USTR Outlines Plans For A Free Trade Area Of The Americas

n a move that could have far-reaching implications for the textile industry, U.S. Trade
Representative (USTR) Robert Zoellick has outlined plans to negotiate a Free Trade Area of the
Americas (FTAA) by January 2005. The plan has the guarded support of textile manufacturers and
importers, but they warn that “the devil is in the details.” In letters to members of Congress,
Zoellick laid out the broad outlines of the U.S. negotiating position, which calls for eventual
elimination of tariffs and non-tariff barriers between countries in the Western Hemisphere. The
plan calls for “fully reciprocal access to markets within the hemisphere for textiles and apparel

Without getting into specifics, the plan is to seek rules of origin that would be designed
to prevent circumvention and transshipments from countries outside the hemisphere. The U.S. textile
industry will seek rules of origin similar to those in the North American Free Trade Agreement
(NAFTA) and the recently enacted Caribbean Basin accord.

Zoellick also said the agreement must safeguard the rights of the United States to invoke
its anti-dumping and countervailing duty laws that are designed to counteract unfair trade
practices. He also said the nations of the hemisphere must seek ways to protect intellectual
property – the designs and patents – of manufacturers.

Zoellick told congressional leaders the administration intends to enter into free trade
negotiations with Morocco and the five nations of Central America, and to pursue the “final stages”
of ongoing free trade negotiations with Singapore and Chile. Trade officials believe the Chilean
pact can be completed by the end of this year.

In announcing his plans, Zoellick said the FTAA negotiations offer the United States “an
opportunity to lead the Americas toward stable and continuing economic growth, improved living
standards, and higher paying jobs in all FTAA countries.”

Administration Slaps Bangladesh For Overshipping Apparel

The Bush administration appears to be living up to its commitment to enforce textile trade
agreements, as it has hit Bangladesh with some pretty harsh trade sanctions for exceeding its
apparel import quota. When Bangladesh overshipped its quota by 175,000 dozen pairs of cotton
trousers last summer, the Customs Service embargoed the goods, and they have been sitting in
warehouses since July 26. Major retailers who had ordered the trousers appealed to the government
to release them in time for Christmas sales, but the U.S. textile industry and its supporters in
Congress insisted that Bangladesh not be rewarded for exceeding its quota.

The U.S. government finally reached a compromise that has made everyone reasonably happy.
The goods will be permitted to enter the country, but next year’s quota for cotton trousers will be
reduced by three times the amount of illegal shipments this year. Eric Autor, the National Retail
Federation’s international trade vice president, said retailers are satisfied with the compromise,
since their main interest was in getting the goods they had been counting on for Christmas. Parks
Shackelford, president of the American Textile Manufacturers Institute (ATMI), said that while
overshipments cannot be tolerated, the compromise is satisfactory under the circumstances.
Government trade officials say this is a one-time deal and it should not set any precedent.

Textile Working Group’s Progress

Textile international trade experts believe the U.S. government is making some progress in
addressing the economic woes of the textile industry, but they feel there still is a long way to
go. It is clear that thanks to the work of the Congressional Textile Caucus, the industry has the
ear and support of Commerce Secretary Donald Evans, and a dedicated and smart worker in James C.
Leonard, assistant secretary of commerce for textiles, apparel and consumer products.

Leonard, a veteran of some 30 years of textile trade wars, told Washington reporters, “This
is the first time I have seen such strong evidence that the government is being responsive to the
needs of the textile industry.” In spite of the commitments, however, many questions remain as to
what actually can be accomplished. Most industry experts feel it is too soon to tell, and they will
continue to press for more results.

A report given to the Congressional Textile Caucus by the interagency Textile Working Group
– established last December to address international trade and economic issues – outlines progress
to date in dealing with such problems as trade agreements, market access, illegal transshipments,
export expansion and trade adjustment assistance for workers who lose their jobs as a result of
imports. The working group said its mission is to “ensure that U.S. textile concerns are reflected
in the administration of our current trade agreements and in negotiations of new agreements,
especially to open foreign markets for our textile and apparel products.”

The working group cited the following accomplishments to date:

•    The government has successfully resisted demands in the World Trade
Organization (WTO) by some developing countries to accelerate the removal of textile quotas now
planned by January 2005.

•    U.S. Customs has stopped $300 million in illegal trade involving 162
factories that have been closed down.

•    Work is underway with 25 countries to get them to follow through on
their commitments to reduce tariffs and non-tariff barriers to trade.

•    The Commerce Department has added 11 trade promotion events to its
already existing calendar of trade shows it supports and offers to help U.S. companies participate.

•    In ongoing trade negotiations, the U.S. government is resisting efforts
to weaken its ability to enforce anti-dumping and countervailing duty laws.

November 2002