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“UNITED STATES COTTON FUTURES ACT AMENDMENTS” mentioning the U.S. Dept of Agriculture was published in the House of Representatives section on pages H4563-H4564 on June 23, 2015.
The publication is reproduced in full below:
UNITED STATES COTTON FUTURES ACT AMENDMENTS
Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2620) to amend the United States Cotton Futures Act to exclude certain cotton futures contracts from coverage under such Act, as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 2620
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. EXCLUDING CERTAIN COTTON FUTURES CONTRACTS FROM
COVERAGE UNDER UNITED STATES COTTON FUTURES
ACT.
(a) In General.--Subsection (c)(1) of the United States Cotton Futures Act (7 U.S.C. 15B(c)(1)) is amended--
(1) by striking ``except that any cotton futures contract'' and inserting the following: ``except that--
``(A) any cotton futures contract'';
(2) in subparagraph (A) (as designated by paragraph (1)), by striking the period at the end and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(B) any cotton futures contract that permits tender of cotton grown outside of the United States is excluded from the coverage of this paragraph and section to the extent that the cotton grown outside of the United States is tendered for delivery under the cotton futures contract.''.
(b) Application.--The amendments made by subsection (a) shall apply with respect to cotton futures contracts entered into on or after the date of the enactment of this Act.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from Georgia (Mr. Austin Scott) and the gentleman from Georgia (Mr. David Scott) each will control 20 minutes.
The Chair recognizes the gentleman from Georgia (Mr. Austin Scott).
General Leave
Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous materials on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the gentleman from Georgia?
There was no objection.
Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, I yield myself such time as I may consume.
I rise in strong support of H.R. 2620. This bill would amend the United States Cotton Futures Act to allow for the creation of a world cotton contract listed on the United States exchange.
Current law, which requires sampling and classing by the USDA of every bale of cotton tendered under contracts listed on a U.S. exchange reflects an antiquated picture of the global cotton market. Some market participants need to hedge price fluctuations in foreign markets, and the current law limits their ability to do so. We need to update our law to reflect the modern nature of this marketplace.
H.R. 2620 accomplishes this by providing an option for cotton produced and delivered in foreign markets to be classed by rating facilities closer to the point of delivery rather than by the United States Department of Agriculture. It makes no changes to the treatment of domestically produced and delivered cotton.
This legislation will allow any willing exchange to meet industry demand to design a world cotton contract. For example, ICE Futures U.S., which has already worked with market participants, has publicly announced their intention and preference to list a world cotton contract side by side with the domestically focused Cotton No. 2 contract they already list.
H.R. 2620 allows for an important new contract for cotton hedging to be developed, which would be beneficial to commercial hedgers. However, it is important specifically to me and to others to note, it would not disrupt the industry's benchmark hedging contract, the No. 2 contract, which is relied upon by U.S. cotton producers in my district and around the country.
Before I close, I would like to thank Chairman Conaway both for his continued leadership on the Agriculture Committee and his efforts on this legislation. Additionally, I want to thank Ranking Member David Scott for working with me on this issue over the last few months. And I would like to acknowledge Lynn Westmoreland's work in this as well. He was instrumental in advancing this issue.
I urge my colleagues to join me in support of H.R. 2620.
Mr. Speaker, I reserve the balance of my time.
Mr. DAVID SCOTT of Georgia. Mr. Speaker, I yield myself such time as I may consume.
I, too, have enjoyed working with my colleague from Georgia, the chairman of our Subcommittee on Commodity Exchanges, Energy, and Credit, Congressman Austin Scott.
Mr. Speaker, our bill, H.R. 2620, will modernize the way in which cotton futures contracts are listed and regulated under the 1916 Cotton Futures Act.
More specifically, as many of you know, the main tool used in the marketplace for hedging cotton is the No. 2 contract. Currently, the No. 2 contract only permits cotton grown within the United States. That cotton is delivered to only five United States cities: Galveston, Texas; Houston, Texas; Dallas/Fort Worth, Texas; Greenville, South Carolina; and Memphis, Tennessee.
Now, under the 1916 Cotton Futures Act, every bale of cotton tendered under a contract listed on a U.S. exchange must be sampled and classed or graded by the United States Department of Agriculture. However, seeing that cotton is grown all over the world, my bill targets cotton that is grown and delivered outside of the United States' borders.
Now, Mr. Speaker, here is the problem, the concern that our bill is solving. As I mentioned earlier, because of the fact that there are only five domestic cities that are cotton delivery points listed under the 1916 Cotton Futures Act, there has been much concern that the Cotton No. 2 contract cannot accurately reflect price movement in foreign markets and, therefore, cannot provide an effective risk management tool. That is simply the problem.
Now, to solve this problem, what our bill will do is simply allow U.S.-based future exchanges flexibility in how they handle foreign-
grown cotton and foreign delivery points that will never touch the United States at all.
Mr. Speaker, we live now and we operate in a rapidly changing global economy. It is very important that we not put our cotton producers or our commodities exchanges into a disadvantaged position competitively when it comes to being able to get the price fluctuations that occur in foreign markets, thereby providing our businesses with the most effective tool by which they can manage their risk.
So because the United States Department of Agriculture does not have the manpower to deploy personnel all over the world at one time, our bill will allow cotton grown outside the United States to be classed by either a United States Department of Agriculture testing lab inside the United States or an international lab deemed to have comparable comprehensive rules and regulations equivalent to the United States. That is it. It is clean and simple.
Our bill solves this problem. It gives our cotton producers and it gives our exchanges that ability to be able to know how prices are sliding in each foreign country that is producing cotton while, at the same time, our producers and our exchanges, without that, cannot apply good risk management. That is why this is so essential.
So let me state again, as my colleague from Georgia, Mr. Austin Scott, made clear, I, too, want to make clear that our bill does not change the fact that 100 percent of all domestically produced and delivered cotton will be classed by the United States Department of Agriculture. There is absolutely no change here.
Furthermore, the bill does not change or alter the Cotton No. 2 contract. What our bill does is simply allow our U.S.-based futures exchanges that much-needed flexibility that is needed in order to list cotton that will never touch the United States through a world cotton contract.
As I said, we live in a global marketplace. It is important that our rules and regulations reflect the modernization that has happened in our global markets since this act was written 100 years ago. It is important, Mr. Speaker, that we keep the United States economy the strongest economy in the world, and our bill, H.R. 2620, will do just.
Mr. Speaker, I urge passage of H.R. 2620.
I yield back the balance of my time.
Mr. AUSTIN SCOTT of Georgia. Mr. Speaker, as my colleague, Mr. Scott, and I have said, this is simply a necessary, minor change. I would just ask all Members to support passage of H.R. 2620.
I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the gentleman from Georgia (Mr. Austin Scott) that the House suspend the rules and pass the bill, H.R. 2620, as amended.
The question was taken; and (two-thirds being in the affirmative) the rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
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