U.S. Cotton Sector’s Survival Hinges on Farm, Trade Policy Compatibility

TAMPA, FL – National Cotton Council Chairman Kenneth Hood says the organization’s top challenge in 2003 will be harmonizing America’s farm and trade policies to keep U.S. cotton competitive in the international marketplace.

In an address at the NCC’s annual meeting here today, he asked delegates to be diligent in seeing that agreements arising from the host of new trade proposals are soundly tested against unified NCC policy. He also asked them to be vigilant in protecting the new farm bill’s benefits.

Hood said that U.S. farm and trade policies must be compatible and equitable "in meeting the competition of the international market and complying with our international agreements. Compatible farm and trade policies that address the inequities of current world trade patterns must be a hallmark of Council policy."

The compatibility objective, he noted, has to be viewed in a global context, and has to reflect that good farm and trade policies must take into account the needs of both the U.S. raw cotton and textile industries. He said the NCC’s firm message to policymakers must be do not: 1) reduce U.S. subsidies until other countries bring theirs down; 2) further reduce U.S. tariffs until other countries bring theirs down to our levels; and 3) increase access to the U.S. market until other countries provide equal access for our products.

The Gunnison, MS, cotton producer said, for example, it is not equitable for:

• the European Union, Japan and Canada to be able to spend $60 billion, $31 billion and $23 billion, respectively, for trade distorting subsidies while U.S. spending is capped at $19 billion;
• foreign producers to be able to sell their agricultural products into the U.S. market and pay an average tariff of 12 percent while U.S. farmers must pay an average of 62 percent to sell their products into foreign markets;
• foreign textile product manufacturers to pay a tariff of less than nine percent to sell their products into the U.S. market when U.S. textile manufacturers must pay tariffs typically ranging from 20 percent to 300 percent to sell their products into foreign markets.

Hood reminded delegates that the U.S. cotton program not only is still under attack by some national media and lawmakers, but by competing nations. That includes Brazil’s assertion that the program violates U.S. obligations under the World Trade Organization (WTO) agricultural agreements. The U.S. government, he said, has put together a strong team to counter those assertions.

On another WTO issue, Hood said NCC leadership and staff were to meet today with Ambassador Zoellick of the U.S. Trade Representative (USTR) regarding China’s failure to abide by its WTO accession agreement. Specifically, China is not giving imported cotton the same "national" treatment as its domestic cotton, including access by Chinese textile mills.

The NCC contingent was to keep urging the USTR to seek formal consultations under the WTO’s dispute settlement provisions, and if that failed to resolve the matter, to request that a WTO dispute settlement panel be convened. Zoellick was scheduled to travel to China next week for regular ministerial consultations under China’s WTO accession agreement.

"China’s behavior serves as a reminder that we must urge Congress to insist that the Administration make full use of the tools available to leverage compliance with existing agreements before ratifying new agreements," Hood said. "In addition to a new WTO agreement, Congress will be asked in the months ahead to approve bilateral agreements with Chile, Singapore and Australia as well as regional agreements with Central America, and then a still broader Free Trade Area of the Americas."

As the unifying force of the U.S. cotton industry, the Memphis-based National Cotton Council brings together industry representatives from the 17 cotton-producing states to establish policies reflecting the common interests and promoting mutual benefits for its broad membership and ancillary industries. The U.S. cotton industry provides employment for some 440,000 Americans and generates more than $120 billion in annual economic activity.

The NCC’s mission is ensuring the ability of all industry segments to compete effectively and profitably in the raw cotton, oilseed and U.S.-manufactured product markets at home and abroad.