Bulletin I - Cotton USA Sourcing Program

Nº 1
March 2011, Year 12
2011 Cotton and Textile Trade Policy
Gary M. Adams
Vice President of Economic and Policy Analysis
National Cotton Council
Numerous trade policy issues continue to
confront the U.S. and global cotton and
textile industries. In many cases, the current
market situation has only served to heighten
the importance of trade as textile mills look
to secure adequate quantities of cotton. In
other cases, increased cotton prices have led
to some recent changes in trade policy. The
following summary provides an overview of
the key trade policy issues affecting cotton
and textiles industries.
differences that remain between the various
negotiating positions.
WTO officials indicated that talks in Geneva
during the week of Feb. 14-17 among 11 key
members representing the main Doha
negotiating alliances—Argentina, Australia,
Brazil, Canada, China, the European Union
(EU), India, Japan, Mauritius, South Africa and
the United States—were conducted in a
cooperative spirit but produced nothing
which could be cited as concrete progress.
World Trade Organization (WTO) Doha
Negotiations
As 2011 begins, there are once again
renewed efforts by the WTO to push the
trade negotiations forward. WTO Director
General Pascal Lamy has called for the
negotiating committees to engage during
the first quarter of 2011 with the intent of
releasing new texts in the spring. While Lamy
has indicated that 2011 offers a window of
opportunity to conclude an agreement, the
path forward appears difficult given the
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Officials said the same issues which have stymied
progress over the past two-and-a-half years continue
to hold up progress.
continues to express interest in special negotiations
for textiles, but opposition by China and India could
stymie those efforts.
WTO members have set the end of ’11 as the target for
concluding the Doha Round, now in its 10th year. To
accomplish this, the Doha negotiating groups’ chairs
are to produce revised draft texts by April that will
reflect progress in the negotiations and serve as the
basis for a final push for a deal. With no progress to
date, though, diplomats already are warning that
the negotiations are running out of time.
Brazil-U.S. WTO Case
The current agriculture text, first tabled in 2008,
calls for a 70% reduction in the allowable levels of
support in U.S. farm programs, and still maintains
the language requiring an 82% reduction in cotton
support. Market access commitments are not as
ambitious, particularly as they relate to developing
countries. Exemptions for so-called “special” and
“sensitive” products could exempt almost 20% of
tariff lines from the full tariff reduction. Many
countries would be able to shield more than 80% of
trade, based on value, from any meaningful
increase in market access.
The negotiations for industrial-product market
access, which includes textiles, achieved less clarity
than the agriculture negotiations. Significant
differences exist on the ambition of tariff reductions
and associated flexibilities for sensitive products.
The United States, along with other countries,
2
In March 2010, Brazil published a list of 102
products that were subject to increased tariffs as a
result of the failure of the U.S. to comply with
decisions of the WTO Dispute Settlement Body in an
ongoing dispute concerning the U.S. cotton
program and the export credit guarantee program.
The increased tariffs were scheduled to go into
effect on April 7, 2010. Brazil’s announcement
indicated that tariffs will be increased on $591
million worth of imports from the U.S., while it plans
to retaliate against U.S. goods valued at $238
million in the services or intellectual property
sector.
Later in March of ’10, Brazil published a list of 21
items under consideration for cross-retaliation
through the suspension of patent and intellectual
property rights. With sanctions estimated at $238
million, the list included agricultural chemicals and
biotechnology products, veterinary medicines,
software, books, music and films.
Before any retaliation was actually implemented,
the United States and Brazil concluded a Framework
Agreement delaying trade retaliation by Brazil
through the development of the 2012 farm bill and
further indicates that a mutually agreed outcome in
the next farm bill would provide a long-term
settlement of the dispute.
Regarding U.S. upland cotton policy, the
Framework calls for an annual limit on
trade-distorting cotton subsidies that would be
"significantly lower" than the average for the
marketing years ’99-05 (the years covered by the
WTO dispute). Furthermore, the actual level of the
limit and the extent to which support counts
against the limit would depend on the types of
trade-distorting domestic support provided. Finally,
Green Box, or non-trade-distorting, support does
not count toward the limit.
