Cotton Exports Feared Jeopardized by GSM Changes

November 13, 2000

The National Cotton Council fears proposed changes to the GSM export credit guarantee program will "seriously jeopardize" the program's usefulness to cotton exports. In a letter to USDA, NCC officials urged the consideration of three issues they considered necessary to protecting cotton interests in the GSM program.

International negotiations on the export credit guarantee program are being conducted through the Organization for Economic Cooperation and Development (OECD). The U.S. negotiators developed what NCC says is a "comprehensive proposal to establish disciplines on the use" of the GSM programs. If the GSM programs were modified to comply with that proposal, says NCC, "it would seriously jeopardize its usefulness in assisting cotton exports."

The NCC is urging the U.S. negotiators to make sure the agreement does not include language which could be interpreted as requiring average fees to rise above current levels; that the proposal requiring equal and regular principal payments at minimum six-month intervals be eliminated; and that the agreement explicitly remove agricultural credits from future negotiations in other forums, particularly new WTO negotiations.

NCC officials also reiterated their opposition to a proposal to reduce the maximum allowable repayment terms for GSM loans to 21 months. OECD negotiations are scheduled to resume this week.