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NCTO Officials Map New Strategies

NCTO annual meeting presenters cite outside-the-box thinking in describing government programs and industry lobbying activities.

James A. Morrissey, Washington Correspondent

T extile industry leaders and government trade officials are honing a new set of tools to deal with the declining textile industry, and taking actions they hope will lead to eventual recovery and growth opportunities.

As some 100 industry and government officials met recently in Washington for the seventh annual meeting of the National Council of Textile Organizations (NCTO), a subtitle for the  meeting's theme - "Knowledge, Innovation, Speed and Integrity: Leveraging the U.S. Advantage" - might well have been "Thinking Outside the Box." Assistant U.S. Trade Representative for Textiles Gail Strickler used that term in talking about government assistance for export financing. NCTO President Cass Johnson did the same as he described NCTO's lobbying activities. And Janet Labuda of U.S. Customs and Border Protection (CBP) seemed to be saying the same thing as she described a new program to crack down on Chinese import fraud.

Rep. Bobby Bright, D-Ala. (right), emphasizes the need for job creation and calls for tax incentives to encourage manufacturers to hire new workers, as outgoing NCTO chairman Wally Darneille looks on.

In his state-of-the-association report, NCTO Chairman Wally Darneille said 2009 had been a "tough year for textiles," pointing out that the nation faced the worst economic downturn since the Great Depression. At the same time, Chinese imports surged after the removal of import safeguards; subsidized imports from India, Pakistan, Bangladesh and Vietnam "gobbled up an even bigger share of our market"; and textile exports to North America Free Trade Agreement (NAFTA) and Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) nations fell off by 20 percent. "Hopefully, the worst is behind us," he said, noting that NCTO members are reporting increased orders and prices are inching up a little, although input costs also are going up.

Darneille urged NCTO members to "focus daily on the competitive advantages we can create within our supply chain," saying: "Our knowledge, innovation, speed and integrity give us a total value proposition that is clearly superior. We know what our customers want better than suppliers in other parts of the world. We constantly innovate our products and our processes and stay ahead of the curve. We can react to changes more quickly, and shorter supply chains mean lower inventories for our customers, and they know they can depend on our integrity to deliver them the proper quality on a timely basis. Our challenge is getting our customers to quantify that."

In a report covering trade issues, Johnson cited as a major problem the steady decline in trade with Western Hemisphere nations with which the United States has preferential trade agreements that require use of U.S. and/or regional yarn and fabrics in duty-free apparel imports. NCTO issued a report showing a drop in trade in a range of products including trousers, underwear, T-shirts, socks, knit shirts and brassieres. The data show that qualifying regional apparel imports between 2008 and 2009 were down 14 percent within the CAFTA-DR region, 16 percent within the NAFTA region, 43 percent within the Andean region and 16 percent under the Caribbean Basin Initiative. Johnson said China is the "major contributor to the decline."

He added that there is a dangerous trend line and "we are trying to prevent worse things happening." He cited the need for meaningful actions against China and other nations that illegally subsidize their exports. He also said NCTO is working with government agencies on innovative means to obtain export financing. Another high-priority area is working with CBP and Congress to develop better means to combat illegal imports.
NCTO's staff outlined a number of legislative issues and placed considerable emphasis on the need for immediate passage of the duty suspension bill, which grants duty-free treatment to imports that do not compete with U.S.-made products. There are a number of textiles on the list of duty exemptions that expired at the end of last year, and some  products have been added. Johnson said failure to act on the bill "is coming at the worst possible time." NCTO supports legislation calling for tougher Customs enforcement, measures in the House and Senate that would make it easier to take anti-dumping and countervailing duties against countries that manipulate their currencies, extension and expansion of the Buy America requirements for government procurement, and extension of the Andean Free Trade Agreement.

Listed as threats are bills under consideration that would grant assistance to Haiti; preference reform legislation that would grant duty preferences to Cambodia and Bangladesh; and the cap-and-trade environmental control legislation. With respect to Haiti, NCTO says it has taken a leadership role in supporting measures the would help bolster the Haitian apparel industry, but it feels some measures under consideration by Congress would permit inputs from Asian nations that would result in U.S. textile job losses. NCTO is opposed to granting new trade preferences to Cambodia and Bangladesh, as they already are major suppliers to the U.S. market without special treatment.


Thinking Outside The Box
A number of speakers at the meeting discussed new and innovative approaches to addressing problems. Labuda described a new Customs program designed to crack down on Chinese import fraud stemming from undervaluing exports. She said her agency has uncovered countless cases of imports entering the United States at declared values that are only a fraction of their actual value. She said her agency is investigating how the declaration system is being abused, and that, where possible, it will levy fines and exclude entry of offending products. Johnson said Labuda has "discovered a large hole in the system [and she is] pressing the government to fill it." Labuda also said her agency is monitoring the performance of trade preference programs to ensure that they are being properly enforced, and the agency is stepping up its training of textile and apparel specialists.

Strickler discussed new inter-agency efforts to help facilitate exports of textiles and apparel. She noted export financing is a major problem, as many of the countries that present market opportunities do not have the resources and effective systems to come up with the credit needed to finance trade. She said the office is working with the Export-Import Bank, the Commerce Department and other agencies, and that it is in contact with factors and others in the industry who can contribute to developing new ways to address export financing.

NCTO reported on the creation of TexNet, a new grassroots network that draws on the resources of outside organizations that have similar interests in the area of international trade. This effectively doubles the number of employees involved in issues on the textile industry agenda.

Sen. Lindsey Graham, R-S.C., addresses problems with Chinese trade and says his anti-currency manipulation bill would pass the Senate by a wide margin.

Congress And Textiles
Members of Congress speaking at the meeting emphasized the importance of trade to the U.S. economy but said it must be not just free trade, but also fair trade. Sen. Lindsey Graham, R.-S.C., addressed problems with China trade and said, "We must bring balance to an imbalanced system." One way to do that would be to enact his bill, which for the first time would permit anti-dumping cases to be brought based on currency manipulation. In view of widespread concern about China trade, he believes his bill would pass the Senate by 75 to 80 votes. Rep. Bobby Bright, D-Ala., a member of the Blue Dog Coalition of conservative Democrats, called for bipartisan legislation to bring down the record level of unemployment, and said one step would be to improve credit access for small and medium-size manufacturers to help them export. He also supports tax breaks for companies hiring new employees. Saying there are many ways to promote fair trade, Rep. Linda Sanchez, D-Calif., called for renewed efforts to open export markets but at the same time attack illegal subsidies of imports and require fair labor standards in exporting countries. "We want to promote trade, and if we do it right, we can boost our economy," she said.

May/June 2010