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Flood of trade pacts should be fair to U.S. ag

The removal of quotas for eight categories of China's textile exports to the U.S. resulted in a whopping 604 percent increase in 2002, says Gaylon Booker, president and chief executive officer of the National Cotton Council.

“The average price reduction of those eight product categories was 72 percent,” he said at the annual Beltwide Cotton Conferences at Nashville, Tenn. “And I'll guarantee you, once they kill U.S. production, those prices will be hiked and there will be no lasting benefit to U.S. consumers.

“This kind of abuse will continue until the Chinese are forced to abide by their accession agreement to the World Trade Organization (WTO).”

Booker says the cotton industry has urged the U.S. trade representative to request consultations under the WTO's dispute settlement provisions, and if those aren't successful to request that a dispute settlement panel be convened. “We are also urging Congress to insist that the U.S. Trade Representative make full use of available tools to force compliance by China and other nations before bringing new agreements to Congress for ‘fast track’ approval.”

There “will be no absence of new agreements brought to Congress for ratification,” Booker says. The administration is working on agreements, or has announced plans to begin discussions with Chile, Singapore, Australia, and a Free Trade of the Americas, while continuing discussions in the Doha Round of the WTO. The effort to bring a regional free trade agreement to Central America “will be more problematical, since these nations already participate in textile trade preferences provided by the Caribbean agreement.

Work together

“As these agreements are being negotiated, it will be important for the U.S. cotton and textile industries to work together,” Booker says. “We must make sure global farm and trade policies are fair and equitable.”

Otherwise, he says, the industry “very likely will witness the same kind of outcome we experienced with the omnibus trade bill last year…when we simply got to the party too late and the House vote count in major textile states was 18-18. We simply can't afford to have this kind of division on issues that are critical to the economic viability of the U.S. cotton and textile industries.”

If global farm and trade policy are to be reconciled so developed nations such as the U.S. can be viable in world markets, several principles must be maintained, Booker says.

They include:

U.S. farm programs cannot be unilaterally reduced or phased out.

U.S. agricultural and textile tariffs cannot be further reduced unless other nations reduce their tariffs to U.S. levels.

Market access must be reciprocal.

Non-tariff barriers must be eliminated.

Export subsidies must be eliminated or harmonized.

Improvements must be made in international trading disciplines and dispute settlement procedures, and the U.S. must have the will to use the tools available.

In the Doha trade round, Booker says, U.S. negotiators “are looking for substantial improvement” in market access, reductions and eventual phase-out of all forms of export subsidies, and substantial reductions in trade-distorting domestic supports.

Reduce tariffs

They propose also to reduce tariffs over a five-year period. “The reduction would not bring tariff rates higher than the U.S. down to U.S. levels, but it would get them much closer…and would allow no country to have a tariff greater than 25 percent.”

Since the European Union accounts for 87 percent of global spending for export subsidies (compared to only 1 percent by the U.S.), the negotiators are proposing the five-year phase-out.

There would also be a substantial reduction in trade-distorting domestic subsidies under the U.S. proposal.

“Our negotiators say this approach would level the playing field,” Booker says. “EU spending would phase down from $67.2 billion to $12.5 billion, while U.S. spending would drop from an allowable level of $19.1 billion to $10 billion — certainly a more equitable situation than we currently face.”

But, he cautions, “It's one thing to lay down a proposal; it's another to convince other parties to accept it. We can expect the EU to resist any proposal that doesn't permit them to retain subsidy advantages, and that negotiations will continue for a long time.”

The U.S. representatives hope to complete negotiations by Jan. 1, 2005.

While some may not like the U.S. proposal and its requirement to reduce this country's agricultural subsidies and existing tariff levels, Booker says “it would require other developed nations to bring theirs down even more.”

Even if the new World Trade Organization (WTO) agreement includes fair and equitable market access and subsidy provisions, “it won't do us much good unless we also have an improved system of international trading disciplines and settlement procedures.”

Congress should insist, Booker says, that the U.S. trade representative “make full use of the dispute disciplines and dispute settlement provisions that are available, and Congress should not ratify new agreements until the trade representative demonstrates a determination to deal with existing non-compliance problems.”

China, for example, the U.S. trade representative agrees, is in violation of its accession to the WTO, “but Chinese officials have refused” to change their implementation practices and have announced their intention to continue the same way in 2003.

“Meanwhile, they've made full use of WTO provisions to increase their textile exports to the U.S. — up a whopping 604 percent in 2002.”

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