authority.

NCC Chairman John Pucheu, right, and Steve Censky, president of the American Soybean Association, were among American farm organization executives in Geneva to discuss U.S. agriculture's concerns with the WTO negotiations.

Meanwhile, NCC Chairman Pucheu, Vice Chairman Larry McClendon, President/CEO Mark Lange and Vice President for Economics and Policy Analysis Gary Adams met with delegations from other countries in Geneva to communicate concerns about negotiating terms which, if adopted, would leave little of the U.S. upland cotton program intact. With assistance from the U.S. Trade Representative’s office (USTR) and the U.S. Mission in Geneva, meetings were held with delegations from Greece, the EU, China and Brazil. A meeting was also held with the combined representatives of what is called the Cotton-4 (C4) countries -- Benin, Burkina Faso, Chad and Mali. The NCC delegation also met with Ambassador Falconer and other WTO staff members, and cautioned that approval of such provisions would further erode U.S. Congressional support for the WTO agreement and for renewal of Trade Promotion Authority.

Chairman Pucheu, Vice Chairman McClendon and ACP Chairman Hardwick then met with USTR, USDA and Congress to convey the industry's serious concern with the cotton-specific language in the Falconer negotiating text. The delegation urged the Administration to communicate its strong objections to the language and to make clear that it would not agree to inclusion of the language. In meetings with Senate and House agriculture committee members and Cotton Belt delegations, the leaders urged them to tell USTR that Congress would reject a final agreement that did not include significant modifications.

The NCC also joined with several commodity organizations on a letter to President Bush reiterating its deep concern with the status and direction of the Doha Round. The letter cited the severe imbalance reflected in the current agriculture text between sharp reductions and limitations on domestic support for U.S. agriculture and undefined or far weaker commitments on market access. Later, Chairman Pucheu and William Gillon, the NCC’s International Trade attorney, joined a U.S. agriculture delegation in Geneva to reiterate the message that a Doha Round agreement must contain significant gains in market access for U.S. agricultural commodities or it faces uncertain support in the U.S. Congress.

Brazil-U.S. Cotton Case

WTO panel rulings against U.S. cotton during 2006 and 2007 served to embolden Brazil and others to widen their challenges of the WTO-legality of U.S. agricultural programs. USTR called the allegations “unfounded,” saying the United States had not exceeded its allowable spending level.

The USTR and the NCC expressed disappointment with a WTO panel ruling that found the United States’ changes were insufficient to bring the challenged measures -- certain support payments under the 2002 farm bill and export credit guarantees -- into conformity with U.S. WTO obligations. Both of their statements also reasserted their shared belief that the earlier changes brought the cotton program into full WTO compliance. If the ruling is not appealed, or if it is upheld upon appeal, Brazil is entitled to impose higher tariffs on U.S. products and services until the cotton program is further changed and supports reduced.

China

In testimony to the Interagency Trade Policy Staff Committee, NCC Director Mike Quinn urged that panel and USTR to make market access to China a priority for the Doha Round negotiations. He told the panel that China, though, has initiated and maintained practices which distort markets and limit access.

While on a tour to study China's textile industry, a team of U.S. cotton industry leaders visited this Weiqiao Textile Company facility in Shandong Province.

A team of leaders, led by Vice Chairman McClendon, traveled to China to ascertain the needs of China’s textile industry and to update them on strides made in U.S. cotton quality and flow.

The NCC arranged for industry leaders and Congressional Members to meet with a major Chinese cotton buying delegation on its stops across the Cotton Belt and joined Cotton Council International in sponsoring a team of leaders from the China Cotton Association which toured the U.S. Cotton Belt to learn more about the U.S. cotton industry.

Trade Promotion Authority

NCC Board Member Andy Warlick, president/CEO of Parkdale Mills, told the Senate Finance Committee, that the textile industry’s support for an extension of Trade Promotion Authority was conditioned on the inclusion of appropriate textile-specific negotiating objectives regarding the Doha Round of trade negotiations.

U.S. Trade Representative Susan Schwab, Agriculture Secretary Mike Johanns, Commerce Secretary Carlos Gutierrez and Senator Charles Grassley (D-IA), the Senate Finance Committee's ranking Republican, made a September appeal for greater Congressional support for the Administration’s trade agenda. They specifically sought support for agreements with Peru, Colombia, Panama and South Korea – and the NCC joined with a coalition of 45 food and agriculture organizations on a letter to Congressional members urging prompt consideration and passage of free trade agreements concluded and signed with Colombia and Peru. Sufficient common ground between the Administration and the Congress was still lacking late in 2007.

On another trade-relate issue, the NCC joined textile organizations in urging support for the companion bills of Sen. Dole (R-NC) and Rep. Hayes (R-NC) that would confer the rank of Ambassador on the U.S. Trade Representative’s chief textile negotiator.