Cotton's Week: March 4, 2005

The NCC Chairman Woods Eastland stated the NCC’s disappointment with the ruling by the appellate body of the World Trade Organization in the Brazil/US cotton dispute.

“As we have stated before, there were several aspects of the Panel’s findings that we believe are inconsistent with the intent of the Agriculture Agreement and are inconsistent with long-standing interpretations of that agreement,” Eastland said. “Our initial, cursory review of the findings of the Appellate Body indicates that it upheld the Panel decision in most respects, including its determinations concerning the export credit guarantee program, cotton’s step 2 program, classification of direct payments, and serious prejudice. While the Appellate Body did modify somewhat the Panel’s decision regarding aspects of the Peace Clause analysis, those modifications did not alter the final result that the Peace Clause did not shield the U.S. cotton program from Brazil’s allegations.

“The NCC will be closely reviewing the Appellate Body’s analysis over the next few days and will consult with the Administration and Congress on this decision. There will be no immediate changes in the U.S. cotton program,” Eastland said. “We will, however, work with Congress and the Administration to formulate an appropriate response to this decision.”

US Trade Representative (USTR) spokesman Richard Mills said, “We’re interested in results, not litigation. Getting the results that our farmers want is best achieved through ambitious global agriculture reform, through ongoing multilateral trade negotiations which address market access, export competition and domestic support, including for cotton. We will study the report carefully and work closely with Congress and our farm community on our next steps."

Undersecretary of Agriculture J.B. Penn said, "We are disappointed in today's decision because U.S. farm programs were carefully crafted to meet our WTO obligations. As we review the WTO report more thoroughly, we will continue to work closely with our agricultural community and Congress. I know that America's farmers and ranchers can compete as long as there is a level playing field, and we intend to work tirelessly to achieve that goal."

Senate Agriculture Committee Chairman Chambliss (R-GA) stated, “While we are disappointed by the result, we will carefully review the decision in the days to come. Nothing in the ruling requires immediate action. Although we still believe the cotton program and the Farm Bill conform to our World Trade Organization (WTO) commitments, I will work closely with my colleagues in the Congress and within the Administration to engage the issues raised in the appellate panel."

Senate Appropriations Committee Chairman Cochran (R-MS) noted that, "Careful consideration has been given in crafting of U.S. farm policy and it is still my belief that the Farm Bill remains compliant within World Trade Organization commitments."

NCC is asking its ginner members to express the organization’s appreciation to all cottonseed members for their commitment to the NCC and to urge cottonseed non-members to join as soon as possible.

NCC’s Board of Directors established the cottonseed segment after several whole cottonseed merchants expressed an interest in becoming active in the NCC’s policy development process. The directors also established a membership dues plan and amended the bylaws to provide delegate and Board representation for this segment’s members. For more information on the cottonseed segment, including membership eligibility, go to www.cotton.org/issues/2005/cseedsegment.cfm

Letters sent to the House and Senate budget committees’ chairmen urging preservation of the ’02 farm law provisions have garnered several signatures. As of March 4, 60 House members and 52 Senators have written the respective chairmen of the budget committees urging them to consider the importance of maintaining the current farm law - scheduled to last through ’07 - when developing the ’06 Budget Resolution. A list of Congressional members who signed the House and Senate letters authored by Rep. Emerson (R-MO) and Sens. Coleman (R-MN), Lincoln (D-AR) and Roberts (R-KS) follows:

Emerson Ag/Budget Letter Co-Signers: McMorris (R-WA), Graves (R-MO), Kingston (R-GA), Alexander (R-LA), LaHood (R-IL), Boozman (R-AR), Lucas (R-OK), Osborne (R-NE), Pickering (R-MS), Bonilla (R-TX), Westmoreland (R-GA), Johnson (R-IL), Everett (R-AL), Rogers (R-AL), Paul (R-TX), Musgrave (R-CO), Rehberg (R-MT), Aderholt (R-AL), Neugebauer (R-TX), Cardoza (D-CA), Pastor (D-AZ), Etheridge (D-NC), Berry (D-AR), Skelton (D-MO), Scott (D-GA), Boyd (D-FL), Bishop (D-GA), Cramer (D-AL), Butterfield (D-NC), McIntyre (D-NC), Salazar (D-CO), Ortiz (D-TX), Rahall (D-WV), Melancon (D-LA), Larsen (D-WA), Hinojosa (D-TX), Costa (D-CA), Boswell (D-IA), Ross (D-AR), Marshall (D-GA) Costello (D-IL), Otter (R-ID), Ross (D-AR), Thompson (D-MS), Holden (D-PA), Hall (R-TX), Boustany (R-LA), Gerlach (R-PA), Herseth (D-SD), Norwood (R-GA), Cuellar (D-TX), Barrow (D-GA), Pomeroy )D-ND), Platts (R-PA), Snyder (D-AR), Nunes (R-CA), Shimkus (R-IL), Price (D-NC) and Miller (D-NC). In addition, Thornberry (R-TX), Baker (R-LA) and Thomas (R-CA) wrote individual letters supporting the current farm bill.

