Trade Bill Designed To Boost Textile Exports

Rep. Jim McDermott, D-Wash., has introduced legislation that would permit duty-free entry into the
United States of apparel made in the Philippines, provided it contains yarn and fabric made in the
Philippines or the United States. Its provisions are similar to the yarn-forward requirement in a
number of US free trade agreements (FTAs).

In introducing the legislation, McDermott, a member of the House Ways and Means Trade
Subcommittee, said the Philippines represents a “tremendous economic potential and enduring
political and security significance to the United States.”

The bill says the United States and the Philippines share the same concerns and challenges
stemming from the removal of textile and apparel quotas worldwide and the import safeguards guards
covering US/Chinese trade. It also notes that the US apparel industry is heavily dependent on
sewing operations outside of the United States, and for the first time, US textile manufacturers
would have a program that utilizes sewing done in an Asian country. The United States has
negotiated an FTA with South Korea, but it is bogged down in Congress in view of strong opposition
from US automobile and textile manufacturers and others in this country as well as from
agricultural interests in Korea.

The law would grant duty-free treatment to apparel products wholly assembled in the
Philippines, provided they are made from US or Filipino yarn and fabric. It specifies a wide range
of products including men’s and boys’ shirts, shorts, underwear and trousers; and women’s and
girls’ skirts, shorts, blouses, slacks, brassieres and swimwear.

Noting that the United States and the Philippines have “mutually benefited from strong
economic and cultural ties that date back many decades,” McDermott pointed to a sharp decline in
trade in recent years. He said  apparel imports from the Philippines have fallen by almost $1
billion since 2000, and US textile exports to the Philippines amounted to only about $20 million
last year.

Kevin M. Burke, president and CEO of the American Apparel and Footwear Association, strongly
endorsed the McDermott bill, saying, “Our efforts to tear down barriers to trade will strengthen
the relationship we share with our 30th-largest trading partner while working to benefit our
textile and apparel industries.”

Peter B. Favila, secretary of the Philippine Department of Trade and Industry, also endorsed
the legislation and urged Congress to approve it “as soon as possible.”

June 30, 2009