Effort To Expand Apparel Exports Blocked

US textile manufacturers and their supporters in Congress have blocked, at least for the time
being, an effort to expand duty-free treatment for apparel imports from Pakistan and Afghanistan.
The effort revolves around legislation creating Reconstruction Opportunity Zones (ROZs) designed to
strengthen the economies of two key US partners in the war on terrorism. Senate sponsors of the
legislation say it will give the people in Pakistan and Afghanistan “new hope and opportunities.”

The legislation, which has passed the House of Representatives as part of the Foreign Affairs
Authorization, would permit non-sensitive exports of textiles, apparel, agricultural products and
hand-crafted goods from these areas to enter the United States duty-free. In order for an area to
be designated a ROZ, President Barack Obama must determine that Pakistan and Afghanistan are
meeting a number of criteria, including establishing or making progress toward establishing
market-based economies, eliminating barriers to US trade and investment, protecting intellectual
property rights, meeting internationally recognized worker rights standards, and taking steps to
reduce poverty.

When the legislation was being considered by the House, an effort was made, at the behest of
US importers, to include the so-called “sensitive product categories” that had been excluded from
quota-free treatment under the now-expired US-China bilateral agreement.

Importers of textiles and apparel have pressed to have the duty-exempt categories expanded to
include all textile and apparel products, but particularly cotton trousers and shorts and cotton
knit tops. These products, importers say, would most likely create job opportunities in the areas
covered by the legislation.In a statement made when the legislation was pending in the House, a
coalition of textile importers said these products currently account for 64 percent of the apparel
exports from Pakistan and more than a quarter of all exports from Pakistan to the United States.
“Configuring the ROZ program to include these items will give Pakistan a fighting chance in this
competitive industry,” the coalition said, “Moreover, US producers are not at risk from apparel
exports from Pakistan, it is the other Asian producers who compete with Pakistan.”

With a big assist from Rep. John Spratt, D-S.C., the sensitive products were removed from the
bill before final House passage, although an effort to restore them is expected to be made in the

Sen. Maria Cantwell, D-Wash., is sponsoring a ROZ bill that would exclude the sensitive
product categories, and Sen. Lindsey Graham, R-S.C., a co-sponsor of the Cantwell bill, has voiced
his strong opposition to any changes. The National Council of Textile Organizations supports the
ROZ legislation in general but not the expansion into the sensitive categories.

July 14, 2009