Hood said that, despite Brazil’s claims to the contrary, the United States is complying fully with the Uruguay Round Agricultural Agreement, and that support levels for cotton under the new farm bill are actually lower than they were under legislation on the books when the Uruguay Round agreement was concluded.
“U.S. cotton producers are suffering from the same depressed market as is being faced by Brazil, but it was not caused by the U.S. cotton program,” said Hood. “International demand for cotton has suffered from an incredible increase in polyester production and use, the devaluation of Asian currencies, an overall weakening of the international economy and the unwillingness of China to provide market access for agricultural products, including cotton.”
In a press statement released by the Council, the Gunnison, Miss., producer noted that: 1)
Target prices under the most recently passed farm bill are slightly lower than those in place in the early to mid-1990s and 2)
2) A significant portion of the new program involves so-called “green box” expenditures, which don’t count toward multilateral ceilings on farm programs.
“Further, the new farm law has provisions requiring the Secretary of Agriculture to make adjustments in farm programs should the Secretary determine that U.S. expenditures will exceed the Uruguay agreement’s established ceilings,” Hood said.
He indicated that while the U.S. share of total world cotton production has declined from 20.3 percent in the early 1990’s to 19.6 percent under the 1996 FAIR Act, world manmade fiber production has increased by 160 percent to exceed cotton use.
He said even as Brazil voices concerns about injury to its cotton industry, it has been reported that cotton production in areas like the state of Mato Grosso is benefiting from special tax breaks. Cotton acreage in the U.S., meanwhile, is down in 2002.
“We do not believe Brazil will be successful in a WTO challenge to the U.S. cotton program, but that challenge can have the effect of diverting our attention from the new round of trade negotiations and new proposals to improve international agricultural trade,” Hood said.
“A new WTO agreement that levels the international playing field requires countries to live up to their market access commitments and imposes appropriate disciplines on domestic agricultural subsidization will be in the best interests of both our countries. Brazilian and U.S. cotton producers have much in common.
“Our countries are in the midst of trying to negotiate a free trade agreement. I would hope that we could focus on issues that will work to our mutual benefit, instead of emphasizing areas of disagreement.”