House Approves Special Import Quotas And Payments For Cotton Textile Manufacturers

By James A. Morrissey, Washington Correspondent

Farm legislation approved by the House of Representatives on July 27 contains a provision designed to replace the cotton textile competitiveness program outlawed in 2005 by the World Trade Organization (WTO) and also permits US mills to import raw cotton under certain circumstances. The competitiveness program is designed to assist US mills that are prohibited by law from importing more than roughly one day’s consumption of raw cotton. As a result, the mills are at a competitive disadvantage when the price they pay for domestic cotton exceeds the world price.

The legislation, which runs through July 31, 2013, extends a special import quota when the price for US cotton in a four-week period exceeds the Far East price. It permits importation of one week’s consumption above the mandatory quota level.

The new system of payments to mills when the domestic price is higher than the world price provides payments of 4 cents per pound in cash or certificates, but it has a provision that the funds must be used for “acquisition, construction, or expansion of land, plants, buildings, equipment, facilities or machinery.” Industry officials believe this approach would not violate WTO rules.

For further information, mill and merchants may contact Gary Adams, vice president of economics and policy analysis, at the National Cotton Council (901) 274-9030.