The Framework also provides benchmarks for
changes to the U.S. export credit guarantee
program that would affect all participating U.S.
commodities. Allocations for the program will be
announced in two equal installments at the
beginning and mid-point of the fiscal year. The
export credit guarantee changes call for a reduction
in the length of the guarantees by October 2012 to
a weighted-average length of no more than 16
months. In addition, fee increases will be based on
the use of the program in the previous 6-month
period. Program usage greater than $1.5 billion
results in a fee increase not less than 15%. Program
usage between $1.3 billion and $1.5 billion will
result in an 11% fee increase.
The Framework also calls for quarterly meetings
between the two countries to discuss progress in
the 2012 farm bill debate. As long as the Framework
is in place, Brazil agreed not to impose trade
sanctions. However, Brazil reserved its rights to
terminate the Framework Agreement at any time
with a 21-day notice. Currently, negotiations are
continuing between the two countries.
China
China is the world’s largest producer, consumer and
importer of raw cotton and the world’s largest
textile producer. U.S. cotton exports to China are 30
to 50% of annual total U.S. cotton exports. China
continues to influence world fiber and textile
markets with their practice of implementing the
Tariff Rate Quota (TRQ) system to keep internal
cotton prices above world price levels and by
allocating import quotas to the "cotton processing
sector" which requires an equivalent level of textile
and apparel exports to offset cotton fiber imports.
Imports of textile and apparel products from China
into the United States are no longer subject to a
special safeguard mechanism included in the WTO
accession agreement. The U.S. has put a monitoring
system in place, and the U.S. industry supports
initiating countervailing duty action if there is
threat of injury from surges of imported products.
The 2009 recession dampened demand for apparel
in general, causing China imports not to grow as
they have in the past. However, with the recovery in
the economy in 2010, U.S. textile and apparel
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imports of all fibers increased by 19% over the
previous year with imports of textile and apparel
from China increasing by 25%. China remains the
largest single exporter of textile and apparel
products to the U.S. with a 47% market share at the
end of 2010.
India
India, the world’s second largest producer and
processor of raw fiber, is truly a wildcard in the
current cotton market. Over the past decade,
increased production has allowed India to become
the second largest exporter of cotton. However, at a
time of recovering world demand, recent policy
decisions by India have added to the volatility and
uncertainty in the world cotton market.
Starting in April 2010, the Government of India has
acted in various ways to limit exports of Indian
cotton. This has taken varying forms, including an
export ban and export restrictions of various kinds
(i.e., lately, an export quota, administered by an
export licensing, or “registration”, program). The
export ban was initially implemented at the request
of Indian textile companies in order help them
compete against foreign rivals. India’s textile
industry has been clear about the reasons for the
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ban or restriction and has made those reasons public
on many occasions.
In October 2010, India replaced the export ban with
an export quota of 4.3 million 480-lb bales. An export
registration process opened on October 1 but was
closed on October 10 as registrations exhausted the
announced quota. However, as of early March, only a
portion of the registered quota had actually been
shipped. Future export quantities remain uncertain.
Since the close of the registration process, India’s
prices have remained at a substantial discount
relative to the “A” Index. Since October, India’s spot
prices have ranged between $1.20 and $1.50 per
pound while the “A” Index has moved above $2.00
per pound.
Free Trade Agreements and Regional
Negotiations
Regional trade preference agreements continue to
be vital to the U.S. textile industry’s ability to
compete, especially since the removal of quotas for
all WTO member countries on January 1, 2005.
Several agreements negotiated by the Bush
Administration have not been advanced through
Congress by the Obama Administration. These
include agreements with Korea, Colombia, and
Panama. The Obama Administration has
announced that it will work to obtain
Congressional approval for Korea, Colombia and
Panama. On December 3, 2010, the United States
and the Republic of Korea reached agreement on
a trade deal that resolved outstanding issues
related to the United States-Korea (KORUS) trade
agreement. The U.S. textile industry has registered
their opposition to the U.S. – Korea trade
agreement.
Work continues on a U.S. - Trans-Pacific
Partnership (TPP) Agreement that will involve
negotiations with several Southeast Asian
countries, including significant textile producers
such as Vietnam. The fifth round of Trans-Pacific
Partnership (TPP) Agreement negotiations
between the United States and eight other
countries ended in Santiago, Chile on Feb. 18 with
“continued progress.” The next round was
scheduled for Singapore in late March. Australia,
Brunei Darussalam, Chile, Malaysia, New Zealand,
Peru, Singapore and Vietnam are participating in
the talks with the United States. The TPP
eventually could act as the foundation for a
broader trade agreement among the 21
economies in the Asia-Pacific Economic
Cooperation forum.
