ABSTRACT

The U.S. cotton industry is increasingly dependent on foreign markets and being able to successfully compete in those markets in the 21^st century will be the key to the industry’s health, if not long-run survival. A look at the historic use pattern for U.S. cotton shows that after a resurgence in domestic use beginning in the mid 1980s a rather rapid decline has taken place since around 1997 (Figure 1).

A look at the most recent long-range projections for U.S. upland cotton utilization from the University of Missouri, Food and Agricultural Policy Research Institute reveals that the evolution of the industry from a supplier for the domestic textile industry to one dominated by exports may be the picture of the future (Figure 2).

While the U.S. cotton industry has always been one whose fate was linked to global events the decline in domestic mill use is making that link even more important. Accordingly developments in the policies that govern trade will have a great influence on the U.S. cotton industry. In this paper I discuss three trade policy issues that will play a role in defining the outlook for the U.S. cotton industry in the near and long-term. The first issue, and the subject of the majority of this brief paper, is the Brazilian complaint to the WTO concerning the detrimental effects of the U.S. cotton program. Next I touch briefly on the issues of China’s performance relative to it’s commitments on cotton market liberalization as a new member of the WTO. I will conclude with a discussion of the effects of the Uruguay Round’s Agreement on Textiles and Clothing (ATC) which brings to an end the Multifiber Arrangement (MFA), a regime governing, in large part, global trade in textiles for the past 30 years.