U.S. trade negotiators “have done a lot more giving than receiving,” says Gaylon Booker, National Cotton Council president and chief executive officer, “and we can no longer afford to allow them to be generous with U.S. market access without getting something meaningful in return.”
Good farm policy is “absolutely linked to trade policy,” he says, “and we cannot have good farm policy in the absence of good trade policy.”
Addressing the 2003 Beltwide Cotton Conferences at Nashville, Tenn., he said in previous U.S. trade negotiations, “our negotiators have not placed a high priority on achieving terms and conditions that were favorable for U.S. agriculture and the U.S. textile industry.”
As a result, Booker says, the nation's textile industry has been swamped by a flood of imports, closing plants and putting thousands out of work. And “an unlevel playing field in agricultural product tariffs” has given other countries an unfair trade advantage.
If a textile or apparel manufacturer abroad wants to ship products to the United States, the effective tariff rate averages 8.9 percent, he says. “By contrast, the effective rates for textile and apparel products entering Argentina ranged from 40 percent to 50 percent-plus; Brazil ranged from 40 percent to 70 percent-plus; China ranged from 20 percent to 36 percent-plus; and Pakistan ranged from 40 percent to 60 percent-plus.
“Preservation of the U.S. textile industry has not been a high priority for our negotiators in the past.”
The same situation exists with agricultural product tariffs, Booker says. “If we want to ship our agricultural products abroad, we face a tariff rate averaging 62 percent. In many countries, it exceeds 100 percent. Our competitors can ship their products into the United States and pay a modest tariff, on average 12 percent.
“Something's wrong with this picture,” Booker declared. “Who was looking out for U.S. agriculture when these agreements were struck?”
Even with these disparities, he says, the recent new farm bill has resulted in a storm of “incessant, mindless criticism about U.S. agricultural subsidies — and the cotton program has taken the brunt of this criticism.”
Yet, he points out, the European Union spends $2 billion to $5 billion a year on export subsidies, compared to only $20 million by the United States, which is mainly for dairy.
“We hear incessant railing about the big payment going to U.S. farmers, but the EU is allowed to spend up to $67 billion annually for trade-distorting domestic subsidies, while U.S. spending is limited to $19.1 billion.” Canada is allowed $23 billion and Japan $30 billion.
Despite widespread publicity about the adverse effects the U.S. farm programs, particularly cotton, are having on farmers in other countries, Booker says, “If our program has any effect at all, it is minute compared to the aggregate effect of a host of other factors. These include the Asian financial crisis, a faltering global economy, currency manipulation, a tripling of world production capacity for textile polyester, and revenue/tax policies of their own governments that deprive their farmers of normal returns from the market.”
As Congress begins its new session and starts work on appropriations bills, he says, there will be initiatives on one hand to provide agricultural disaster relief — “which our industry certainly needs and which the council supports” — while at the same time there will be calls for the cost of disaster assistance to be offset by reductions in farm program spending.
“Sen. Chuck Grassley, R-Iowa, has promised that a reduction in payment limits will be considered as one way to offset any disaster spending, which of course would put the offset burden squarely on the shoulders of the cotton industry.”
Meanwhile, Booker notes, U.S. trade officials will be pressing forward with the Bush administration's trade agenda, and “it will be important that we make policy-makers at all levels understand that global farm policy and international trade policy must be compatible and fair.”
For the cotton industry, he says, this must take into account the interest and needs of the U.S. textile industry. “We cannot export enough cotton to maintain a viable U.S. cotton industry. We must find a way to provide better underpinning for this industry.”
The economic viability of both the U.S. cotton and textile industries hinges on (1) agreement on core issues, especially regarding farm and trade policy, (2) broadening cotton's coalition beyond its seven industry segments, and (3) aggressively pursuing industry goals, both with the administration and on Capitol Hill.
“If we do these things well,” Booker says, “I believe we can generate enough support to hold essential farm bill provisions and have a real influence on terms and conditions that are eventually approved in new trade agreements.”
“If we don't get together and move aggressively, with the broadest possible coalition, we may not be able to hold the provisions of the new farm law we fought so hard to get. And we won't get the trade provisions we need to compete in a global arena that's characterized by fewer subsidies, lower tariffs, and phased-out quotas.”