Date: 2015-06-23
Speaker: DAVID SCOTT (democrat)
Chamber: H
State: 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 foreigngrown 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 muchneeded 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. I yield back the balance of my time.