NCC Has Concerns with WTO Framework Text

MEMPHIS - National Cotton Council Chairman Woody Anderson said today that “the U.S. cotton industry is glad to see that cotton will be addressed as part of the overall agricultural negotiations. However, we are concerned about the specific references to cotton in the framework’s text.”

The WTO framework text provides the basis for further negotiations under the Doha Development Round. The document includes general concepts in key areas such as agriculture and industrial market access. Further negotiations in the Doha Round will develop specific policy changes consistent with the framework text.

“We are disappointed to see cotton highlighted in numerous contexts,” Anderson said. “We are encouraged to see that there are no specific commitments for an ‘early harvest’ of the cotton program, which would have required separate negotiations outside of the overall agriculture discussions.”

NCC President and CEO Mark Lange added that “singling out cotton as a separate issue is both unfair and inappropriate. Unfortunately, this initiative has been influenced by poor economic analysis. Particular emphasis on U.S. cotton is unjustified and unwarranted - the world cotton market is much more than the United States. The U.S. has not increased cotton production, but we have seen a surge in foreign production, particularly in China and Brazil.”

Anderson, a Texas cotton producer, noted that “there are a number of independent studies that conclude only modest impacts on world prices from the presence of the cotton program. Studies by FAO, Texas Tech University and the IMF all report that the U.S. cotton program affects world prices by only one to three percent. As the Doha negotiations move forward, it is imperative that there be a broader understanding of world fiber markets and the role played by U.S. cotton.”

Lange said he is not surprised that these studies would conclude such a modest impact.

“Let’s just look at the numbers,” Lange said. “The U.S. represents less than one-fifth of world cotton production. Also, the cotton market does not operate in a vacuum. Cotton prices are directly impacted by what happens in substitutes such as manmade fiber. With the recent explosion in manmade fiber production, U.S. cotton represents less than seven percent of world fiber markets.”

“Agricultural reforms must occur through a broad-based approach, and this text should not limit that approach,” Anderson said. “The U.S. cotton industry is committed to reforms, but they must be undertaken across all areas.”