NAFTA AGRICULTURE FACT SHEET:
Cotton

TREATMENT OF TARIFFS:

• U.S. tariffs on cotton are being phased out in conjunction with the treatment of previous quantitative restrictions.
• Mexico’s 10-percent tariffs on cotton are being phased out over either 5 or 10 years, depending on the type of cotton.

TREATMENT OF QUANTITATIVE RESTRICTIONS:

• Upon enactment of the NAFTA on January 1, 1994, previously existing U.S. Section 22 import quotas on Mexican cotton were replaced by a NAFTA tariff-rate quota (TRQ), which is being phased out over a 10-year transition period.
• Mexico, which had a Section 22 quota of 4,029 metric tons, initially received a 10,000-ton TRQ under the NAFTA. This quota grows by a 3-percent compound annual rate over the transition period. For 1998, the TRQ is 11,255 metric tons.
• In-quota shipments enter the United States duty-free. Above-quota imports from Mexico faced an initial tariff equivalent of 26 percent, which is being phased out on a straight-line basis to zero over 10 years.
• Mexico does not have any quantitative restrictions affecting imports of cotton.

RULES OF ORIGIN FOR COTTON TEXTILE PRODUCTS:

The following cotton products are subject to NAFTA rules of origin:

Fiber-forward: cotton yarns; cotton knit fabrics

Yarn-forward: most cotton woven fabrics; most cotton/man-made blends

Fabric-forward: cotton luggage, handbags, flat goods, cotton fabrics that are coated, laminated, or impregnated.

Single substantial transformation: men's shirts from certain high-count cotton fabrics; men's shirts from certain cotton/man-made blends; apparel from specific fabrics (corduroy, velveteen).

• TRQ’s were established to allow additional entry of some non-NAFTA-origin apparel. The de minimis provisions allow up to 7 percent by weight of fibers and yarns to be non-NAFTA in origin.

U.S. Cotton Trade with Mexico

Value in $1,000; volume in metric tons. Includes linters and cotton waste.

Last modified: Friday, November 18, 2005