In Santiago, the teams began looking at how best
to craft a TPP rule of origin, which will help
support development of a regional trade
agreement. The countries plan on exchanging
proposed product-specific rules of origin in March.
The US government would like to wrap up the TPP
in time for the next APEC leaders' summit in
November in Honolulu. Four other rounds will
take place before the APEC meeting, including
talks in Singapore in March, Vietnam in June, the
United States in September and Peru in October.
Trade associations representing the U.S. textile
industry have concerns regarding certain aspects of
the TPP, with rules of origin and the inclusion of
Vietnam being cited most often.
Summary
Trade issues will undoubtedly remain a focal point
of the U.S. cotton and textile industries. With 95
percent of U.S. cotton production moving into
export channels either as raw fiber, cotton yarn or
fabric, trade policy has a critical influence on the
health of the U.S. cotton ecnomy.
5
American Denimatrix
Plant:
1926 FM 54
Telephone: (806) 385-6401
Fax:
(806) 385-5155
http://www.pcca.com
Denim sales/marketing:
980 Avenue of the Americas, 2do Piso
Nueva York, NY 10018
Telephone: (212)494-0100
Fax:
(212) 494-0150
Contact name/number:
Mr. Jack Mathews
Vice President of Fabric Sales and Product Development
Telephone: (212) 494-0100
Fax: (212) 494-0150
List of Senior Management:
Mr. Wally L. Darneille, PCCA President & CEO
Mr. Bryan Gregory, Vice President of Textile Manufacturing
Mr. Jack Mathews, Vice President of Fabric Sales and Product Development
History of Company:
In business for 33 years, American Denimatrix was acquired in 1987 by Plains
Cotton Cooperative Association (PCCA) and is now a part of the cooperative’s Textile
and Apparel Division. Located in Littlefield, Texas, American Denimatrix operates a
vertically integrated denim facility focused on the development and production of
value-added fashion denim for its customers, including many of the world's most
recognized apparel brands and retailers.
PCCA's strong financial statement has enabled American Denimatrix to continually
invest in the most modern textile equipment. We recently have added capacity in
ring spinning and in core spinning. Our ability to produce yarn in-house allows us
6
to offer short lead times. Consequently, American Denimatrix's state-of-the-art
denim manufacturing process can produce 38 million linear yards of denim
annually in a variety of styles, shades and weights to meet the needs of each
individual customer. American Denimatrix's product development staff also
collaborates with customers to develop styles that fit current trends.
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border and major ports that serve the Caribbean and Latin America. This unique
location enables American Denimatrix to reduce transit time and transportation
costs for denim shipped to cutting and sewing operations throughout the region.
The same geographic location also benefits PCCA and its ability to ship cotton to
customers throughout the world.
Products
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Dye shades include a broad range of indigo shades including pure indigos, sulfur bottoms
and sulfur tops. In addition to indigo dyes, we also offer denim fabrics in natural, black and
grey shades.
End Products Supplied
Denim fabrics for jeans, shorts, skirts, and jackets
Antex Knitting Mills
3750 S. Broadway Place
Los Angeles, CA 90007
Phone: (323) 232-2061
Fax:
(323) 233-7751
www.antexknitting.com
Contact name/number:
Mr. William Tenenblatt, President
Email: [email protected]
Ms. Anna McMassey, Vice President of Merchandise and Design
Email: [email protected]
List of Senior Management:
Mr. William Tenenblatt, President
Ms. Anna McMassey, Vice President of Merchandise and Design
History of Company
Antex Knitting Mills is a vertical knitting, dyeing, printing and finishing
company established in Los Angeles in 1973. The company produces
approximately 1.5 million yards of fabric per week. Its traditional business is to
provide fashionable knitted fabrics to the junior, contemporary, and children's
markets. Several years ago, Antex added the Antex Premier Performance
division to provide technical fabrics to the outdoor and active wear markets.
Antex prides itself on its flexibility in servicing its customers' needs in providing
competitively priced, high quality fabrics and quick deliveries. It is the
company's goal to service the needs of the apparel industry by offering fabrics
that appeal to the fashion, lifestyle, and performance driven consumer.
