Cotton's Week: August 8, 2003

The NCC submitted comments to the US Trade Representative’s (USTR) office and to the Government of China concerning proposed revisions to China's regulations implementing the tariff rate quota (TRQ) for cotton and other commodities. Despite improvements, the NCC is concerned that improper restrictions on the ability to import cotton into China remain.

The proposed regulations were issued by China to streamline implementation of TRQs and to reflect new responsibilities within the newly restructured agencies of the government. The proposal eliminates the previous Category A and Category B distinctions for TRQs that were used to divide importers into general importers and processing trade importers. Importers in the processing trade were required to re-export textile products produced from imported cotton.

Despite the elimination of these categories, the NCC expressed concern to USTR that portions of the regulations still discussed processing trade restrictions. Two documents will be required for "processing trade" applicants: the Agricultural Product Import TRQ Certificate and a Processing Business License. The proposed regulation also contains provisions concerning the "processing trade," smuggled imports and the application of over-quota duties on products not re-exported that are very similar to the original TRQ regulations. The NCC consistently has objected to restrictions on the processing trade, which are contrary to the US-China Accession Agreement and to general World Trade Organization rules concerning national treatment.

The NCC’s comments seek clarification with respect to the extent processing trade restrictions will continue to be imposed. They also expressed confusion over who has "trading rights" in China and whether contracts must be signed prior to a Chinese entity receiving an import quota allocation.

Hunt Shipman, chief of staff for the Senate Agriculture Committee, told attendees at the American Cotton Producers meeting and the Cotton Foundation Annual Meeting in Corpus Christi, TX, that the committee is preparing to combat payment limit amendments when the agriculture appropriations bill comes around for debate.

"We’re talking about change in the middle of a farm bill," Shipman said, "and that’s not right. That legislation was a contract with producers. This likely will be an emotional debate but one I think will be persuaded by the negative impact on agriculture and the damage to a number of agriculture sectors."

Allen Mackey, staff member with the House Ag Committee, said at the Corpus Christi, TX, meeting that Rep. Bonilla (R-TX) has been able to prevent House amendments to the appropriations bill that would damage agriculture. "He sees no basis to justify an argument for payment limitations," Mackey said.

Payment limitations affect more than just a farmer’s bottom line, he said. "These changes would affect how a program works and would affect lending agencies and industry. How can lenders justify loans when they don’t have accurate numbers because payment limitations could change?"

John Maguire, NCC Senior Vice President for Washington Operations, said the challenge would come in the Senate with budget resolutions. "So far, Sen. Cochran (R-MS) has not allowed language that would damage farm programs, but Sen. Grassley (R-IA) has other amendments for payment limitations that he’ll try to attach to anything he can."

NCC Chairman Bobby Greene reiterated the NCC opposition to any change in farm law, although, he said, "We expect Grassley to continue to offer his amendments as often as he can, but the current law must remain intact." Greene said continuity within the farm program is "crucial to the industry. We need consistency."

The NCC’s Policy Advisory Committee on Trade met by conference call on Aug. 7. Chairman Charles Earnest, producer from Steele, MO, called the meeting to allow NCC leaders to prepare for trade issues to be addressed at the upcoming meeting of the Board of Directors.

Topics reviewed by NCC General Counsel William Gillon, Trade Consultant Gaylon Booker and Vice President Foreign Affairs Allen Terhaar included status reports on bilateral and regional free trade agreements; African and developing country challenges to agricultural support in advance of the upcoming World Trade Organization (WTO) ministerial meeting in Cancun, Mexico; the Brazilian WTO challenge to the US cotton program; issues related to Chinese textile exports and implementation of TRQs; and challenges to the export credit guarantee program.

The most recent attacks on the US cotton program include an editorial, "The Long Reach of King Cotton," which appeared in The New York Times. The NCC response, a letter from NCC President Mark Lange to the editor of the Times, appears also on the NCC web site at www.cotton.org.

Lange said the industry had hoped The Times "would do (its) homework rather than simply repeat the unsubstantiated claims run by other publications."

NCC has learned that USDA is considering a rule permitting yard storage under certain conditions for ELS cotton while under CCC loan during the ’03 marketing year. NCC staff believes the rule is moving through the administrative process in USDA and publication is pending.

NCC delegates approved a resolution opposing outside storage of any cotton under CCC loan at the ’03 Annual Meeting. In letters and a series of meetings, NCC leadership and staff have communicated the NCC policy to USDA officials and reviewed the Joint Cotton Industry Bale Packaging Committee’s (JCIBPC) procedures for evaluating bale packaging materials. The JCIPBC has never considered packaging material for outside storage conditions.

Senior executives representing 8 Indian textile manufacturing operations, with an estimated ’03 cotton consumption of 1.75 million bales, will get a firsthand look at the advantages of US cotton Aug. 11-19. The current estimate of US cotton imported by the represented mills is about 370,000 bales.

Cotton Council International (CCI) sponsors the COTTON USA Special Trade Mission. The goal is to showcase the quality of US cotton and the industry’s reliability to one of US cotton’s most valuable overseas customers.

