Domestic producers pay an assessment when they sell their raw cotton. Despite these concerns, quotas and tariffs have not prevented cotton imports from sharing in the growth in the U.S. market. Cotton imports have grown even faster than U.S. consumption, increasing from 1.5 billion pounds in 1984 to about 3.8 billion pounds in 1994, an average annual growth rate of about 10 percent. Officials concluded that the cotton import assessment complies with the principle of national treatment because the assessment imposed on importers is the same as the assessment imposed on domestic cotton producers and the assessment is mandatory for both importers and producers. USDA Has Established an Administrative Framework for Assessing Imported Cotton Products

USDA has carried out the activities specified in the 1990 legislation to assess imported cotton products. For example, USDA held a referendum on whether to assess imports and eliminate refunds of assessments. USDA also established equivalent assessment rates for imported cotton products; issued relevant orders and regulations governing the program’s operations; established procedures for exempting imports containing U.S. cotton; and provided for the representation of cotton importers on the Cotton Board. Furthermore, this assessment is in accordance with U.S. international trade agreements, according to USDA and USTR officials. An example of how the assessment is calculated follows:         One bale = 500 pounds         One kilogram = 2.2046 pounds         One pound = 0.453597 kilograms The $1-per-bale assessment is converted to kilograms:         A 500-pound bale = 226.8 kilograms (500 x 0.453597)         The $1-per-bale assessment = $0.002000 per pound (1/500) or             $0.004409 per kilogram (1/226.8)
The supplemental assessment of 5/10 of 1 percent of the value of the cotton is converted to kilograms:         Average price received = $0.683 per pound or             $1.5057 per kilogram (0.683 x 2.2046)         5/10 of 1 percent of the average price in kilograms =             $0.007529 per kilogram (1.5057 x 0.005)

	Calculation of the Assessment on a Shipment of Imported Cotton

USDA Actions to Implement the Administrative Framework Outlined in the 1990 Amendments

The Cotton Research and Promotion Act Amendments of 1990 set forth administrative implementing procedures for the U.S. Department of Agriculture (USDA) to extend the research and promotion program to cotton imports.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO assessed the: (1) growth in the U.S. market for cotton and cotton products; (2) extent to which import restrictions have affected importers' ability to take advantage of any growth in the U.S. market; and (3) relevant U.S. international trade obligations and the compliance factors for imported cotton and cotton products.

What GAO Found

GAO found that: (1) the cotton import assessment has not affected the growth rate of cotton imports; (2) the volume of imported cotton products has increased from 1.5 billion pounds in 1984 to 3.8 billion pounds in 1994; (3) the assessment is in compliance with U.S. trade obligations and is based on the principle of national treatment; (4) the Department of Agriculture (USDA) established an administrative framework for assessing cotton products, held a referendum for cotton producers and importers on whether to assess imports, set an assessment rate equivalent to domestic producer rates, and established collection procedures for cotton products with the Customs Service; (5) cotton importers frequently pay duplicative assessments on cotton products containing U.S. cotton because they have difficulty meeting the exemption criteria; and (6) producers and importers disagree on the management and oversight functions of the Cotton Board.