The Dominican Republic-Central America Free Trade Agreement Free Trade Agreement, which squeaked through the House on a 217-215 vote and was signed into law Aug. 3, is “essential to preserving a viable U.S. cotton and textile industry,” a National Cotton Council official said at the summer conference of the Southern Cotton Ginners Association.
“In 2005, U.S. raw cotton exports to CAFTA countries totaled more than 200,000 bales,” said Fred Johnson, the council's vice president of administration and program coordinator, at the meeting attended by ginners from Louisiana, Mississippi, Arkansas, Tennessee, and Missouri.
Additionally, he noted, U.S. exports of yarn and fabric to those countries totaled more than 2.5 million-bale equivalents and accounted for more than 50 percent of total U.S. cotton textile exports.
CAFTA builds on the trade preferences of the Caribbean Basin Trade Partnership Act, and extends their duty-free access to the United States beyond 2008, when that law is scheduled to expire.
Although there were “concerns” about a yarn-forward rule in the CAFTA agreement, the council's board of directors “ultimately concluded that this agreement was in our industry's best interests, and that it provides the U.S. with the best opportunity for supplying apparel manufacturers and other end-use manufacturing businesses with U.S. cotton fiber and U.S.-produced cotton textile products.”
In other trade issues on the council's slate, Johnson said negotiations in the Doha Round of the World Trade Organization “have resulted in the development of an agricultural framework agreement.
“It seems to contain sufficient flexibility to maintain an effective farm program, but it does contain specific references to cotton, and includes the establishment of a special cotton subcommittee that has met periodically and is reporting to the agriculture negotiating group.”
He said the council has met several times with senior U.S. Trade Representative officials about the special subcommittee's charge and activities.
A number of council activities related to China are ongoing, Johnson said.
“China has become the largest importer of U.S. cotton. We're still tallying sales for the 2004 crop and already have commitments for almost 4 million bales.”
It's expected that China will buy 7 million bales from all sources, he noted.
“But their unpredictability and unwillingness to fully comply with all of their trade obligations require our constant attention.”
The council has worked with the Bush administration in conducting several meetings with Chinese officials about the way they allocate their import quotas.
“With China's U.S. cotton purchases now above its WTO commitments, there has been some relief in this situation, but the council believes we must continue to push for reform in China's quota system,” Johnson said.
He said the council is working closely with the U.S. textile industry and the administration to insure appropriate safeguards against the surge of imports from China.
“In addition to the quota allocation and textile safeguard issues, we've discussed our concerns about contract sanctity and the cooperative efforts with the Chinese government as they endeavor to reform their cotton classification system.”
In the face of criticism by the New York Times and officials of several West African governments over U.S. cotton subsidies, the council and the U.S. cotton industry are continuing to actively seek opportunities to establish a cooperative relationship with the cotton-producing countries of West Africa, Johnson said.
With USDA and US-AID, the council is sponsoring three training programs for West African cotton officials this summer, he said.
“We embarked on this initiative with the belief that there are many common issues and concerns between us. We also believe there are real solutions to be realized through mutual dialogue and cooperative efforts, rather than those being proposed to the WTO.”
The most recent proposal, which calls for the U.S. cotton program to be dealt with separately from other crops in the Doha negotiations, was “another important concern” that the council brought before the U.S. Trade Representative and WTO officials during recent meetings in Geneva, Johnson said.