NCC: Cultivation of China as Customer Imperative

MEMPHIS – The National Cotton Council told the House Ways and Means Committee that the U.S. cotton industry is exporting an ever increasing quantity of cotton fiber to China and it is imperative that China continue to be cultivated as a good customer.

Robert Weil, II, a Montgomery, AL, merchant and a NCC vice president, told the lawmakers the NCC recently hosted an intern from the China Cotton Association (CCA) to assist their understanding of U.S. cotton industry business systems and trade terms. He said the NCC intends to send an intern to China this year to work with their CCA in an effort to continue the information exchange.

Testifying Thursday about opportunities and challenges in trade with China, Weil, who serves on the Bush Administration’s Agricultural Technical Advisory Committee, said, “I am convinced we will sell more cotton to China in the years ahead. At the same time, our long-standing customer, the U.S. textile industry, continues to erode financially in the face of competition from textile imports – and there is no more competitive textile and apparel manufacturer in the world than China. With its rate of increase in cotton production, cotton mill use and cotton purchasing, China is the dominant force in world cotton.”

As an example, Weil said China thus far in the 2004 marketing year has about 2 million bales in commitments from the United States and is expected to import up to 8 million bales from all sources. He said China also produced a record 29 million bales of cotton in calendar year 2004 and exported almost $55 billion dollars of total textile and apparel products, a 50 percent increase since 2002. The projections developed for the 2005 USDA Ag Outlook show China importing 14.5 million bales for the 2005 marketing year – an increase of more than 6 million bales over 2004.

“This growth should be taken in context with the demise of the U.S. textile industry,” Weil said.

He noted that China now is estimated to be spinning about 41 million bales while U.S. mill cotton use has fallen to around 6 million bales a year, 40 percent below the rates that existed in the 1990s.

Weil focused his testimony on: 1) access to China’s market; 2) the U.S. cotton industry’s ability to enter into contracts; 3) issues related to cotton quality; and 4) evolving terms of trade.