Textile Competitiveness Program Hits Roadblock
Source: Textileworld Date: 2007-12-03
By James A. Morrissey, Washington Correspondent
Failure of Congress to enact a new Farm Bill has left the textile industry’s cotton textile competitiveness program in limbo. Although the House passed a bill in July that included a competitiveness program, the legislation has bogged down in the Senate, where Republicans have blocked its consideration with procedural tactics.
There is a chance the Senate will take another run at a bill this week, but with the short time remaining in the current session, it may be impossible to reconcile the House and Senate bills and send something to the president that he is willing to sign. The legislation pending in both houses includes a competitiveness program, but is being held up by other issues.
Under a law enacted by Congress in the 1930s designed to bolster the US cotton industry, US textile mills are virtually prohibited from importing raw cotton. When the world price for cotton is lower than the domestic price, US textile manufacturers are at a competitive disadvantage. Over the years, a number of attempts have been made to address the problem and make US manufacturers more competitive. In 1990, Congress enacted a Cotton Competitiveness Program that permitted a limited amount of imports and made direct payments to mills and shippers to offset the difference in the world and domestic prices. That law subsequently was rolled over a couple of times, but in 2004 the World Trade Organization (WTO) ruled that the direct payments were an illegal subsidy, and Congress in 2005 passed legislation eliminating them.
In an effort to restore the competitiveness program, the House passed a bill providing for somewhat expanded criteria for opening import quotas and restoration of direct payments. In order to overcome the WTO problem the bill stipulates that payments of 4 cents per pound have to be used for acquisition, expansion or modernization of plants.
In view of the limited time remaining in the current session, it is unlikely legislation combining both measures could be crafted and signed by the president. If nothing is enacted this year, the current law permitting some imports but no payments remains in effect, and a new Farm Bill would have to be taken up in January.
