NCC Statement on Trade Preferences, Contract Defaults

The NCC has consistently pursued a yarn forward rule of origin for textile and apparel products with a goal of stemming the losses in the U.S. cotton spinning industry.

Published: May 3, 2012
Updated: September 24, 2012

MEMPHIS -- The National Cotton Council has consistently pursued a yarn forward rule of origin for textile and apparel products, according to NCC President/CEO Mark Lange.

He said this rule was adopted in the several hemispheric trade agreements during the past 15 years. The goal was to stem the losses in the U.S. cotton spinning industry, as textile import quotas were phased out beginning in 1995 and China was granted full accession rights to the World Trade Organization in 2001. The yarn forward rule encouraged the formation of textile and apparel manufacturing facilities across Central America and Caribbean regions creating several hundred thousand hemispheric jobs as the U.S. spinning industry adjusted to the onslaught of Chinese products in the U.S. domestic market.

"The U.S. and hemispheric textile and apparel investment, jobs and trade relations will be severely damaged if the trade preferences created by the yarn forward rule of origin are undermined in wider trade agreements," Lange stated.

He noted that the NCC sent a letter to U.S. Trade Ambassador Ron Kirk to discuss the cotton contract defaults in Peru and Vietnam during the next round of negotiations for the Trans-Pacific Partnership Agreement. Textile mills in those countries have defaulted on millions of dollars of raw cotton contracts that resulted in severe economic losses for U.S. cotton merchants and marketing cooperatives.

"The U.S. government should carefully consider allowing preferential trade provisions for countries whose corporations willfully ignore commercial commitments," Lange said. "Contract sanctity is a fundamental building block of trade relations and widespread disregard of the principle should sound a loud warning to the extension of trade preferences."