Our highly trained staff is up to date on the latest advances in the industry and
constantly strives to maintain and improve their level of expertise. Our R&D
department can analyze and duplicate any fabric submitted to us. We also
have an extensive knit and print line and are constantly creating new and
exciting fabrics.
Products
The Antex knitting department consists of 300 high-speed, multi-feed,
state-of-the-art machines. The equipment, ranging from 14 to 38 cut
machines, provides the capabilities to produce a wide range of fabrics
including:
Interlocks, jersey, ribs, thermals, novelties (single/double), yarn-dyed stripes,
fleece, french terry fabrics., wet printing on cellulosic fibers (reactive dyes,
resist and discharge); on polyamide fibers (acid dyes for swimwear); on
polyester fibers (disperse dyes); and pigment printing (all fibers). Finishing
processes are: sueding, sanding, brushing, stain release, moisture
management, water repellent, anti-microbial, UV protection, flame
retardant.
End Products Supplied
T-shirts, sportswear, dresses, juniors, golf apparel, career uniform apparel,
military, performance apparel, base layer underwear, team sports
7
Buhler Quality Yarns Corp.
1881 Athens Hwy.
Jefferson, GA 30594
Telephone: (706) 367-9834
Fax:
(706) 367-9837
E-mail: [email protected]
www.buhleryarns.com
History of company
With the support of almost 200 years of experience from our parent company,
Herman Bühler AG, in Switzerland, Buhler Quality Yarns, USA manufactures yarns of
customers with the highest quality requirements. An excellent yarn quality and a
perfect customer service are the most important goals in our business. We concentrate on this in our daily work and it guides our company philosophy.
Contact Name / Number:
Mr. Werner Bieri, President, CEO
Telephone: (706) 367-3900
Fax:
(706) 367-9837
E-Mail: [email protected]
Buhler Quality Yarns Corp., USA is leading supplier of medium to fine-count Supima®
cotton yarns into the US, Canadian, Central American (CBI) , South American
(ATPDEA) and Sub Saharan Africa (AGOA) markets. Our quality, flexibility, and
responsiveness to those markets have helped keep our customers and us competitive
in the global market place.
Mr. David Sasso,VP of International Sales
Telephone: (706) 367-3931
Fax:
(706) 367-9837
E-Mail: [email protected]
Our product offering was expanded in 2007 into other luxury yarns, other spinning
technologies, and new application of chemistries to improve fabric performance and
value added properties. Our new fiber offerings include Micro Modal and Supima
Blend, and 100% Micro Modal.
Mr. Victor Almeida, Technical Support
Telephone: (706) 367-3934
Fax:
(706) 367-9837
E-Mail: [email protected]
Products
List of senior management:
Mr. Werner Bieri, President & CEO
Mr. Russell Mims, Operations Manager
Ms. Linda T. Newton, Sales & Customer Service
Mr. David Sasso, Vice-president International Sales
Mr. Victor Almeida, Textile Engineer & Technical Support
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100% Supima cotton combed Ring Spun, 12 80 Ne, Plied on request
50% Supima, 50% Micro Modal from Lenzing,
Ring Spun, 20 – 50 Ne
Applications
Weaving (warp and Filling)
Knitting (Circular, Seamless, Warp)
Cotton sewing thread
Carolina Cotton Works, Inc
14 Commerce Drive
Meadow Creek Industrial Park
Gaffney, SC 29340
Phone: (864) 488-2824
Fax:
(864) 488-0488
www.carolinacotton.com
Contact name/number:
Bryan Ashby, Vice President, Sales & Marketing
Phone: (864) 488-2824
Fax:
(864) 488-0488
E-mail: [email protected]
Mr. Stacey Bridges, Sales Manager
Phone: (864) 488-2824 ext.108
Fax:
(864) 488-0488
E-mail: [email protected]
List of senior management:
Mr. Page Ashby, President
Mr. Bryan Ashby, Vice President, Sales & Marketing
Mr. Hunter Ashby, Operations Manager
Mr. Stacey Bridges, Sales Manager
History of company
Carolina Cotton Works, Inc. (CCW) opened for business in March of 1995.
