National Cotton Council leaders say China's announcement that it will use a “little-known” fiber test to measure the quality of imported cotton is another indication that the Chinese do not intend to honor their commitments to the World Trade Organization.
Speaking at the NCC's fall board of directors meeting in Memphis, Council Chairman Kenneth Hood noted that China previously had announced Tariff Rate Quotas that will “actually restrict access for U.S. cotton.” The new test for neps and short fiber content is another step in that direction, he said.
“Such tests are by no means accurate or feasible and clearly constitute another move on the part of the Chinese to restrict market access,” said Hood, a cotton producer and ginner from Gunnison, Miss.
Later in the board meeting, J.B. Penn, USDA's undersecretary for farm and agricultural services, said U.S. officials have met with Chinese representatives on the issue of WTO compliance, but the discussions “have not been particularly heartening.”
Hood said Council leaders and representatives of the American Cotton Shippers Association, Calcot Limited, AMCOT and other industry groups have met twice with USDA and U.S. Trade Representative officials to discuss their response to the China's new restrictions.
“Our most recent trip focused on the development of a coordinated response with USDA to China's notification that their cotton standards have been modified to require nep and short fiber content measurements,” he said.
“We were pleased that Preston Sasser of Cotton Incorporated could join us for this session because his organization has funded some research on the testing protocol the Chinese say they will use for neps and short fiber content. Neither of these can be measured accurately or feasibly with this or any other existing technology.”
Hood said he, Council President Gaylon Booker and John Maguire, the Council's vice president for Washington operations, also met with Senate Minority Leader Trent Lott to ask him to encourage the Bush administration to push harder on the issue.
Under the agreement permitting its entry into the World Trade Organization, the Chinese government promised to provide market access through new Tariff Rate Quotas for 3.75 million bales of cotton.
American Cotton Shippers Association (ACSA) officials say that when the Chinese announced the Tariff Rates Quotas, however, U.S. merchants saw red.
The Chinese reportedly agreed that they would import another 3.75 million bales annually to be divided among China Tex, three other state trading companies (1.24 million bales); the processing trade (2.3 million bales) and the private sector (230,000 bales).
But the recent announcement said:
Only 6 percent or 230,000 bales are truly private sector.
At least 61 percent or 2.3 million bales designated for the processing trade must be exported or the goods manufactured from this cotton will be taxed as “smuggled” goods.
Both the private sector and processing trade must have a sales contract before they can receive an allocation to import.
Unfortunately, ACSA officials said, China will not identify who has those allocations, and, while 33 percent of 1.24 million bales have been allocated to the four state trading companies, the Chinese government has instructed them not to utilize them.
Hood said cotton industry leaders asked Lott to urge the U.S. Trade Representative (USTR) to insist that China immediately correct the Tariff Rate Quota allocations and stop erecting other non-tariff trade barriers.
USDA Undersecretary Penn said Agriculture Secretary Ann Veneman and other Bush administration officials have met with Chinese officials to discuss the Tariff Rate Quota issue and the regulations China issued last winter on imports of genetically modified soybeans.
“Sometimes it is difficult to figure out who actually makes the decisions in the Chinese government,” he said. “Unlike in the United States, the people who negotiated the WTO accession agreement are not the same people who will implement the agreement.”
Penn said that when Veneman, he and other USDA and USTR officials traveled to China last month to try to discuss the GMO soybean and Tariff Rate Quota issues, the top Chinese leadership had left Beijing to discuss the succession of the new government that is scheduled to occur this fall.
“We did meet with the top ministry officials for agriculture, trade and the regulatory agencies, and they all said the government intended to comply with the WTO agreement,” said Penn. “The question is who's going to make it happen?”
Later, William B. Dunavant III, the president of the American Cotton Shippers, expressed his frustration in a report on the activities of Cotton Council International, the export promotion arm of the NCC.
Referring to the sharp rise in Chinese textile exports to the United States, Dunavant said “The best way to get China's attention would be to slap a 40 percent tariff on all of its textile imports coming into this country. I don't know if that will happen. But I think its something the government should consider.”