By Gaylon Booker
MEMHIS — In 2004, the National Cotton Council faced some old foes on familiar battlegrounds as well as new ones on somewhat different battlegrounds. Regardless of the foe and the venue, the NCC’s biggest and most consistent battle since passage of 2002 farm legislation has been protecting it against attacks from those who would dismantle it, especially its cotton provisions. As usual, the program had to be protected from efforts to single out agriculture for disproportionate cuts as Congress wrestled with a worsening budget deficit. There were the usual attempts to impose stricter payment limits. And, as always, there were media attacks on the cotton program, spurred by continuing, misleading allegations by the Environmental Working Group.
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Supported by a number of international organizations, including OXFAM International, the U.S. cotton program also was singled out for special scrutiny in a framework agreement reached by WTO participants to move the Doha Round forward. Four separate references to cotton, evolving from a proposal tabled by several African nations, will lead WTO participants to expect unequal treatment for the U.S. cotton program.
Also in the international arena, a WTO dispute settlement panel issued a ruling that supported Brazil in most of its challenges of the U.S. cotton program. Unless overturned on appeal, which is expected to be completed by early March, the ruling could have significant implications for the current cotton program, including its provisions that allow U.S. cotton to be competitively priced to domestic and foreign customers.
Meanwhile, virtually all new bilateral and regional trade agreements completed in 2004 include third-country participation provisions that make it more difficult for the U.S. textile industry to compete in the global arena. And, significantly, on January 1, 2005, all remaining U.S textile and apparel quotas were removed, further opening the U.S. consumer market to foreign products.
NCC actions
The NCC has led the industry’s efforts to protect its flanks against all these attacks, including:
• testimony before Congressional committees and in meetings with key lawmakers and USDA officials in support of the current farm program;
• cooperation with the office of the U.S. Trade Representative (USTR) and USDA to help defend the U.S. cotton program from Brazil’s challenge and to protect it from unfair targeting in the WTO Doha Round;
• cooperation with the U.S. textile industry to achieve workable provisions in new trade agreements and to persuade the U.S. government to implement threat-based China textile safeguards;
• working in partnership with the U.S. government in its USDA/USAID program to help West African countries in ways that do not require damaging changes to the U.S. cotton program;
• working through Cotton Council International to strengthen key markets for U.S. cotton and textiles in Europe, Asia, Latin America, the Middle East and Africa; and
• redoubling efforts through the NCC’s Technical Services Division and The Cotton Foundation to improve quality and reduce costs.
The past year saw a further weakening of the U.S. textile industry and greater reliance on raw cotton exports to maintain a viable domestic cotton industry. Another 21 U.S. textile plants closed in 2004, bringing to 333 the number that have closed since 1997. U.S. mill cotton consumption continues to slip, with total consumption in 2004 dropping to 3 billion pounds. Meanwhile, the U.S. retail market for cotton textile products totaled 9 billion pounds in calendar 2004.
Some modestly good news for 2004 came in the form of at least a temporary halt to the long downward trend in U.S. mills’ share of the domestic textile market. We know, of course, that the 2004 slight rise in market share held by U.S. mills was not a reversal of the long term trend.
It was, instead, a reflection of the removal of U.S. textile quotas. Each year leading up to 2004, exporters had routinely borrowed from their next year’s quota. Because there would be no quotas in 2005, this borrowing practice could not be continued.
Not only was there no 2005 quota from which to borrow, but the quota that had been borrowed from 2004 had to be repaid — hence the temporary market share recovery by U.S. mills.
2005 priorities
Looking ahead, the NCC’s highest priorities in 2005 will continue to be protecting cotton provisions of the U.S. farm program from unfair and counterproductive changes. Good cotton program policy is important to the entire industry, from cotton farmer to textile manufacturer.
At the same time, the NCC will continue its efforts to influence trade policy in ways that will benefit the U.S. cotton and textile industries.
It is abundantly clear that the U.S. cotton industry must increasingly rely on raw cotton exports to maintain its economic health. It is also evident that a viable domestic textile industry remains important to the U.S. cotton industry.
NCC leaders believe the best way to help underpin the U.S. textile industry is through trade agreements that enhance trade between the U.S. and its Western Hemisphere neighbors.
In 1997, 3.66 billion pounds of cotton were grown in the U.S., spun into yarn in the U.S., made into fabric in the U.S. and then made into apparel in the U.S. — “dirt to shirt,” we say. By 2004, that total had dropped to just over 800 million pounds. Our reliance on trade with Western Hemisphere countries is clearly huge and growing.
Whether this reliance can be counted on to help sustain a viable U.S. textile industry in the years ahead depends in a major way on the terms of future trade agreements and the extent to which U.S. officials are committed to enforcing the ones already in place. This explains why the U.S. textile industry and its suppliers place trade issues at the very top of their priority list.
This spring the U.S. Congress will be asked to approve CAFTA legislation. The NCC is on record as supporting a good CAFTA agreement — a position shared by most U.S. textile and fiber organizations.
Fiber and textile leaders urgently need to find a way to optimize trade benefits for CAFTA signatory countries while working with the administration and Congress to address other trade priorities, including China safeguards.
Developing a strategy for doing so will be challenging. Failure to do so will be devastating to the U.S. textile industry and will increase U.S. cotton’s dependence on raw cotton exports.
Increased reliance on exports will make it more difficult to maintain sound cotton program provisions as Congress begins to focus on new farm law and as the WTO deals with farm programs in the Doha Round.
In the critical early months of 2005, NCC leaders will be urging all interests to find the necessary consensus on farm and trade policy that will enable us to move forward with a strong, united push for policies that can help maintain viable U.S. fiber and textile sectors.
Gaylon Booker is a consultant for the National Cotton Council of America and a past president and CEO of the organization.
