Tall Orders For New Administration And Congress

S textile manufacturers will be pressing the new Congress and administration taking over
in January to act on what they feel is a good deal of unfinished business left behind by the Bush
administration and the 110th Congress. While it will take some time to get administration trade
officials nominated and confirmed, textile and other manufacturers are looking to the government to
stem the flow of imports and their impact on manufacturing jobs. They, along with retailers and
other importers, look for a busy year on the trade front.

Free Trade Agreements

The Bush administration negotiated some 25 free trade agreements (FTAs). Textile
manufacturers generally supported those agreements when they provided a yarn-forward rule of origin
and limited amounts of inputs from non-participating countries if it appeared that the
participating countries presented market opportunities for US yarn and fabric in apparel
manufactured in those areas. The broader-based American Manufacturing Trade Action Coalition, which
includes textile manufacturers, has been less than excited about the FTAs, as it has felt that many
of the countries involved do not provide anywhere near the overseas market opportunities for US
goods that they do for increased imports. US importers of textiles and apparel do not like the
yarn-forward requirements and limits on products from non-participating countries, as they believe
they restrict sourcing opportunities.

There is not much likelihood that new free trade agreements on the scale and scope of the
Bush administration will be negotiated, at least not very soon. There is increasing congressional
concern about reciprocity and other considerations such as human rights, working conditions and
environmental protection. It will be virtually impossible to negotiate new agreements until
Congress renews the president’s Trade Promotion Authority, which says Congress can only approve or
reject an agreement without any amendments. That authority expired last year, but there is
considerable sentiment to renew it.

China Trade

While there is widespread concern about the trade deficit in manufactured goods, more than
half of which is accounted for by China, there continues to be considerable reluctance to get tough
with China. This is due in large measure to the facts that retailers rely heavily on Chinese
imports and multinational corporations have major involvements in China, and no one wants to pick a

In order to stem an increasing flow of imports from China, US textile manufacturers and
organized labor are banking on an import-monitoring system that could lead to the imposition of new
import quotas and/or other trade sanctions. Two avenues are being pursued. One would be a
monitoring program by the Department of Commerce that could lead to imposing anti-dumping  or
countervailing duty tariffs on goods if it is determined that Chinese goods are being unfairly
subsidized and dumped in the US market. A second approach being taken by the House Ways and Means
Committee would direct the International Trade Commission to monitor trade and its impact on the US
economy. If there is sufficient indication that Chinese imports are disrupting the US market or
threatening to do so, import quotas or tariffs, or both, could be imposed. In both cases, the
monitoring efforts would have to have the support of the president. While a monitoring program
would be confined to the US

market, the effort has been joined by textile and apparel trade associations from 16 other
countries that believe a surge in Chinese exports into the US market would eat into their share of
the market.

Textile officials both here and abroad are concerned about what they say is China’s
manipulation of its currency in order to gain an unfair advantage in trade. Congress has taken some
tentative steps to address the currency issue, but nothing has come of it. One bill, sponsored by
Reps. Duncan Hunter, R-Calif., and Tim Ryan, D-Ohio, would declare currency manipulation an unfair
trade practice and give injured parties the right to seek compensation under US countervailing duty
laws. Another measure, sponsored by Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C.,
would impose a 27.5-percent punitive tariff on Chinese goods in order to offset the advantage of
what is viewed as unfair subsidy. Importers of textiles and apparel are strongly opposed to these
measures, charging that they would increase the costs of consumer goods and limit their choices.
They say that similar efforts in the past have failed to protect US manufacturing jobs.

Trade Enforcement

Reps. Charles B. Rangel, D-N.Y., chairman of the House Ways and Means Committee, and Trade
Subcommittee Chairman Sander Levin, D-Mich., will most likely retain their leadership positions in
the next Congress and can be expected to reintroduce their Trade Enforcement Act of 2008, which is
designed to help the United States enforce its international trade rights and attack non-tariff
barriers to trade. The legislation would create a Director of Intellectual Property Rights
enforcement and an advisory committee to address property rights issues. It would increase staffing
and add better training for expanded Customs and immigration enforcement. It would require the US
Trade Representative (USTR) to identify and annually report on foreign government trade barriers
and take action to eliminate them. It also would create a Congressional Trade Enforcer to
investigate trade barriers, and calls on the USTR to file cases and make great use of US trade
remedies such as countervailing duties to combat unfairly subsidized imports from non-market
economies, such as China.

Job Loss Assistance

While there is considerable congressional interest in renewing and upgrading trade
adjustment assistance (TAA) for workers who lose their jobs as a result of import competition,
bills that would do that were held hostage in view of other trade legislation in the waning hours
of the 110th Congress. The proposals, which likely will be reintroduced in the new Congress in one
form or another, would expand TAA eligibility, reduce the requirements for receiving aid, shorten
the time frame for processing applications and provide increased funding for retraining.

Copyright Protection

The Bush administration was successful up to a point in putting pressure on China to do a
better job of policing intellectual property rights violations, and US textile manufacturers would
like to see more of that. One specific area of concern is the so-called “Orphan Works,” for which
it is difficult or impossible to contact the copyright holder of a design. US manufacturers often
have a comparative advantage with their ability to produce copyright and patented designs, but that
advantage is lost when their designs are knocked off by overseas manufacturers. Legislation to
address this problem was introduced in the last Congress, but it was not enacted. Rep. Howard
Berman, D-Calif., chairman of the House Judiciary’s Subcommittee on Courts, the Internet and
Intellectual Property, is the main sponsor of the bill, and textile manufacturers would like him to
give it another shot in the new Congress.

Changes Sought In Government Procurement Of Textiles

Textile and apparel manufacturers are seeking ways to improve and expand government
procurement of textile products. Although it is a long shot, they are supporting legislation that
would extend the Buy American principles currently required for textile and apparel purchases by
the Department of Defense to the Department of Homeland Security (DHS). Legislation introduced but
not enacted in the 110th Congress would have prohibited the DHS from purchasing certain items,
including clothing, fabrics and sewn products from overseas, if the products are available from
domestic sources. Textile manufacturers will be asking their supporters in Congress to try again.
In addition, two coalitions, comprised of major US textile and apparel trade associations, are
involved in stepped-up efforts to streamline and improve military procurement practices in an
effort to make it easier and more practical for domestic manufacturers to do business with the

November/December 2008