Cotton's Week: November 18, 2005

The House passed a bill, on a strictly party line vote, to cut $49.5 billion from spending over the next five years. House majority leaders agreed to a number of changes to win over the final votes. These changes included additional home heating subsidies, changes to the food stamp and school lunch provisions, as well as changes to cuts in Medicaid. Other concerns likely will be taken up in the upcoming conference with the Senate which earlier passed a $35 billion plan. Conferees will have to address significant differences between the two bills. One obvious difference will be whether to include language regarding oil exploration in Alaska’s Arctic National Wildlife Refuge. 

After the nutrition programs were changed prior to the vote, a breakdown of the reductions in programs within the Committee's jurisdiction shows that:  1) the total reduction in commodity programs, including direct payments and the elimination of the Step 2 cotton program, is $1.01 billion over five years; 2) conservation programs account for $760 million in savings, while energy programs account for $23 million in savings; 3) rural development program funding reductions account for $446 million over five years; 4) research programs contribute $620 million to the total reduction package; and 5) the proposed reductions for the food stamp program account for less than a half of a percent of the total food stamp budget or $796 million over 5 years. The reductions total $612 million in ’06 and an overall reduction of $3.652 billion for FY06-10.

The Senate Agriculture Committee, under the guidance of Chairman Chambliss (R-GA), passed a reconciliation package that the Congressional Budget Office estimates will reduce outlays for mandatory programs under the Committee’s jurisdiction by $196 million in ’06 and $3.014 billion over FY06-10. A conference committee now will be formed so the respective committees can work out the differences between the two bills.

Trade officials will meet in Geneva on Nov. 22 in a continuing effort to narrow differences before the WTO Ministerial in Hong Kong on Dec. 13-18.

Top trade officials from the United States, European Union (EU), Brazil and India will meet to discuss what can be accomplished in Hong Kong in the wake of a decision by trade ministers during a meeting in Geneva on Nov. 8-9 to abandon their goal of finalizing full “modalities” in Hong Kong due to deep differences. The modalities were to include final formulas and figures for reducing tariffs on industrial and agricultural goods and reducing agricultural subsidies.

US Trade Representative Portman has been in Asia and Africa during the past 10 days, where he has continued to advocate an ambitious WTO agenda in Hong Kong. While in China, Ambassador Portman called on China to play a more active role in the Doha negotiations and to fully comply with the commitments made as part of China’s WTO accession agreement. He emphasized the importance of market access and intellectual property rights as key issues for compliance by China.

WTO Director General Lamy has indicated his intention to circulate a draft Hong Kong Ministerial declaration by Nov. 25. While the reports from agriculture and non-agricultural market access may not include specific modalities, there are discussions about including a range of numbers related to tariff reductions and subsidies.

Several leaders, including Brazil’s President Lula da Silva, continue to call on the EU to improve its offer on market access in response to the US proposal to significantly reduce subsidies if sufficient reciprocal market access is made part of the agreement.

There has been increased rhetoric by developing countries that if there are not substantial reductions and ultimate elimination of subsidies by “rich” countries, the less-developed countries will emerge from the Doha round worse off.  Following Amb. Portman’s and Secretary Johanns’ visit to W. Africa, Oxfam and the EU reiterated their call for the US to commit to take early action on US cotton subsidies. The EU has announced its intention to introduce a specific proposal on cotton prior to the Hong Kong meeting.

A coalition of international textile and apparel organizations called for a separate textile sectoral negotiation in the WTO Doha Round. The 13 groups from 11 countries have asked their governments to support the removal of textiles from the industrial products classification in the so-called non-agricultural market access and services (NAMA) negotiating group of the Doha Round to a separate textile sectoral during the Hong Kong Ministerial scheduled for Dec. 13-18.

The coalition’s organizations, which include the US-based National Council of Textile Organizations, are located in countries that are participants in a variety of free trade agreements (FTA) with the US, including the Andean FTA, CAFTA-DR FTA and NAFTA. The organizations expressed concern that a Swiss Formula cut of tariffs in the broad industrial products category would provide China further opportunities to dominate trade in textile and apparel products.