Senate signers: Coleman (R-MN), Roberts (R-KS), Burns (R-MT), Talent (R-MO), Vitter (R-LA), Isakson (R-GA), Specter (R-SD), Thune (R-SD), Bond (R-MO), Warner (R-VA), Dole (R-NC), Craig (R-ID), Allen (R-VA), Hutchison (R-TX), Shelby (R-AL), Martinez (R-FL), Burr (R-NC), Inhofe (R-OK), Lincoln (D-AR), Baucus (D-MT), Leahy (D-VT), Harkin (D-IA), Stabenow (D-MI), Pryor (D-AR), Landrieu (D-LA), Johnson (D-SD), Kohl (D-WI), Salazar (D-CO), Murray (D-WA), Cantwell (D-WA), Dayton (D-MN), Levin (D-MI), Dorgan (D-ND), Lautenberg (D-NJ), Wyden (D-OR), Nelson (D-NE), Obama (D-IL), Jeffords (D-VT), Kennedy (D-MA), Durbin (D-IL), Kerry (D-MA), Bayh (D-IN), Mikulski (D-MD), Rockefeller (D-WV), Sarbanes (D-MD), Corzine (D-NJ), Feingold (D-WI), Dodd (D-CT), Schumer (D-NY), Akaka (D-HI), Bingaman (D-NM) and Reid (D-NV).

Rep. Nussle (R-IA) and Sen. Gregg (R-NH), the respective budget committee chairmen, indicated they intend to schedule a markup of the FY06 Budget Resolution in their committees the week of March 7. Senate Agriculture Committee Chairman Chambliss (R-GA) said, “We’re going to continue to dialogue, but I have to tell you I’m not very happy about the proposal coming from the Administration. I can’t vote for any budget that has instructions to make the proposed cuts.”

Chairman Chambliss was referring to the Administration’s proposal to cut $5.7 billion from agriculture, conservation, nutrition and risk management programs. The Administration has proposed cutting the federal budget deficit by half by ’09. Their ’06 budget proposal included a net total cut (after tax and user fee adjustments) of $38.7 billion from entitlement programs including cuts in agriculture, food stamps and Medicaid.

According to China Customs data, obtained from Global Trade Information Services' Global Trade Atlas database, shipments of textiles and apparel from China to the US increased dramatically in Jan. ’05 when compared to previous months while quotas were still in place.

The table below shows the percentage change in China shipments to the United States for several categories for which quotas were removed as of Jan. 1, ’05. This data represents Chinese shipments and, therefore, these items may or may not already have landed in the United States.

One of the largest increases in shipments occurred in the category of cotton trousers. In Jan. ’05, China shipped almost 26.7 million pairs of cotton trousers, a 1,332% increase when compared to Jan. ’04 shipments. This amount is larger than total US imports of cotton trousers from China for all of calendar ’04. Shipments of cotton knit shirts from China in Jan. ’05 increased by 1,836% when compared to the same time period last year. China shipped more than 18.2 million cotton knit shirts in Jan. ’05, more than half the amount of cotton knit shirts imported into the United States from China for all of calendar ’04.

These increases show the importance of having a system which allows for the early monitoring of US trade data and a resolve by US government officials to make full and timely use of textile safeguard provisions. Data showing US textile and apparel trade for Jan. ’05 is scheduled for release on March 11. However, quantities included in the table below probably will not be represented in US data until the following month. The NCC, meanwhile, is seeking meetings with the USTR, the Commerce Dept. and the Committee for the Implementation of Textile Agreements to discuss the huge increases and appropriate action.

Net export sales for the week ending Feb. 24 were 200,300 bales (480-lb). This brings total ’04-05 sales to more than 11.2 million. Total sales at the same point in the ’03-04 marketing year were about 11.7 million. Total new crop (’05-06) sales are 503,100 bales.

Shipments for the week were 326,200 bales, bringing total exports to date to 5.9 million, compared with the 6.3 million at the comparable point in the ’03-04 marketing year.

President Bush nominated Stephen Johnson, EPA’s acting head, to fill the agency’s top job permanently. President Bush called Johnson, a career government employee who has been with the agency for 24 years, "the first professional scientist to lead the EPA" saying “he knows the EPA from the ground up and has a passion for its mission. He will listen to those closest to the land because they know our environmental needs best."

An International Crisis Group report says comprehensive reform of the cotton industry in Uzbekistan, Tajikistan and Turkmenistan is desperately needed to address the political, economic, social and environmental problems facing that region.

The report said Central Asian cotton’s exploitative economics have millions of the rural poor work for little or no reward with profits going to the state or to elites with strong political ties. It said forced and child labor and other abuses are common in the system that only can work in an unreformed economy under conditions of severe political repression, which can be used to mobilize workers at less than market cost.

Brazil's President Luiz Inacio Lula da Silva is expected to sign a new law that would initiate creation of a framework to legalize biotech seed sales in Latin America's largest country.

Biotech seeds are currently banned in Brazil, but their use has been widespread by Brazilian farmers who planted illegal Roundup Ready soybean seeds to cut production costs. The President has twice allowed the harvesting of biotech soybeans even though the crops were technically illegal.

The new law opens a path to develop rules that would allow companies to sell biotech seeds of soybean, cotton, corn and other crops in Brazil, where production has boomed over the last decade.