News Releases

Wednesday, January 28, 2015

Isakson Raises Concern over Decline in Trading Price of Cotton, Points to Harmful Impact of China's Stockpiling Program

Received assurance from trade official that the U.S. is currently engaging with China on the issue

WASHINGTON – On Tuesday, U.S. Senator Johnny Isakson, R-Ga., member of the Senate Finance Committee, questioned U.S. Trade Representative Michael Froman about status of global trade negotiations critical to Georgia at a hearing held to review the president’s 2015 trade policy agenda.

During Tuesday’s hearing, Isakson raised concerns over the significant decline in the trading price of cotton, from 80 cents to 85 cents a pound and now down to 55 cents to 57 cents a pound.

As the U.S. cotton’s largest export market, Isakson pointed to the harmful impact of China’s stockpiling reserve program through the government purchases of domestic cotton, allowing China to subsidize their producers at twice the world market price of cotton.

“On commodities, there is another great product in my state and it’s cotton,” Isakson said. “China is basically buying cotton and … stockpiling it. [China] is subsidizing their producers at twice the world market price.

“What can be done with China to enforce, through the WTO or through any agreement we might otherwise have, to keep them from manipulating the cotton prices and suppressing the cotton market?” Isakson continued.

In response to Sen. Isakson, Ambassador Froman explained that this issue is one that looks to the whole pattern of agricultural subsidies and has changed a great deal over the last ten or fifteen years. He explained that when the Doha Round [of trade talks] first began, the focus on agricultural subsidies was really on the United States and the European Union. However, both of those areas’ subsidies have come down while subsidies from China and India have increased, and, by some measure, China is now the largest subsidizer of cotton. 

Ambassador Froman assured Sen. Isakson that the Office of the U.S. Trade Representative is currently engaging with China on this issue and about taking a fresh look at where subsidies are being provided, how it’s distorting the market and how that should play into global trade.

A video of Sen. Isakson’s Q+A with Ambassador Froman on this issue can be found here: https://www.youtube.com/watch?v=d4sXOTRtdDQ&feature=youtu.be.

 

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