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Obama’s Budget Ups Funding for Trade Enforcement

Proposal would cut funds for cotton export promotion.

WASHINGTON — President Obama proposed more funding for an agency overseeing apparel and textile import data and the enforcement of trade remedy laws, but called for cuts in funding for foreign cotton promotion in the $3.55 trillion federal budget he submitted to Congress on Thursday.

This story first appeared in the February 27, 2009 issue of WWD.  Subscribe Today.

Obama released a 134-page 2010 fiscal year budget outline of proposed funding for the federal government’s agencies entitled “A New Era of Responsibility.” He said he will submit his full budget request, with funding for specific programs, in the spring after officials complete their line-by-line cutting of “waste and inefficiency.”

“This is a process that will take some time, but in the last 30 days alone we have already identified $2 trillion in deficit reductions that will help us cut our deficit in half by the end of my first term,” Obama said.

His initial budget request places a heavy emphasis on investing in major health care reform, as well as education and energy initiatives. It calls for allowing former president George W. Bush’s tax cuts for income levels above $250,000 to expire at the end of 2010. It also seeks to make permanent tax cuts of $400 for individuals and $800 for couples that were included in the recently enacted $787 billion economic stimulus plan but expire in 2010.

One of the programs targeted by Obama for cuts has implications for cotton producers and farmers. He has proposed a 20 percent cut in the Department of Agriculture’s “market access program” that aids in the creation and expansion of foreign markets for U.S. agricultural products. The USDA allocated $20.7 million to the Cotton Council International, a division of the National Cotton Council, in fiscal year 2008 and $38,000 to the Mohair Council of America, which would face funding cutbacks under Obama’s budget request.

The National Cotton Council called the cuts to the market access program “confounding.”

Jay Hardwick, chairman of the National Cotton Council and a Louisiana-based cotton producer, said the market access program “is an excellent example of the private-public joint effort to expand markets for the U.S. producer.”

Obama’s proposal also calls for a cut in cotton subsidies in the form of direct payments to producers to assist the industry in areas such as price support and financing, which Hardwick called “troubling.” U.S. cotton subsidies and agriculture subsidies as a whole have been a key sticking point in the Doha Round of global trade negotiations between rich and poor countries. The European Union and Brazil, in particular, have challenged U.S. cotton subsidies and have held them up as a reason for blocking progress in reaching a global trade accord. Obama’s attempt to cut them could give the U.S. more leverage in the global round that has faltered for more than seven years.

Several agencies with programs affecting the fashion industry will receive funding increases in Obama’s initial request. The blueprint does not include funding for specific departments within agencies that oversee industry programs and did not include a budget proposal for the U.S. Trade Representative’s office.

The budget request calls for an increase in funding for the Commerce Department to an estimated $13.8 billion from projected 2009 levels of $9.3 billion. Commerce plays a key role in antidumping and countervailing duty cases filed by domestic industries that are hoping for an increase in funding and resources in the trade remedy area.

“We’re hopeful that some of that increase [in Commerce’s budget] goes to the International Trade Administration because there are programs there of importance,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “We hope they will beef up the enforcement division for unfair trade practices.”

Stephen Lamar, executive vice president of the American Apparel & Footwear Association, which includes many importers, said, “We still need to make sure that we see enough funding going toward the trade programs, for export promotion and market access. Obviously, there needs to be sufficient funding at customs for oversight and enforcement, and for the basic operation of the programs.”

Obama’s budget also proposed that more than 90 ports receive additional funding in 2010 to purchase technology like radiation monitors and inspection X-ray equipment to assist in securing the ports. The budget will continue providing more than $1.4 billion in port security grants.