Agricultural Marketing

The cotton check-off program, which has collected assessments on domestic cotton since 1967, is intended to strengthen cotton's competitive position relative to synthetic fibers and maintain and expand domestic and foreign markets for U.S. cotton. The program's promotion efforts have probably contributed to cotton's growth in the U.S. market. In addition, the U.S. consumption of cotton and the import share of the U.S. cotton market continued to increase following the imposition of the assessment on imported textiles and apparel. The value of this assessment--about one-half cent for a man's cotton shirt--is unlikely to slow consumer demand for cotton. Furthermore, this assessment is in accord with U.S. international trade agreements. Although the Agriculture Department has created an administrative framework for assessing imported cotton, two major issues raised by importers have yet to be resolved. The first of these issues--double payments on assessments--may be addressed by current efforts to identify foreign mills that use large amounts of U.S. cotton. The second issue, however, is harder to resolve--the extent of the Cotton Board's oversight over Cotton Incorporated. Although steps are being taken to address this matter, such efforts do not deal with importers' lack of representation on Cotton Incorporated's board of directors.

GAO found that: (1) the cotton import assessment has not affected the growth rate of cotton imports; (2) the volume of imported cotton products has increased from 1.5 billion pounds in 1984 to 3.8 billion pounds in 1994; (3) the assessment is in compliance with U.S. trade obligations and is based on the principle of national treatment; (4) the Department of Agriculture (USDA) established an administrative framework for assessing cotton products, held a referendum for cotton producers and importers on whether to assess imports, set an assessment rate equivalent to domestic producer rates, and established collection procedures for cotton products with the Customs Service; (5) cotton importers frequently pay duplicative assessments on cotton products containing U.S. cotton because they have difficulty meeting the exemption criteria; and (6) producers and importers disagree on the management and oversight functions of the Cotton Board.