NCC Committed to WTO-Compliant Federal Cotton Program

The NCC pledged to do its part at maintaining an effective U.S. cotton program that complies with WTO obligations.

May 20, 2004
Contact: Marjory Walker
(901) 274-9030

WASHINGTON – The National Cotton Council (NCC) pledged to do its part at maintaining an effective U.S. cotton program that complies with World Trade Organization (WTO) obligations.

In testimony before the House Agriculture Committee here Wednesday, NCC Chairman Woody Anderson said the U.S. cotton industry would work with the Committee and the Administration on that objective as the NCC fundamentally understands the WTO’s value and “a rational, rules-based international trading system is superior to the alternative.”

Anderson said, though, that the NCC believes a recent WTO Panel initial ruling against the United States is incorrect and will fight the decision and its ramifications. He pointed out, for example, “a perplexing result” in news reports that today’s federal cotton program was ruled to support U.S. cotton at a higher level than in 1992 – even though the U.S. cotton program in that year was fully coupled to production and had a higher loan rate and target price than any cotton crop subject to the 2002 farm bill.

The Texas producer offered U.S. cotton’s appreciation for: 1) the support offered to the industry by the House Agriculture Committee’s chairman and ranking member and 2) U.S. Trade Representative Robert Zoellick’s commitment to appeal the decision.

“We should not and cannot unilaterally disarm under these circumstances,” Anderson stated.

He said the NCC also is encouraged by Ambassador Zoellick’s efforts to get the Doha Round restarted noting that “one-way concessions will be at the expense of U.S. interests without achieving further international economic integration.”

Anderson told the panel that since Cancun, “the U.S. cotton industry has been working to open a dialogue with several African countries to better understand the central forces driving investment in cotton and cotton textile production and we are participating in information exchanges. These are small steps, but are reflective of our belief that there is more than enough room in the world cotton market for African production.”

On other trade-related concerns, Anderson told the Committee:

·        The United States must remain vigilant and continue to push for China – now the largest importer of U.S. cotton - to reform its tariff rate quota system as required by the U.S.-China WTO accession agreement.

·        Preferential trade arrangements and free trade agreements are having a greater impact on U.S. cotton’s trade situation than ever before. While agreements awaiting Congressional consideration are generally acceptable from a cotton fiber perspective, many recent agreements have contained rule-of-origin exceptions that will damage U.S. textiles.

“When the outstanding agreements are added, the United States has agreed to allow third country fabric to qualify as originating goods in an amount equal to 18 percent of total U.S. apparel production,” Anderson said. “This is 18 percent of an industry that seems to decline every year. This free ride is being granted to fabric made in countries that are not even parties to the agreement. It is detrimental to the U.S. cotton and textile industry and discourages the development of spinning and weaving capabilities in the participating countries.”