Indian firms represented on the trade mission are Abhishek Industries, Ltd.; Arvind Mills, Ltd.; JCT, Ltd.; Nahar Spinning Mills, Ltd.; Raymond (I), Ltd.; M/s. Super Spinning Mills, Ltd.; Vardhman Group; and Winsome Textiles.

Pillowtex Corp. announced the closing of 16 plants and the elimination of 6,450 jobs in the US and Canada in the wake of its 2nd bankruptcy filing in less than 3 years. The company said it does not plan to reorganize, but will wind down business and liquidate its assets.

In the single biggest job loss ever in North Carolina, the company is closing 5 plants and, according to the state, putting about 5,500 people out of work.

The job cuts are part of the largest layoff in US textile history, according to the American Textile Manufacturers Institute. Kannapolis, NC-based Pillowtex said it did not have the cash to continue operations amid intense foreign competition and soft consumer demand.

Sen. Hollings (D-SC), 4th most senior member of the Senate and 10th longest-serving Senator in history, announced Aug. 4 he would not seek re-election to a 7th term.

Hollings served one term as South Carolina governor before being elected to the Senate in ’66. He has served as chairman or ranking member on the Commerce, Science and Transportation Committee, Budget Committee and Appropriations Subcommittee on Commerce.

During a news conference announcing his decision, Sen. Hollings specifically mentioned his continuing concern over the loss of textile and other manufacturing jobs in South Carolina and across the country. He pledged to continue his efforts to preserve those jobs during the remainder of his service in the Senate.

The NCC submitted comments in support of responsible human testing of pesticides by manufacturers and industry. The removal of data from the registration process under the Food Quality Protection Act of ’96 (FQPA) could artificially increase the total "exposure" from the chemical, thus requiring some uses of pesticides to come off the label. The EPA currently applies a "10X" factor to data generated from animals, which inflates the estimated tolerances by a factor of 10 when using this data to estimate risk to humans.

This issue has been debated for several years, following the EPA’s unofficial statement that human testing of pesticides would not be considered when evaluating risk under FQPA. A lawsuit filed by CropLife America, which the NCC supported in the courts, was won in May, requiring the EPA to withdraw its policy and obtain comments from the public prior to making any policy changes. The removal of human testing data has implications for chemicals such as Aldicarb (Temik), which are seen as high-risk chemicals. EPA has extended the comment period until Aug. 20.

Approval was granted for buprofezin, the active ingredient in Courier, for use on cotton for the control of whitefly. Buprofezin previously was used under a Section 18 Emergency Exemption and sold as Applaud by Aventis. The EPA approved the use of Courier, but the lack of a technical registration for the active ingredient was discovered by the Department of Homeland Security while trying to bring the product into the country.

The NCC worked with Nichino-America in an effort to make the product available for this year. Due to the fact that the label for Courier and its competitor, Knack, limit the number of times each product can be sprayed, a product shortfall would have been likely. With the registration of buprofezin on Aug. 6, there will be enough time to formulate Courier and have it available for use this season.

The loss of Courier would have caused difficulties in controlling the whitefly.

Larkin Martin, a Courtland, AL, producer, will serve as Cotton Foundation president in ’03-04. She succeeds Don Cameron of Helm, CA, who will be chairman of the Foundation’s Board of Trustees.

Elected as new trustees were Clyde Sharp, a Roll, AZ, producer; John Isgrigg, Valent USA, Walnut Creek, CA; and Matthew Plitt, BASF, Durham, NC. Re-elected trustees were producers Martin; Allen Helms, Jr., Clarkedale, AR; and Craig Shook, Corpus Christi, TX; and allied industry members Ed Cherry, FMC, Washington, DC; Bud Hughes, Stoneville Pedigreed Seed, Memphis, TN; Don Kimmel, Delta and Pine Land, Scott, MS; Karen Marshall, Monsanto, St. Louis, MO; George Montgomery, DuPont Ag Products, Huntsville, AL; Barry Schaffter, John Deere, Waterloo, IA; Gregg Storey, Bayer CropScience, Durham, NC; and Neil Strong, Syngenta Crop Protection, Moneta, VA. These officers and trustees were elected at the Foundation’s annual meetings in Corpus Christi, TX.

It was reported to the trustees that the Foundation is applying $420,000 in support of 33 general projects in ’03-04. The projects range from such new efforts as creating a cotton-akaganeite textile suitable for removing naturally occurring arsenic during municipal drinking water treatment to such ongoing work as California researchers’ evaluations of field plant and soil samples to confirm Fusarium infection and identification of different Fusarium groups or strains.

The Foundation’s ’03 Report to Members, which describes Foundation project activities in ’02-03, is available at http://foundation.cotton.org.

Crop year ’02 exports reached approximately 12.1 million bales (480-lb.) based on final shipments of 352,800 bales in the week ending July 31. This establishes a record for US raw cotton exports. USDA’s last export estimate was 11.6 million bales.

Outstanding sales of slightly over 1.2 million bales on July 31 were carried forward. Outstanding commitments are now approximately 3 million bales for the ’03 marketing year.