From Cotton Grower Magazine – May 2015
It’s true that politics makes strange bedfellows. The same can be said about international trade.
Perhaps more accurately, you could say that the World Trade Organization makes for astoundingly strange opponents. This is how farmers from across the American Cotton Belt suddenly find themselves at odds with the Turkish steel industry, of all things.
The trouble began back in October, when U.S. regulators ruled against Turkey in an investigation into steel rebar supports originating from that country. Not surprisingly, politicians from Turkey became involved shortly thereafter. They postured and threatened to retaliate by causing trouble for U.S. imports into their country. And wouldn’t you know it, U.S. cotton fell into their crosshairs.
This was no small matter – Turkey was the largest importer of Upland U.S. cotton in 2014, importing 1.1 million bales worth around $500 million, according to Reuters. So it’s easy to see why they decided to hit what they see as a big American industry. After all, U.S. cotton had already been targeted by trade challenges from Brazil, Peru and China recently. Turkish politicians clearly thought they might as well join the party.
Turkey is alleging that U.S. cotton exports are being sold to Turkish mills at a price that is lower than what is offered to domestic mills in the U.S. or to other countries internationally. As National Cotton Council President and Chief Executive Officer Gary Adams explains it, Turkey is alleging that the U.S. is selling its cotton to them at less than the cost of production.
“We’re confident that there is no economic basis for this investigation,” says Adams. “But that doesn’t make it any less challenging, because frankly, there are political motivations behind this investigation.”
As Adams explains, when a country’s government concludes that this type of “dumping” has occurred, the normal recourse is to apply a tariff to that product. In fact, the U.S. applied a tariff to Turkish steel products following their findings back in October.
“A Turkish official actually came out last September, making public comments that for each investigation that the U.S. brought against a product in Turkey, Turkey would in turn launch three in retaliation,” Adams says. “It’s fairly clear that this was a retaliatory act by the Turkish officials.”
The investigation into whether or not American cotton is being dumped in Turkey is ongoing.
Thankfully, the NCC has gained status as an interested party, putting forth information to repudiate the allegations from Turkish officials. As Adams says, the process has led to more work and more expenses, but the NCC intends to see it through its conclusion. The goal is to avoid any tariff or duty applied to U.S. cotton in Turkey, he says.
The entire matter serves as yet another testament to the necessary work the NCC does on behalf of American cotton. When politicians from across the world decide they want to play political games, the Council is, in large part, our best mechanism for responding. As they have shown in the past, they are more than capable of holding their own – no matter how nefarious the opponent.