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Washington Outlook Archive

Lobbyists See Little Action On Trade Issues

James A. Morrissey, Washington Correspondent

I n the wake of the highly contentious debate over healthcare reform, the Obama administration and members of Congress are reluctant to move on international trade issues, which could be equally divisive and have a negative effect on next year's congressional elections. As a result, Washington lobbyists for importers and manufacturers see little action on textile trade issues this year. They point out that many members of Congress have been forced to make tough votes on healthcare, and they are not inclined to step on any more land mines that could hurt their re-election chances despite ongoing concerns about trade deficits and the continuing loss of manufacturing jobs to overseas competitors.

There are about a dozen measures in various stages of consideration by Congress that would have an impact on textile and apparel trade, including bills in both the House and the Senate that would define currency manipulation as an unfair trade practice and permit use of US anti-dumping and countervailing duty laws to offset trade advantages; free trade agreements (FTAs) with Colombia, Panama and South Korea that were negotiated by the Bush administration but have been held up in Congress as members seek ways to introduce labor rights and environmental considerations; expansion of the Buy American requirements for purchases of textiles and clothing by the Department of Homeland Security; bills that would make non-market economies such as Vietnam and China subject to US anti-dumping and countervailing duty laws; a proposal to create a value-added tax system similar to those in use in other countries; and a plan to create Reconstruction Opportunity Zones in Afghanistan and Pakistan that would permit specified textile and apparel products to enter the United States duty-free. In addition, the House Trade Working Group has proposed far-ranging changes in international trade practices including a comprehensive review of the model that has been used in negotiating FTAs and replacing what the group calls the "anti-democratic" fast track negotiating authority with a new system that would give Congress a stronger hand in shaping future trade agreements.

Of a more urgent nature, a number of duty suspensions, including some on textiles and textile machinery, are due to expire at year's end, as is the Andean Trade Partnership Act granting special trade concessions to Bolivia, Colombia, Ecuador and Peru. There's a pretty good chance Congress will act on these measures this year or early next year, but if not, they could be approved retroactively, as they have been in the past. Retailers and other importers in particular do not like that prospect, as it simply adds to uncertainty in their procurement decisions.

No one sees any significant action on other trade issues. There may be some hearings that would lay the groundwork for action next year and give members of Congress an opportunity to show their constituents they are concerned about trade problems. There remains a possibility that a number of relatively non-controversial items could be lumped together in a trade bill or attached to other legislation.

Customs Reform
One area in which there is likely to be some action is Customs reform. Textile manufacturers, importers and key members of Congress agree there is an urgent need to reform some Customs practices. Textile manufacturers for years have pressed for more Customs agents and more aggressive enforcement, particularly with respect to FTAs, in situations in which they feel the benefits of these special programs are being negated by illegal shipments from non-participating countries. Importers have been concerned by what they see as too much emphasis on enforcement and not enough attention paid to facilitating legal trade. Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking Republican member Chuck Grassley, R-Iowa, have introduced legislation reauthorizing US Customs and Border Protection (CBP) and US Immigration and Customs Enforcement (ICE) and putting more resources behind both enforcement and trade facilitation. The senators say those agencies need to do a better job of enforcing customs and trade laws and at the same time do more to smooth the way for legitimate trade.

The Baucus-Grassley bill would fully authorize CBP and ICE, which today have only discretionary authority under the Homeland Security Act, and would specifically direct the agencies to "prioritize" their enforcement and facilitation missions. The bill would create within CBP and ICE two new high-level positions whose main mission would be to oversee enforcement and facilitation.

At a recent congressional hearing, Cass Johnson, president of the National Council of Textile Organizations, told the committee that textile and apparel fraud has been a problem for decades and that according to Customs officials, the textile and apparel sector today attracts more fraudulent activity than any other industrial product sector. "At a time when there are immense problems for manufacturing our government needs to take all actions necessary to make sure our trade laws are faithfully executed," he said.

Where The CPSC Is Headed
The new head of the Consumer Product Safety Commission (CPSC), Inez Tenenbaum, seems to be heeding Theodore Roosevelt's advice to "Speak softly but carry a big stick."

A lawyer and former South Carolina superintendent of education, Tenenbaum told her staff she is not interested in a confrontational relationship with the industries the commission regulates, but she also emphasized that she will draw on the powers of the new product safety law to issue and enforce safety standards. She also plans to use education and openness to bring about a better atmosphere to promote product safety.

While expressing her interest in cooperation, Tenenbaum, in a meeting with Associated Press reporters and editors, put industry on notice that she will enforce the new Consumer Product Safety Improvement Act (CPSIA), and she pointed out the new law provides heavy penalties for non-compliance. CPSIA, among other things, raises from $1.8 million to $15 million the maximum penalties the agency can impose for violations and ups the criminal penalties to five years in prison. It also requires the Government Accountability Office to conduct a study of formaldehyde in textiles and apparel and to issue a new standard if warranted.

Tenenbaum's approach to regulation was demonstrated in one of the first actions under her chairmanship - regulations requiring manufacturers of products intended for use by children, including textiles and apparel, to have tracking labels that will make it easier to spot unsafe products and provide information for recalls. Textile manufacturers were generally pleased with the guidelines that stated manufacturers can use their "reasonable judgment" in determining the types of labels appropriate for their products.

President Barack Obama and the Senate moved quickly to bring the commission, which has been limping along since the 1980s with an acting chairman and only one other commissioner, up to full strength with the appointments of Tenenbaum; Anne Northrup, a former member of Congress from Kentucky; and Robert Adler, a veteran of more than three decades of work with product safety issues; in addition to Bush administration holdovers Thomas Moore and Nancy Nord.

September/October 2009