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Textile Manufacturers Support Export Initiative

James A. Morrissey, Washington Correspondent

The National Council of Textile Organizations (NCTO) has told administration officials that its members "strongly support" President Barack Obama's National Export Initiative, but they say the U.S. government must act in four critical areas if there is to be any hope for achieving the goal of doubling exports over the next five years.

In a letter to the Trade and Promotion Coordinating Committee, NCTO President Cass Johnson said that with more than $12 billion annually in exports, the U.S. textile industry already is the third-largest exporter in the world, but with major policy changes and programs, he believes it is possible that a goal of increasing exports from $12 billion to $24 billion is "clearly within reach."

That all depends, however, on some major steps by the United States and other governments.

For example, he said, ways must to be found to improve the financing of exports. Noting that the U.S. textile industry has experienced "tremendous difficulty" in securing financing through private lending and the U.S. Export-Import Bank (Ex-Im Bank), Johnson called for changes that would make funding more accessible to textile manufacturers interested in exporting. While much of the exporting done by U.S. textile manufacturers goes to countries with which the United States has free trade agreements (FTAs), such as the North America Free Trade Agreement and the Central America-Dominican Republic Free Trade Agreement, the Em-Im Bank views most of those countries as high-risk, and the cost of insurance is high. NCTO believes the Ex-Im Bank needs to relax its policies in determining high risk and decide that exports going to FTA partners should be given special consideration when determining risk; and if the exporter is able to prove that the inputs will enter the United States as a different product, the risk should be the "country of ultimate destination," that is, the United States.

NCTO also called for eliminating the subsidies, including currency manipulation, given to countries that compete with U.S. exports in the Western Hemisphere. "In today's competitive world," Johnson said, "no issue is more frustrating for U.S. textile exporters than the unfair playing field that overseas subsidies have created for textile and apparel trade and the lack of U.S. government attention to those subsidies." He cited Chinese currency manipulation in particular, which he said amounts to a 20- to 40-percent price advantage, but he also referred a list of 63 other subsidies China gives its textile and apparel sector.

NCTO called for four steps the U.S. government can take to address this problem:

•    Label China as a currency manipulator and support legislation that would allow the U.S. companies to defend themselves against illegal subsidies.

•    Use the World Trade Organization to challenge China, where subsidies exist.

•    Create a comprehensive public database of Chinese industrial subsidies and make it available to U.S. industries.

•    Reduce the costs of filing dumping and countervailing duty cases, which at present can run into millions of dollars.

The NCTO filing also called for increasing Customs enforcement in free trade areas. Noting that 70 percent of U.S. textile exports go to trade preference areas, Johnson said  "fraudulent players have increasingly discovered that U.S. Customs no longer considers commercial fraud a high priority and fraud has now become prevalent in the Western Hemisphere region." The association called for enactment of the Textile Enforcement and Security Act, which gives Customs new authority, resources and tools to address   fraudulent activity in trade preference areas.

Finally, NCTO called for increased trade promotion and trade missions with emphasis on the importance of textile and apparel trade in the Western Hemisphere, where today there is $25 billion in two-way trade. NCTO says the region offers a number of unique features that are hard for Asia to compete with. The association called on the Department of Commerce to create a forum in which sourcing agents can review and understand the benefits of sourcing garments made in the region with U.S. components.

Johnson said the United States needs "an aggressive and determined export policy that supports businesses and sweeps away impediments to our goods both at home and abroad."

August 3, 2010