Cotton industry disappointed with Doha trade negotiations

After years of seemingly endless ministerial meetings, position papers and, yes, posturing by participants, the Doha Round of the World Trade Organizations seem to be taking a turn for the worse for U.S. cotton.

Cotton industry leaders have tried to be supportive of the Doha Round, the name given to the negotiations aimed at producing a new world trade agreement that began in Doha, Qatar, in 2001, said Larry McClendon, the National Cotton Council's chairman and a ginner from Marianna, Ark.

But recent developments are forcing NCC leaders to reassess how supportive they can be given the long-running criticism of and the “singling out” of U.S. cotton in the negotiations in Geneva, Switzerland.

Speaking at the Mid-South Farm and Gin Show in Memphis, Tenn., McClendon said much of the Council's concern centers around the release of a new draft negotiating text by Crawford Falconer, the chairman of the WTO's agriculture committee, in Geneva last month.

“It calls for the largest cuts in U.S. farm programs shown in the Falconer text released last July while offering less market access than previously demanded by the U.S.,” he said. “The market access provisions are riddled with exceptions that could easily allow a developing country to exempt most of its trade from real increases in market access.

“This is exactly the kind of trade-off U.S. agriculture feared and was at the center of our concerns presented in our July 27 letter about the July Falconer text.”

McClendon said the Falconer text appears to “fall far short” of the standard U.S. farm groups established in 2005 and reaffirmed in 2007, a standard he said those groups clearly communicated with U.S. negotiators.

“USDA needs to provide agriculture with a clear analysis of exactly what gains we can expect in market access from a negotiating text so riddled with loopholes,” he said. “It is hard to imagine U.S. agriculture will support the latest Falconer text if we are not given solid market access analysis to address the fears we have concerning this text.

“If our negotiators believe they have a good deal then where is the analysis by the International Trade Commission and the U.S. Department of Agriculture to support their claims?”

McClendon said Cotton Council leaders will be paying particular attention to market access improvements in China, which has become a major customer for U.S. cotton despite it receiving less than favorable treatment from the Chinese government.

“China is the only country that applied double-digit import duties on our cotton exports, which reached 40 percent in the spring of 2007,” he said. “China is the only country that tightly manages the availability of import licenses causing surges in export activity to meet centrally controlled mandates on landings of imports.”

Why has the Council devoted so much of its time and resources to the Doha negotiations? “The answer is that eventually there will be a new set of international rules and obligations that most of the world, including the United States will acknowledge. These new standards will be in place for at least 10 years. It is in our best interests that we get the agreement right.”

U.S. cotton producers, who have not been enjoying the high prices experienced by other commodities, have another concern with the Falconer text, McClendon notes. “There is a section of the text that demands we reduce our cotton program by more than 90 percent from recent spending levels.”

McClendon also rejected claims from OxFam and other non-governmental organizations in Europe and the United States that the U.S. cotton program is somehow hurting African cotton producers.

“Parastatal cotton organizations in West Africa have yet to explain why their cotton producers receive less per pound for cotton than virtually every other cotton producer in the world,” he said. The Council will keep asking the question of why they only get 60 percent or less of the world average price?

“The West African cotton nations have never addressed the technological deficiencies that ensure their producers will fall farther and farther behind cotton producers in China, in India, in Brazil.”

McClendon said the NCC and other farm groups have been urging House and Senate agriculture committee leaders to move the 2008 farm bill forward to reduce the uncertainty now faced by production agriculture.

“A stable and consistent farm program provides an essential foundation upon which to make the long-term investments, and cropping and marketing decisions that are necessary in today's agriculture,” he said.

“The farm bills advanced by the House and Senate contain significant reform to existing payment limitations and eligibility requirements including elimination of the three-entity rule; equal treatment for spouses; elimination of certificate redemptions and termination of limits on marketing loan benefits for improved accountability and transparency; and, modifications to the existing adjusted gross income test which will deny farm program payments to wealthy non-farmers.”

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