WTOReport Among Top Issues Discussed
At American Cotton Producers Meeting

Friday, August 17, 2007                           By Shawn Wade

      When cotton producer leadersfrom across the United States gathered in St. Louis this week there was nodoubt that at least some of their discussion would involve the latest news fromthe WTO.

      A strong West Texascontingent joined their producer colleagues from across the Cotton Belt at theAmerican Cotton Producers to "cuss and discuss" the WTO and other top issuesfacing the industry midway through the 2007 growing season. Heading up the WestTexas group were Plains Cotton Growers President Mike Hughes of Lamesa, PCGChairman Rickey Bearden of Plains and PCG Executive Vice President SteveVerett.

      National Cotton CouncilGeneral Counsel William A. Gillon provided leaders from the American CottonProducers group an in-depth report on the status of ongoing WTO issues. Duringhis report, Gillon discussed the recent announcement by Brazil that yet anotherWTO panel has supported their claims of serious prejudice by the U.S. cottonprogram. He also provided some insight about the latest wrinkles introduced bythe WTO in the case.

      He began by noting that whilethe draft WTO report outlining the Panel's findings is supposed to remainconfidential, Brazil immediately announced the fact that the Panel had upheldtheir claim against the U.S. Since that time U.S. trade officials have alsoacknowledged that the report's conclusions went against the U.S.

      Gillon reported that despitethe latest ruling, the timetable from this point on in the case is still alengthy one. Among the steps remaining to be completed by the WTO include theissuance of the formal report by October 1. The final report will remainconfidential until it is translated into the official languages of the WTOmembership, a process that is likely to take until December 1.

      After the final report isissued the U.S. will have the opportunity to file an appeal of the decision.According to Gillon, a U.S. appeal of the latest decision is expected to befiled in January or February 2008 and that the WTO appeal process would likelybe complete around May 1.

      Following the U.S. appeal itis expected that Brazil will announce retaliatory measures against the U.S. andthat the U.S. would request an arbitration panel to calculate the amount ofinjury involved in the case.

      Once named, the WTOarbitration panel would have 60 days to calculate the assumed damages. With somany steps remaining, it appears the process may not be completed untilmid-Summer 2008.

      Gillon pointed out that sincethe beginning the Brazil case has been one built on impressions, with littleacknowledgement of the facts or the complex nature of the cotton price issue.He added that the persistence of the assumptions that drove the first WTO Paneldecision in favor of Brazil appears to have been carried over in the latestfinding.

      Little else, according toGillon, can explain a Panel decision that says the U.S. cotton program withoutStep 2 and with significantly altered export credit guarantee programscontinues to cause serious prejudice to Brazil's interests.

      He explained that among thefacts that were apparently ignored in the recent ruling are that U.S. cottonacreage and production have both dropped significantly since the start of theU.S. compliance effort - while cotton prices, production and acreage have allincreased around the world during the same period.

      Gillon also noted that onesignificant contradiction on Brazil's part that surfaced during the hearingprocess, but apparently not considered by the Panel, is the fact that whileBrazil was arguing that the U.S. cotton program continues to depress prices andcause them harm, Brazil was actively selling off significant amounts of itsinternal cotton supply to drive down cotton prices that they deemed were toohigh in their own country.

      Gillon noted that he hopesthe Panel report can explain the apparent discrepancies between their findingsbased on Brazil's arguments and Brazil's own efforts to depress cotton pricesduring the same period.

      Without a clear descriptionof exactly what the U.S. program is supposed to have done to create a "significant"level of price suppression, Gillon warns that the panel may have created atroubling precedent.

      Without a thoroughexplanation to the contrary, he notes that the Panel has apparently taken intoconsideration significant evidence that the U.S. program (even with the noweliminated Step 2 program) could have had no more than a 2-3 percent impact onworld cotton prices.

      Ifthe observed 2-3 percent fluctuation in cotton prices is the basis for thePanel's decision it is possible that such small changes could now be considereda "significant impact" and change the way future claims are measured.

 

2007County Crop Tours and Field Days

      With the Labor Day weekendonly a few short weeks away, the August/September calendar is rapidly fillingup with County Crop Tours and Industry Field Day events.

      The table below contains apartial listing of the events already scheduled. Growers interested inattending any of the Texas Cooperative Extension events should contact theappropriate TCE County office to request additional details.

      Formore information about the industry Field Days listed below contact your localsales representative or dealer. Additional details will be included in "CottonNews" as they become available.

2007 High Plains Event Calendar

Event:

Date:

Dawson Co. Crop Tour

August 27

Parmer/Bailey Co. Crop tour

August 28

Gaines Co. Tour

August 30

Texas Plant Protection Assoc. Precision Ag Expo, Ollie Liner Center, Plainview

September 6 - For more information contact: TPPA at 936-539-2349; http://tppa.tamu.edu

Yoakum Co. Crop Tour

TBA

Floyd Co.y Crop Tour

September 18

Lynn Co. Ag Tour

September 19

Mitchell Co. Ag Tour

September 20

Crosby Co. Crop Tour

September 21

Harvest Aid Training, Hale Co.

September 24

Industry Field Days:

Date:

FiberMax Field Day

September 27