Cotton's Week: August 15, 2003

US trade officials accepted for further consideration 3 of the 4 requests filed by US textile groups for the imposition of temporary quotas on rapidly increasing imports of textiles and apparel from China.

The Committee for the Implementation of Textile Agreements (CITA), an interagency group chaired by the Commerce Department, agreed to consider the petitions for quotas on knit fabric, brassieres and dressing gowns, while rejecting the petition on gloves.

The petitions were filed July 24 by the American Textile Manufacturers Institute, the American Manufacturing Trade Action Coalition, American Yarn Spinners Assn. and the National Textiles Assn. These were the members of a fiber/textile coalition that were considered to have "standing" to file the petition. NCC is one of the 15 members of the coalition.

A Federal Register notice requesting public comment on the 3 petitions is expected. The public comment period will last for 30 days, after which CITA will have 60 days to determine whether to impose quotas and initiate consultations with China. If imposed, the quotas will cap imports at 7.5% above the previous year's trade.

NCC Chairman, Bobby Greene said the NCC will file comments supporting the safeguard petitions, adding, "We urge NCC Interest Organizations to file supporting comments as well." Relevant information about how comments should be filed will be posted on NCC’s web site.

The 4 petitions are the first requests under a China-specific textile trade safeguard included in China's World Trade Organization (WTO) accession agreement. The safeguard allows WTO members to impose quotas for up to one year on surging, disruptive imports of textile and apparel products from China.

NCC was instrumental in arranging 2 CEO/senior management orientation meetings in the Carolinas to organize follow-up actions on the China safeguard petition filed by a fiber/textile coalition and related initiatives. NCC consultant Gaylon Booker said, "The meetings were arranged to energize industry leaders behind an aggressive campaign to assure achievement of the coalition’s goals."

Three primary goals were communicated in a July 7 letter to the President: Initiate the safeguard provisions authorized in the China World Trade Organization accession agreement; reject any pro-China trade preference levels in the Central American Free Trade Agreement and other free trade agreements; and maintain US textile tariffs in the Doha Round of trade talks.

The 2 meetings - in Greensboro, NC, and Spartanburg, SC - both were well attended. Forty-one industry leaders attended the Greensboro meeting and 37 were present in Spartanburg. The follow-up campaign includes a variety of actions, from voter registrations to written and personal communications with Congressional delegations and Administration officials.

NCC Vice-Chairman Woody Anderson, as well as a number of area producers, joined textile executives in the meetings and in the press conferences that followed. Concerning the safeguard petition, Anderson said, "The coalition is not asking for anything that is not already authorized. We are simply asking US officials to claim the rights that are ours under terms of the China accession agreement."

Ronnie Flemming, president of Southern Cotton Growers, said, "Farmers are being hurt by the destruction of the US manufacturing industry, too. When US manufacturers like Pillowtex are forced into bankruptcy, US cotton farmers are losing their best customers." Roy Baxley, Chairman of the South Carolina Cotton Board, conveyed a similar message, adding, "Loss of the domestic industry is especially damaging to producers in our area because this is a market that is right in our own backyard, so to speak."

USDA will publish Aug. 18 an interim rule that permits outside storage of loan-eligible extra long staple (ELS) cotton under certain conditions. USDA’s rule becomes effective upon publication. The NCC has policy that urges the Commodity Credit Corp. (CCC) not to allow outside storage of loan cotton.

The Joint Cotton Industry Bale Packaging Committee has well-established testing standards and thorough adherence to due process to insulate USDA from allegations of arbitrary actions. Decisions on loan eligibility have the potential to confer substantial advantages or disadvantages on the industry’s various firms, the NCC points out.

The rule allows outside storage of ELS cotton pledged for CCC loan collateral if a producer meets the requirements contained in an addendum to the loan agreement. The rule indicates the cotton does not have to be stored by an approved warehouse; that the loan does not have to be secured by a warehouse receipt; that the cotton must be stored in a county where the 10-year average level of precipitation is 10 inches or less; that the cotton must be stored on a site constructed so as to prevent the accumulation of water under the cotton; and that the producer shall be liable for all costs associated with the storage of the cotton while it is stored outside. To ensure that CCC’s collateral is not damaged by outside storage, the interim rule contains substantially different provisions for loan forfeitures of cotton stored outside. The producer of the cotton is responsible for any deterioration of quality incurred by cotton stored outside.

