Commodity Fact Sheet
What’s the Outcome for Cotton?
On February 8, 2004, the United States and Australia concluded negotiations on a Free Trade Agreement (FTA), and on February 13, 2004, President Bush notified Congress of the intent of the United States to enter into an FTA with Australia. The FTA contains commitments on most agricultural products, and addresses other trade measures between the two countries as well.
The current situation .
. . Under the World Trade Organization (WTO)
agreements, Australia’s tariff on cotton is bound at zero. From 2001 through
2003, U.S. suppliers exported an average of $102,000 of cotton to Australia.
With the agreement . . . Australia continues its duty-free tariff treatment for cotton to sustain the United States’11 percent-import market share.
United States Commitments
The current situation . . . Cotton is subject to tariff rate quotas (TRQ) established as part of the U.S. commitments in the WTO with in-quota tariffs ranging between 0 and 4.4 cents per kilogram. U.S. cotton imports exceeding the TRQ face import tariffs of 31.4 cents per kilogram. The U.S. TRQ has never been fully utilized by Australia or other countries. Australian cotton exports to the United States have been minimal because of market conditions.
With the agreement . . . The United States will establish a special FTA TRQ for Australian cotton. This FTA TRQ will allow duty-free access initially for 250 metric tons of cotton that will expand over 18 years at a rate of 3 percent annually. The over-quota tariff will be reduced to zero in equal annual steps over 18 years.
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