Special Program Provisions
Special Program Provisions for Upland Cotton
Special marketing provisions are authorized to keep the U.S. upland cotton spinning industry competitive. These provisions include a special import quota, a limited global import quota, and an economic adjustment assistance payment to users of upland cotton.
Special import quota.A special import quota is authorized when, for any consecutive 4-week period, the weekly average of the cheapest U.S. (Far Eastern) cotton price quotation exceeds the prevailing world market price (the average of the cheapest five Far Eastern price quotations).
The quota equals 1 week's domestic mill consumption of upland cotton at the seasonally adjusted average consumption rate during the most recent 3 months for which data are available. The quota applies to upland cotton purchased within 90 days after quota announcement and entered into the United States within 180 days after announcement.
The quantity imported under this special import quota during any marketing year (August 1-July 31) is limited to 10 week's domestic mill consumption of upland cotton as established in the first special import quota of any marketing year.
Limited global import quota.A limited import quota program is authorized when the average monthly spot price of base-quality upland cotton exceeds 130 percent of the average spot price during the preceding 36 months. The quota equals 21 days of domestic mill consumption of upland cotton at the seasonally adjusted average rate during the most recent 3 months for which data are available. The quota applies to upland cotton entered into the United States within 90 days after quota announcement.
A special import quota cannot be established if a limited global import quota is in effect; nor may a limited global import quota be established if a special import quota is in effect. In addition, the special import quota and the limited global import quota quantities are considered to be "in quota" for purposes of tariff-rate quota provisions of trade agreements, so they are not subject to over-quota tariffs.
Economic adjustment assistance.On a monthly basis, economic adjustment assistance payments are made to domestic users of upland cotton (regardless of origin) for all documented use during the previous month.
The value of the assistance payments are 4 cents per pound through July 2012, and 3 cents per pound thereafter. The assistance can only be used to acquire, construct, install, modernize, develop, convert, or expand land, plant, buildings, equipment, facilities, or machinery. If assistance payments are used for other purposes, the domestic user is liable to repay the amount plus interest and is ineligible to receive the payments for 1 year.
Special Program Provisions for Extra-Long Staple Cotton
Special marketing provisions for U.S. extra-long staple (ELS) cotton are authorized to maintain and expand its domestic use, increase its exports, and ensure its competitiveness on the world market.
TheELS programissues payments to exporters and domestic mill users of U.S. ELS cotton in a week following a consecutive 4-week period when:
- The weekly average of the lowest foreign ELS cotton price quotation (adjusted to U.S. quality and location) is less than the average U.S. ELS cotton price quotation, and
- The lowest foreign quote is less than 134 percent of the U.S. ELS loan rate.
Payments are made to domestic users on documented purchases of raw cotton, and to exporters on documented sales for shipment of raw cotton, at a payment rate equal to the difference between the U.S. price and the foreign price during the fourth week of the period.