Because US textile product tariffs already are relatively low, further cuts would erode the benefits of trade preferences provided to countries participating in the FTAs. The groups also argue that a special China safeguard only could be discussed in a separate textile sectoral negotiation.

Net export sales for the week ending Nov. 10 were 249,600 bales (480-lb). This brings total ’05-06 sales to about 7.9 million bales. Total sales at the same point in the ’04-05 marketing year were about 7.0 million bales. Total new crop (’06-07) sales are 159,100 bales.

Shipments for the week were 219,200 bales, bringing total exports to date to 3.2 million bales, compared with the 1.9 million bales at the comparable point in the ’04-05 marketing year.

Reps. Peterson (D-MN) and Costa (D-CA) introduced legislation that would extend the commodity title of the current farm law for an additional year through the ’08 crop year and other titles through fiscal or calendar year ’08. The legislation’s provisions also provide that if the President does not submit implementing legislation based on the outcome of the Doha Round by Jan. 15, ’08, there would be an additional one-year extension.

Sens. Graham (R-SC) and Schumer (D-NY) agreed to delay a vote on legislation (S. 295) that would impose a 27.5% tariff on all products imported from China if China doesn’t take more aggressive action to allow its currency to float.

The Senators agreed to postpone a vote until Dec. 23 because President Bush is meeting with Asian leaders in Korea on Nov. 18-19 and with the President of China on Nov. 20. Both Senators stated their belief that a vote on the measure would be inappropriate while the President is in Asia.

The measure was first considered in April when 67 Senators voted not to table it as an amendment to pending legislation. In response, Senate leaders agreed to schedule a separate vote in June. Sens. Graham and Schumer agreed to postpone the June vote after meeting with Treasury Secretary Snow who advised that China was preparing to allow the currency to float more freely.

In July, China moved to a “managed” float with a limit of 0.3% on the daily adjustment in the value of the Yuan. Sens. Graham and Schumer have expressed disappointment at this very modest adjustment.  A number of key US business organizations, including NCC, have urged President Bush to raise this issue during his meeting with China’s president.

President Bush nominated Richard T. Crowder to serve as Chief Agriculture Negotiator at the US Trade Representative’s office. Crowder would fill the position previously held by Allen Johnson.

Crowder is the president and CEO of the American Seed Trade Assoc. He also has worked with Dekalb Genetics, ConAgra and the Pillsbury Company. From ’89-92, he served as USDA Under Secretary for International Affairs and Commodity Programs. In that capacity, he supervised agencies that administered international trade promotion and commodity programs.

Attendees are encouraged to complete Beltwide Cotton Conference registration online by going to the Beltwide web site (http://beltwide.cotton.org). The deadline for discounted registration fees is Dec. 2. After Dec. 2, credit card registration can be made on-line or attendees may register on-site at the registration kiosks, but must pay the full registration fee. Mailed or faxed registration forms received after Dec. 2 will be processed only if the appropriate (non-discounted) registration fee is included.

Conferees also are encouraged to make their housing reservations at the Beltwide web site. Most conference hotels still are reporting room availability.

All ’06 BWCC attendees will have access to a tool for building a personal conference schedule. By registering at http://ncc.confex.com/ncc/2006/scheduler/, first-time users may generate a password to access the “Personal Scheduler.” New Developments From Industry and technical conferences session information is posted there now and the production conference program will be added later.

The NCC-supported America’s Heartland public television series will focus an upcoming episode on the historic King Ranch which covers more than 800,000 acres in South Texas, part of which are devoted to cotton production.

The series celebrates the nation’s agricultural landscape by profiling the people, places and processes that bring food, fiber and fuel from farm and ranch to American consumers. It began airing this fall after being distributed to more than 300 US public television stations by America’s Public Television. The show is now being aired by 150 of those stations and is reaching just more than 45% of the nation’s households.

 NCC and several other commodity organizations support the show, which is being produced by KVIE, the public television affiliate in Sacramento. The Monsanto Company and the American Farm Bureau Federation are the flagship supporters for the series.

Another upcoming episode will include a visit to Louisiana and the historic Loyd Hall, a beautifully preserved mansion and a symbol of plantation agriculture. To find airing times in your community, visit http://www.americasheartland.org/watch_heartland/index.htm.