Cotton's Agenda -
Where are WTO negotiations?
U.S. Trade Representative Susan Schwab said that in the first quarter of 2008 a breakthrough is likely to be reached on a set of revised texts on agriculture and industrial goods that will be released in Geneva by late January or early February. Ambassador Schwab listed those along with services as the three areas of market access at the core of the talks and key to a breakthrough. She has said the United States is seeking an agreement where WTO members can become passionate about an agreement that will generate economic growth – namely, new trade flows derived from real new market openings.
This is in contrast to two papers recently released by WTO Agricultural Negotiations Chairman Crawford Falconer saying the United States should allow more cuts in farm program support and accept less market access than our nation initially offered.
What is U.S. cotton’s main focus?
For U.S. cotton, significant access to China’s markets – more than what Ambassador Falconer suggests – is absolutely essential for the health of our industry. We have regularly communicated to U.S. trade negotiators that a successful Doha Round outcome must include meaningful increases in market access to China if U.S. cotton is to realize any real benefits. That’s because China continues to be the largest market for U.S. cotton exports. Recently, imports ranged from 10 and 20 million bales per year, with the United States supplying between five and nine million of those bales.
Are there specific concerns with China?
There is continued uncertainty overall about the Chinese cotton industry. However, we do know that its investment in spinning machinery continues, while its mill cotton use is growing and should continue to expand – which would most likely preserve its status as the No. 1 importer of raw fiber. That scenario appears even likelier when you consider that China will have greater access to the U.S. market as restraints on selected categories of textile imports are scheduled to expire at the end of 2008.
While China is a valued customer, a real industry concern is the manner in which they administer their basic import quota of approximately four million bales. While a nominal import duty of one percent is applied to imports under this quota, the bigger apprehension is how the quota is allocated. In addition, imports above the initial four million bales are assessed a variable levy that ranges between 5 and 40 percent. The combined effect of the variable levy and the import allocation allows China to support internal cotton prices at levels well above the world market. Regardless of international signals, its prices range between 75 and 80 cents per pound. The result is reduced competitiveness relative to manmade fiber and restricted raw cotton imports.
Mark Lange is president and chief executive officer for the National Cotton Council of America. He and other NCC leaders contribute columns on this page.