The NCC expressed disappointment with USDA’s decision to publish the rule.

"The NCC has long opposed outside storage of loan cotton and communicated its concerns to USDA that no bale packaging material has been specifically approved for outside storage, " said NCC Chairman Bobby Greene. Greene added, "While CCC is fully protected from any damage from the use of outside storage, the grower is fully exposed to risks from an untested system."

The NCC will file comments to the rule. When published on Aug. 18, the rule will be posted on the NCC web site, www.cotton.org.

NCC’s ’03 mid-year Board meeting will be Aug. 20-22 at the Loews Vanderbilt Hotel in Nashville, TN. The Board’s open session will begin at 1:30 p.m. on Aug. 21 and likely will move into a closed session later that afternoon.

Among open session staff reports will be a Washington update and an economic outlook. The Board’s executive session will be on the next morning. CCI’s Export Promotion Committee will meet on Aug. 20.

The US and European Union (EU) presented a "framework for establishing modalities" to the Agricultural Negotiating Group of the Doha Round of Trade Negotiations, representing a compromise between the US and EU on the agricultural negotiations.

The agreement calls for a "blended" approach to market access, where some tariff lines would be subject to a Swiss formula type of reduction and others to a more-or-less straight percentage approach. It also calls for significant reductions in export subsidies and export credits with the EU and the US agreeing to reduce their respective programs in parallel.

In its August crop report, USDA estimated a ’03-04 US crop of 17.10 million bales, up 500,000 bales from the July report. US mill use was lowered 200,000 bales to 6.60 million bales, while exports were unchanged at 11.80 million bales for total offtake of 18.40 million bales. Ending stocks for ’03-04 are a projected 4.30 million bales for an ending stocks-to-use ratio of 23.4%.

For the ’03-04 marketing year, USDA projected world production of 95.38 million bales, up 540,000 bales from the July report. World mill use is projected to reach 99.16 million bales. Consequently, world ending stocks for ’03-04 are projected to be 34.29 million bales for a stocks-to-use ratio of 34.6%.

US Cotton Crop, ’03-04

The NCC’s Cotton Leadership Development Committee has selected the ’03-04 cotton leadership class.

Members of this 21st class are: Producers - David Dunlow, Gaston, NC; Stoney Hargett, Alamo, TN; Craig Ivey, Tornillo, TX; and Greg Wuertz, Coolidge, AZ; Ginner - Bryan Wells, Decatur Gin Co., Bainbridge, GA; Warehouseman - Michael Nettles, Plainview Coop Compress, Lubbock, TX; Merchant - Robert Buckles, Cargill Cotton Co., Gastonia, NC; Crusher - Teresa McMillan, Planters Oil Mill Co., Pine Bluff, AR; Cooperative - Ron Nickell, Calcot, Ltd., Bakersfield, CA; and Manufacturer - Daniel LaFar, III, Bowling Green Spinning Co., Bowling Green, SC.

During 6 weeks of activity across the Cotton Belt, class members will visit with industry leaders, tour production and processing operations and observe research activities. They also will receive communications training, attend the NCC’s Annual Meeting and meet with lawmakers and government agency representatives during a visit to Washington, DC.

The Leadership Program, which provides developmental training to potential industry leaders, has been supported since its ’83 inception by grants from DuPont Crop Protection to The Cotton Foundation.

Net export sales for the week ending Aug. 7 were 66,100 480-lb. bales, resulting in total ’03-04 sales of almost 3.1 million bales. Total sales at the same point in the ’02-03 marketing year were approximately 3.7 million bales. Total new crop (’04-05) sales are 88,300 bales.

Shipments for the first week of the new marketing year were 309,300 bales, ahead of the 181,500 bales at the comparable point in the ’02-03 marketing year.