The way things have been going with trade and legislation issues over the last several months, cotton growers and ginners “may feel they have a bullseye target hanging on them,” says Harrison Ashley.
“With the current farm bill, the cotton industry has been under fire from the get-go,” the National Cotton Council assistant director for member services told Southern Cotton Ginners Association members at their regional meeting at Clarksdale, Miss.
When the House and Senate return from their August recess, Ashley said, they'll be faced with trying to decide how to implement cuts in the federal budget, including several billion dollars from agricultural programs.
And a “recurring theme,” he said, will be Sen. Charles Grassley, R-Iowa, and others attempting to amend the farm bill and change payment limit rules.
“We're going to have to work to hold onto this farm bill for its intended life span, and pressure will continue to be on agriculture to do this. The council will continue working with both the House and Senate agriculture committees to insure that proposed cuts in the budget reconciliation bill will do the least possible damage to current farm policies.”
Trade issues are still at the forefront of the council's legislative agenda, Ashley said, because the U.S. is now exporting two-thirds of its cotton production.
The recent passage of the Dominican Republic-Central American Free Trade Agreement “was very important” to preserving a viable U.S. cotton/textile industry, he said.
CAFTA countries consume 2.7 million bale equivalents of U.S. cotton yearly. In combination with North American Free Trade Agreement (NAFTA) countries, U.S. sales total 6.7 million bales of both raw and finished cotton.
“It's important that we control that cotton in this hemisphere, rather than losing it to Pacific Rim countries,” and CAFTA should provide the U.S. “the best opportunity” to do that.
The world's largest consumer of cotton, China, is also the biggest customer for U.S. cotton, Ashley noted, with 4 million bales of American cotton purchased in 2004.
“But the country's unpredictability and unwillingness to fully comply with World Trade Organization (WTO) rules” has necessitated the council “holding their feet to the fire to make them honor their commitments under the WTO.
“We've also had several meetings with the USDA, the Office of the U.S. Trade Representative (USTR), and the Bush administration to insure that safeguards are in place to stem the surge of Chinese textiles and apparel into the U.S.”
The WTO ruling in favor of Brazil and against the U.S. with regard to cotton subsidies “may reach well beyond the elements of the U.S. cotton program,” Ashley said. “Prohibited subsidies are common farm bill provisions for all commodities, and we've been working with other commodity organizations to determine how this ruling will influence upcoming WTO rounds and the new farm bill.”
The USDA will submit legislation to Congress to comply with the ruling and calling for the immediate elimination of the Step 2 program, he said.
“The council opposes this action and will work with Congress to continue the Step 2 program and to set an ending date toward the ending date of a future crop year, rather than making it effective immediately.”
The WTO Doha round negotiations, renewed last July, have resulted in development of an agricultural framework agreement, Ashley said. This includes “three pillars for agriculture — market access, elimination of export subsidies, and 2005 reductions in the maximum allowed domestic support.
“The agreement seems to contain sufficient flexibility to maintain an effective farm program, but it also includes specific references to cotton and includes the establishment of a special subcommittee on cotton that will meet periodically and report to the negotiating group.
“But we must guard against singling out the cotton program to be considered separately.”
A recent proposal by some African nations to treat cotton differently from other commodities has resulted in “stepped-up rhetoric” calling for the elimination of the U.S. cotton program, Ashley said. “We might as well be ready: there's going to be some bad press from the Environmental Working Group, OXFAM, and others opposed to the cotton program.”
Even so, he said, the council has “actively sought opportunities to establish a close working relationship” with the cotton-producing countries of West Africa.
“We embarked on this initiative with the belief that there are many common issues and concerns, and we believe real solutions will be realized through mutual dialogue and cooperative efforts, rather than those being proposed to the WTO.”
Discussions on the new farm bill began recently in Nashville, Ashley said, and will continue through this year and into 2006, when the USDA will conduct listening sessions and field hearings.
Debate will stretch through 2006 and into 2007, with 2008 being the first year of the new farm program.