China Safeguards Decision A Victory for U.S.Industry's Seeking "Fair" Trade

Friday, November 21, 2003                        ByShawn Wade

      Even though the recentdecision by the U.S. Commerce Department's Committee for the Implementation ofTextile Agreements (CITA) affects only three relatively small categories oftextile imports, it sends a hopeful message to other manufacturing industriesthat the U.S. is willing to enforce the provisions of the trade agreements wemake.

      The petitions granted by CITAlast Monday involve Chinese imports in only three textile categories: knitfabrics, dressing gowns and brassieres. These categories account for no morethan 5 percent of the $10 billion-plus in Chinese textile and apparel salesthat currently flow into the U.S.

      For the cotton industry andits textile trade partners the ruling was a small victory in a much larger warto protect not only what remains of the U.S. textile industry, but also thecritical new textile industries in the Caribbean Basin and Latin America thatutilize mostly U.S. grown cotton.

      The decision should send aclear message to current and future U.S. trading partners that we expect themto abide by the trade agreements they sign to gain further access to the U.S.marketplace.

      The Bush Administration'sdecision to invoke the safeguard rule is intended to get China to fully complywith its WTO obligations and puts the ball in China's court by first opening aconsultation process between the countries to develop a plan to limit Chineseimports in these categories.

      If no agreement is reached,the U.S. then has the option to arbitrarily cap any further rise in Chineseimports in these categories to 7.5 percent above the amount of product thatentered the U.S. during the first 12 months of the 14 months preceding therequest for consultation.

      PCG fully supports the BushAdministration's efforts to get China and the rest of our trading partners toabide by the rules they agree to when trade deals are struck.

      "The reality of trading withChina has always been that, regardless of the agreements they enter into, theywill trade when it is to their advantage to do so," says PCG Executive VicePresident Steve Verett. "Past history shows that the U.S. has maintained a veryliberal trade policy overall. How else could we post a total 2002 trade deficitof $418 billion with the rest of the world, of which $103 billion is with Chinaalone."

      "For me the most importantpart of this decision is that the Administration is finally saying we expectour trading partners to deal with us fairly and that the only acceptable way todo that is to abide by the rules."

      The most feared impact byU.S. cotton growers would be that China will quit buying U.S. cotton to make uptheir current fiber shortage.

      Market analysts believe thatimplementation of the China safeguard provision will ultimately amount tolittle more than a bump in the road to future Chinese sales.

      Chinese demand has alreadyspurred them to purchase over 2.5 million bales of U.S. cotton to date andanother one million is forecast to be needed down the line.

      Any slowdown that analystsforesee will be caused more from the fact that China has already booked enoughcotton to meet their immediate needs.

      In public, China can nowvociferously object to the U.S. action, threaten to buy the cotton they needelsewhere and then take a wait and see approach to purchasing the additionalsupplies they need from the U.S. when prices move in their favor.

      There is little disagreementthat significant damage has been done to the U.S. textile industry and thatmuch of it is directly and indirectly the result of Chinese imports.

      The real danger for cottonproducers trying to sell their cotton is the fact that most of the U.S. marketshare that China has gained has been at the expense of the textile exportingcountries of Latin America, countries of the Caribbean Basin and to a certainextent Asia, all of whom have been good customers for U.S. cotton.

      In the case of the CaribbeanBasin and Latin America, many U.S. textile companies have strong ties with thetextile industries in these countries and provide a competitive alternative toChinese textile goods with the added bonus of buying mostly U.S. cotton.


3rd Annual Texas Commodity Symposium

      Farmers and ranchers shouldmark December 3 on their calendar and plan a trip to Amarillo to take in the 3rdAnnual Texas Commodity Symposium.

      The Symposium is sponsored bythe Corn Producers of Texas, Texas Grain Sorghum Association, Texas Wheat Producers Association and for the first timein 2003, Lubbock-based Plains Cotton Growers, Inc. The event is being held inconjunction with the Amarillo Farm and Ranch Show, December 2-4 at the AmarilloCivic Center.

      Scheduled speakers for theTexas Commodity Symposium and the topics they are expected to address are:Trade Issues - Floyd Gaibler, USDA Deputy Under Secretary for Farm and ForeignAgricultural Services; Federal Crop Insurance - Ross Davidson, AdministratorUSDA Risk Management Agency; Farm Service Agency Update - John Fuston,Executive Director Texas FSA; School Finance Reform - Billy Hamilton, TexasComptrollers Office; and USDA Pay Limit Commission Report - Dr. Ed Smith, TexasA&M University.

      For more information call800-827-8007 or on the Internet go to: