The Department of Agriculture announced in May the Great American Cotton Plan, a comprehensive initiative that among other things seeks to improve cotton trade by (1) implementing a three-point trade plan to expand export opportunities for U.S. cotton, (2) secured commitments from Indonesia and Bangladesh that will support future U.S. cotton purchases and textile production using U.S. cotton, and (3) continued USDA support of cotton exports through the Market Access Program and COTTON USA™ licensing initiatives.
The plan noted that under separate agreements on reciprocal trade (1) Indonesia agreed to support and facilitate commercial arrangements to import at least 163,000 metric tons of U.S. cotton annually for five years and then maintain a minimum level of imports of at least 150,000 metric tons and (2) Bangladesh will receive a tariff reduction on apparel produced using U.S. cotton and textile inputs.
USDA has now announced that its Foreign Agricultural Service is designing a mechanism that will incentivize purchases of U.S. cotton that will launch in 2027. Specifically, FAS will play a key role in verifying purchases of U.S. cotton by select countries (Bangladesh, Indonesia, Cambodia, and Malaysia) in exchange for preferential tariff treatment on imports of apparel produced using U.S. cotton and textile inputs.
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