Plenary Meeting of the INTERNATIONAL COTTON ADVISORY COMMITTEE MINUTES

1) After warm opening remarks, the Chair invited Mr. Alois Schönberger, Chair of the Private Sector Advisory Panel (PSAP) to deliver the report of the PSAP to the Plenary Meeting. Mr. Schönberger noted that the reserve policy of the Government of China has many impacts on the world cotton market: prices remain above average even though stocks are record high; prices of cotton are above those of competing fibers and cotton’s share of world fiber use is being negatively affected; market participants are not sure how long the current reserve policy will continue, thus adding uncertainty to the world market. The PSAP observes that disruptions to cotton marketing exacerbate problems of contract defaults and distort markets by causing imbalances between supply and demand, and defaults on contracts remain a significant problem in the world cotton industry. Such policies are rarely, if ever, imposed on chemical fiber trade. The PSAP urged governments to (1) ensure transparency in policies by informing all market participants of changes in policies and programs in a timely fashion; (2) avoid policies that disrupt markets as such policies often have unintended consequences which result in a weakening of the cotton value chain; (3) jointly with the cotton industry, strengthen efforts to enhance demand for natural fibers, including cotton; (4) ensure that valid international arbitral awards are automatically enforceable, as provided by the provisions of the New York Convention of 1958; (5) take heed of an annual report by The World Bank, “Doing Business,” and in particular to improve the procedures for enforcement of contracts in countries where contract enforcement is difficult, time consuming and expensive; (6) be aware of the list of firms reported to have failed to fulfill awards resulting from arbitrations conducted by CICCA Member Associations when determining eligibility for programs funded by governments; (7) avoid abrupt and retroactive application of trade distorting measures. The PSAP expressed concerns that membership of the EU in the ICAC on the basis of one country, paying one assessment, and exercising one voice or one vote within the ICAC would restrict the participation of cotton industry bodies in the work of ICAC working groups.