Starting out in a new building and all new equipment, we soon earned a
reputation of having one of the finest dyehouses in the United States. With
continued success each year since, CCW has reinvested in new equipment and
systems to allow us to stand alone as the most efficient dyehouse in the
country. Although we continue to offer commission bleaching and dyeing
services, the growth of our business has proven to be in the finished fabric
package business.
Experience - Quality - Dependability - Three necessary components of strong
customer/vendor relationships have been the key building blocks of Carolina
Cotton Works. With the experience of company president Page Ashby, comes
knowledge of yarn spinning through cutting. We have built solid relationships
with several major yarn spinners and knitters in the United States. We have
the resources and technical abilities to become the premier U.S. fabric supplier
for apparel producers both domestic and international.
Using the above equipment in our 64,000 square foot building, Carolina
Cotton Works can produce up to 250,000 pounds per week of bleaching and up
to 135,000 pounds per week of piece dyeing.
Equipment listing:
JEMCO III 2000 CBR; (7) 1000 lb. Scholl Rapidstar Jets; (1) 80 lb. Scholl Sample
Jet; (2) Santex Relaxed Belt Dryers; (3) Tubetex Pak-Nit II Compactors; RFG
Napper; Tubetex 4-Roll Pad; Santex Pad; (2) Santex Shrinking Calendars
Products
Jersey, Body Size Rib, Fleece, Pique (collars and welts), Herringbone, Interlock,
French Terry, Thermal Performance Fabrics, ANSI Fabrics.
End Products Supplied
Customers use CCW's fabric to manufacture outerwear products such as
t-shirts, rib tops, golf shirts, sweatshirts and sweatpants. Underwear products
include briefs, t-shirts and thermal underwear. We also process fabric used for
moisture transport performance apparel.
9
U.S. and World Cotton
Economic Outlook
Prepared by:
Economic Services - National Cotton Council
March 2011
The National Cotton Council released its annual early season planting
intentions survey results on February 5, 2011 and revealed that US
all-cotton plantings in 2011 of 12.5 million acres (14% higher than
2010) should generate a crop of 19.2 million bales, 18.5 million bales
of upland and 671,000 bales of extra-long staple. 2011 Upland cotton
intentions are 12.3 million acres, an increase of nearly 14% from 2010,
while extra-long staple (ELS) intentions of 251,000 acres represent a
23% increase.
Assuming an average abandonment rate of 11%, total upland and
ELS harvested area would be about 11.1 million acres. Applying
state-level yield assumptions to projected harvested acres generates
a cotton crop of 19.2 million bales, compared with 2010’s total
production of 18.3 million bales.
The survey, mailed in mid-December to producers across the 17-state
Cotton Belt, asked for intended 1011 cotton acreage and intended
plantings of other 1011 crops. Responses were collected through
mid-January.
In the report, National Cotton Council staff said while the cotton
market is currently calling for more acres, competing crop prices are
also strong. Final acreage decisions will be sensitive to how relative
prices move between now and planting time. This, along with a
number of other issues, including weather, could cause actual
plantings to differ from growers’ stated intentions.” (See table below
for regional/state responses.)
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PROSPECTIVE ’11 U.S. COTTON PLANTINGS
SOUTHEAST
Alabama
Florida
Georgia
N. Carolina
S. Carolina
Virginia
MID-SOUTH
Arkansas
Louisiana
Mississippi
Missouri
Tennessee
SOUTHWEST
Kansas
Oklahoma
Texas
WEST
Arizona
California
New Mexico
TOTAL UPLAND
TOTAL ELS
Arizona
California
New Mexico
Texas
ALL COTTON
’10 Actual
(Thou.) 1/
2,597
340
92
1,330
550
202
83
1,920
545
255
420
310
390
5,886
51
285
5,550
366
195
124
47
10,769
204
3
182
3
17
10,973
’11 Intended
(Thou.) 2/
2,930
388
109
1,410
694
225
105
2,283
589
278
524
348
544
6,585
69
326
6,190
465
226
172
67
12,263
251
4
225
3
19
12,514
Percent
Change
12.8%
14.0%
18.3%
6.0%
26.1%
11.2%
26.9%
18.9%
8.0%
8.9%
24.8%
12.4%
39.5%
11.9%
34.6%
14.4%
11.5%
27.0%
15.8%
38.8%
42.5%
13.9%
23.1%
47.2%
23.6%
28.2%
13.7%
14.0%
1/ USDA-NASS
2/ National Cotton Council
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