NCC Concerned With WTO Negotiations' Direction

The NCC says the WTO Doha Round negotiations are headed down a path that will “practically ensure an inequitable and unfair outcome for the U.S. cotton industry.”

June 20, 2007
Contact: Marjory Walker
(901) 274-9030

MEMPHIS – The National Cotton Council says the World Trade Organization’s Doha Round negotiations are headed down a path that will “practically ensure an inequitable and unfair outcome for the U.S. cotton industry.”

In a letter sent today from NCC President/CEO Mark Lange to U.S. Trade Representative Susan Schwab, the NCC conveyed the industry’s concerns with the direction of agricultural negotiations and noted four specific items that will necessarily determine whether the Doha Round helps or seriously harms U.S. cotton producers.

“We sent this letter because the National Cotton Council believes the U.S. should have a well-defined position for dealing with attempts by others to overstep the Doha negotiations in agriculture,” Lange said. “The agricultural negotiations appear to be taking a track that leads to far more specificity in policy provisions than is desirable. Not only do the negotiations appear to be further increasing the reduction in support beyond the U.S. proposal but are adding ill-conceived commodity specific caps.”

The first area of concern noted in the letter involves the West African C-4 cotton proposal, which would require additional commitments from cotton.

“We have provided a great deal of information demonstrating clearly that eliminating U.S. cotton subsidies will not provide a solution for the economic plight of West African cotton producers,” the letter stated. “Similar evidence has been presented to the C-4 by disinterested third parties. This evidence has failed to move this debate onto a different, productive path.”

The letter said the NCC also is uncertain of the U.S. strategy to protect U.S. cotton from an unfair and inequitable Doha Agreement, noting that the United States has never offered any alternative to the C-4 cotton proposal despite a NCC request in February 2006 that stated: “Further details on cotton should be left to the overall agricultural negotiations and the ultimate submissions of schedules.”

“We are very concerned if that strategy hinges on simply convincing the C-4 countries to agree to be reasonable during the modalities stage of the negotiations,” the letter stated. “What happened in Geneva in 2004 and Hong Kong in 2005 is about to happen again – the C-4 countries are clearly positioned to block the Doha Round unless their demands are met. If, in fact, the draft modalities to be issued by (WTO Agricultural Committee) Chairman Falconer contain the C-4 cotton proposal, the U.S. cotton industry will have no choice but to re-evaluate its position on this negotiation and on a possible extension of trade promotion authority.”

The second area of concern in the letter focused on commodity specific limits.

The letter noted that any movement by the United States toward commodity specific limits based upon a 1995-2000 time period will severely affect the U.S. cotton industry, which does not support the concept of a product-specific cap to be applicable to the newly defined blue box.

“We stated previously and we emphasize again that the U.S. counter-cyclical program is decidedly not tied to production of any particular commodity,” Lange said.

The third area of concern is market access.

The letter reminded the USTR that the U.S. cotton industry has joined with every other major commodity group in the United States, as well as major farm organizations, in “urging the United States to remain committed to the level of market access contained in the U.S. proposals put forward in 2005. It is likely that market access at lower levels will not provide significant gains for U.S. agriculture in general.”

Specifically for cotton, Lange said the National Cotton Council has made it abundantly clear that to provide any hope that the Doha Round could yield any positive result for U.S. and world cotton producers, it must contain an increase in China’s tariff rate quota to no less than 16 million bales annually - which represents only about 35 percent of China’s total use.

“Unfortunately, China, the world’s largest cotton market, continues to demand special treatment as a recently acceded country,” he said. “We are increasingly concerned that increases in market access into China under a Doha agreement will be negligible.”

The final concern presented in the NCC’s letter noted that despite a steady request from the U.S. textile industry for a sectoral negotiation on textiles, positive progress has yet to be seen.