Free trade agreements for the Western Hemisphere should be written more with U.S. citizens in mind than the interests of businessmen in third party countries, the chairman of the National Cotton Council said at a Senate hearing.

The comments of Bobby Greene, a farmer and ginner from Courtland, Ala., are born out of years of the Cotton Council's experience with free trade agreements such as NAFTA, China's accession to the World Trade Organization and other preferential trading agreements.

Greene said that the NCC agrees that increased trade with countries in the Western Hemisphere through the North American Free Trade Agreement or NAFTA and other preferential trade agreements is “of great importance to the U.S. cotton industry.”

But Greene cautioned that free trade agreements “need to be carefully constructed to ensure that farmers, workers and companies in the United States and Central America are the beneficiaries of the agreement, not entities in third party countries.”

In testimony before the Senate Foreign Relation Committee's Subcommittee on Western Hemisphere, Peace Corps, and Narcotics, Greene cited the “very strong economic link” between this nation's cotton production and textile manufacturing sectors, saying those two sectors have much at stake in Western Hemisphere trade negotiations.

Unfortunately, consumption of cotton by U.S. textile mills has declined dramatically due to a flood of low cost cotton imports from Asia. Greene said that the U.S. cotton industry believes that increased trade in this hemisphere is one of the few options available to help combat the ever-rising tide of Asian apparel imports into the United States.

Two-way trade

Greene told the panel that trade agreements have created substantial two-way trade in textiles and apparel with NAFTA and Caribbean Basin countries, but trade between the U.S. and South American countries still is relatively small.

“Future trade agreements should seek to expand trade in cotton and cotton textiles in a manner that is beneficial to all participating countries,” he said.

“The National Cotton Council supported NAFTA — and that agreement has been beneficial to our industry. Likewise, regional preferential trading arrangements with the Caribbean Basin countries and the Andean countries can be beneficial to the U.S. cotton industry if properly implemented and administered. The industry is following with great interest the negotiations for a Central America Free Trade Agreement and is working to gain a better understanding of the economic impact it can expect from a Free Trade Agreement of the Americas (FTAA).”

Greene told the panel U.S. cotton welcomes a hemispheric focus to trade policy, “but is concerned that further progress toward enhanced trade is being jeopardized.”

Chief among concerns the NCC has is that negotiations designed to place disciplines on domestic agricultural programs should not be undertaken within a hemispheric free trade negotiation.

“Negotiations on agricultural support programs are properly within the purview of the agricultural negotiations being carried out in the World Trade Organization,” Greene said. “The United States will place its producers at an extreme disadvantage in world agricultural markets should it agree to changes in its domestic agricultural programs in order to secure free trade agreements in this hemisphere.”

Use rules unfairly

Greene also expressed concern that countries in this hemisphere and around the world are increasingly using phytosanitary rules to unfairly restrict imports of agricultural commodities.

“In this hemisphere, we have most recently noticed Brazil changing phytosanitary requirements in an unpredictable fashion, threatening U.S. exports to that country,” he stated. “Instead of having to respond to each new rule or edict individually, the United States should reserve the right within trade agreements to broadly withdraw trade concessions when its trading partners begin erecting barriers based on unfounded phytosanitary concerns.”

Greene stressed that regional agreements must:

  • Contain a consistent, workable rule-of-origin for cotton fiber and textile and apparel products that is no less restrictive than NAFTA rules of origin for these products.

  • Include provisions that would establish effective rules to deal with intellectual property rights.

  • Disallow preferences for products made with components from non-participating countries.

  • Preserve important aspects of trade preferences already established with the Caribbean and Andean countries.

“There will be no free rides in these negotiations,” he said. “There should not be any tariff preference levels (TPLs) and other exceptions that undermine the basic rule-of-origin.”

In his testimony, Greene also renewed a NCC request that a separate negotiating group on textiles be established within the FTAA, and he said more needs to be done to ensure that competitive financing tools are available to U.S. exporters of yarn and fabric, and USDA's export promotion program must be adequately funded.

e-mail: flaws@primediabusiness.