As trade disputes and negotiations continue to roil key points of the U.S. agricultural landscape, where does cotton stand?

Gary Adams, president and CEO, National Cotton Council of America, had some answers for those attending the 2018 Southern Cotton Ginners Association meeting held July 10 in Biloxi, Miss.

“This is the (Trump) administration’s trade policy,” said Adams, flashing slides on a screen behind him. “It’s up and down, depending on the day, maybe the hour. There are a couple of key things we’re following.”

“President Trump has been very strong with his objectives on what he looks at in trade policy. Some have been somewhat unpredictable in some cases in terms of tweets. But it’s pretty clear that sovereignty and trade deficits are first and foremost what he looks at in a positive trade deal.

“He has a lot of advisors weighing in determining trade policy. Some are very protectionist — (Peter) Navarro (Assistant to the President, Director of Trade and Industrial Policy, and the Director of the White House National Trade Council) and Robert Lighthizer (current United States Trade Representative Ambassador) are taking a very strong stand on trade and trade policy.”

Navarro and Lighthizer “are taking a very strong stand on enforcement of Section 232 and 301. Those are the vehicles by which we now have tariffs on steel, aluminum and, when we talk about China, a range of products with proposed tariffs back on July 6.”

The administration “is also not a fan of the WTO. I share that sentiment with them from a cotton perspective.”

NAFTA

The NAFTA renegotiations have been under way for several months.

“I’d say they’ve worked through some of the easier issues. There hasn’t been a lot of progress yet on more difficult issues.

“There’s been more engagement between the United States and Mexico than there has been with Canada. Some of the stickier issues like how to deal with Canadian dairy haven’t seen much progress.”

“Mexico is a big market for U.S. cotton, yarns and fabrics. A lot of it comes back from Mexico to the United States — so a lot of two-way trade.

“Our message through this process has been ‘do no harm’ and maintain the NAFTA benefits. There are probably some to close a couple of loopholes … but, for the most part, just staying status quo with cotton and textile trade would be a positive.”

How quickly could the NAFTA renegotiations be done?

“It’s possible completion could be done in 2019. It won’t happen (in 2018). It’s already too late for this Congress to take it up. I think the (Mexican) presidential election several weeks ago further complicates the negotiations.”

China

Where do things stand with China?

“We’re essentially in a situation where the United States imposed tariffs and China has retaliated. We were working hard hoping cotton wouldn’t be on that list.”

Those hopes weren’t realized and China announced they’ll retaliate against agricultural commodities. “Soybeans are on the list, cotton is on the list. (The NCC) has continued to do outreach with U.S. officials at the USTR and USDA concerns. We also have excellent contacts in China.”

Currently, “if you look at Australian cotton, Indian cotton or West African cotton, the landed price is between $1.05 to $1.10. If you come in and add the 25 percent tariff to U.S. cotton and you’re looking at $1.34 to $1.35. That’s the concern with making U.S. cotton competitive.”

What about China’s cotton stocks?

China has moved from 58 million bales in 2015-16 to an expected 33 million in 2018-19.

“We’ve heard in terms of the government reserves — all stocks — somewhere in the range of 12 million to 15 million bales will be considered a normal level. So, they’re going to be in a position where they’ll have to come back to the market in a big way.”