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Chinese reneging on WTO agreement

However, it did not take long for China to renege on the agreements it made to get into the WTO, according to Neal P. Gillen, executive vice president of the American Cotton Shippers Association (ACSA).

Gillen, who also serves as the ACSA’s Washington lobbyist, was clearly disappointed when he told the recent annual Western Cotton Conference in Fresno that “Chinese trade officials are now going back on their word and have taken disappointing, and in my opinion illegal actions, designed to protect a domestic industry.”

Gillen said China used the recent agreement it reached with the U.S. to pave the way into the WTO as a “wedge” to expand its level of textile imports into the U.S. to an all-time record. China now leads all other countries in textile imports into the U.S.

To add insult to injury already inflicted by the way China is implementing the tariff rate quotas, China has recently implemented new standards on short fiber content and neps on all cotton imported into China. “This additional non-tariff barrier is also a violation of the WTO agreement,” bristled Gillen.

ACSA and others in the cotton industry have logged strong protests with Congress, USDA and the departments of State and Commerce and the office of the U.S. Trade Representative along with other WTO signatory countries about China’s efforts to nullify the pact.

To win WTO entry, China agreed that its would be up to almost 3.8 million bales annually, divided up 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).

However, according to Gillen, it came out in the wash that:

  • Only 6 percent or 230,000 bales are truly private sector.
  • 61 per cent or 2.3 million bales designated for the processing trade must be exported or the goods manufactured from this cotton will be taxes as “smuggled” goods.
  • Both the private sector and processing trade must have a sales contract before they can receive an allocation to import.
  • China will not identify who has those allocations.
  • 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.

Gillen said ASCA would vigorously pursue actions to force China to live up to its WTO agreements.

In another key issues on ASCA plate is the ongoing effort by the cotton industry to derail the dogged efforts of Iowa Sen. Chuck Grassley to limit payments and prohibit the use of generic certificates.

The Grassley-Dorgan amendment, said Gillen, would put many Western cotton merchants, ginners and producers “out of business.”

“Make no mistake about it” Gillen said Grassley is “determined” to prevail, although he has failed twice since the new Farm Bill has passed.

“This battle is set to resume in the coming weeks when the Agriculture Appropriations Bill is considered in the House and Senate,” Gillen said. ASCA is part of a 46-member coalition of farm organizations “united to fight payment limitations.”

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