WASHINGTON — Trade bills pending in the last days of the Republican-controlled Congress may have significant ramifications for apparel and textile production.
If Congress fails to act on several bills, importers will face more uncertainty in sourcing strategies and might be forced to shift production. For the domestic textile industry, inaction on most of the measures would be welcome, although a segment supports extending trade benefits that expire at the end of the year to the Andean countries.
Among the proposals that executives and lobbyists are pressing Congress to pass, defeat or postpone are granting permanent normal trade relations to Vietnam as well as expanding and extending duty free apparel and textile trade benefits to sub-Saharan African countries, Haiti and the Andean countries of Peru, Colombia, Bolivia and Ecuador.
There is speculation that Republican leaders could bundle some of the pending bills into an omnibus legislative package containing tax breaks for small businesses. But some experts said lawmakers are trade-weary and will not support moving the legislation this week.
“No decisions have been made on any of the trade bills, yet,” said Kevin Madden, press secretary for House Majority Leader John Boehner (R., Ohio). “Peru and Vietnam are obviously still out there, and there haven’t been any decisions made about their status.”
Paul Fakes, a legislative assistant in the office of Sen. Majority Leader Bill Frist (R., Tenn.), said Frist has indicated the Senate will take up the Vietnam trade bill if the House passes a “clean,” stand-alone bill without amendments.
Fakes said Frist has “tasked” the Senate Finance Committee and House Ways & Means committee to put together a tax and trade package that is “non-controversial” and can be passed under fast-track procedures in both the House and Senate this week. That package could contain one-year extensions for the expiring Andean and African trade preference pacts and generalized system of preferences program, as well as duty suspensions on hundreds of imported products contained in a miscellaneous tariff bill.
Stung by the loss of majorities in the House and Senate, Republicans appear to be showing signs of discontent with the Bush administration. Democrats, who will control the Congressional agenda for the first time in 12 years, are trying to formulate their own free trade agenda.
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“If Republicans cannot restore discipline, you could say the whole trade agenda is in doubt this week,” said Gary Hufbauer, senior fellow at the nonprofit Peterson Institute for International Economics. “It will take fierce Republican discipline, which was clearly missing before Thanksgiving, and it will also take the view of the top leadership in the Democratic Party that they don’t want to be seen as purely negative on trade.”
GOP leaders are facing a complicated scenario with the Vietnam bill, which failed to get the two-thirds majority necessary in the House on Nov. 13 under special rules that limit debate and are often used when an overwhelming affirmative vote is anticipated.
Further complicating matters is the House Textile Caucus, which appears poised to vote against the trade and tax package. But two powerful House leaders — departing Ways & Means Committee chairman Bill Thomas (R., Calif.) and his successor, Charles Rangel (D., N.Y.) — support it.
Textile-state lawmakers oppose expanded benefits for Haiti that allow companies to use foreign fabrics and yarns, which would undercut the existing U.S. fabric and yarn export business to the Caribbean region.
“We are opposed to the Haiti bill,” Rep. Robin Hayes (R., N.C.) said. “We are working hard with leadership and telling them we don’t need that now on top of the other [trade] issues that are adversely affecting the textile industry.”
Cass Johnson, president of the National Council of Textile Organizations, which supports trade preferences for the Andean region, said, “We will definitely oppose the trade package [if it includes preferences for Haiti], even if Andean [trade preferences] are included. You would be taking away a lot more than you are getting.”
Johnson noted that U.S. fabric and yarn export business to the Andean region is around $200 million annually, while the textile export business to the Caribbean region as a whole is about $700 million to $800 million.
Retailers and apparel manufacturers have a two-pronged approach this week, but are concerned a large omnibus package could become too controversial.
“If there is a deadlock [on the trade-related bills], leadership will start dropping stuff out of it,” said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel. “They will have to throw things overboard if they can’t reach a consensus, and no one wants that.”
Jennifer Mulveny, director of trade and legislative affairs for law firm Sandler, Travis & Rosenberg, who has been leading importers’ efforts to extend the trade benefits for the four Andean countries, said the extension of the Andean preference program stands a better chance of inclusion in a trade and tax package than more controversial bills like the Vietnam and Haiti bills.
She said that extensions of the third-country fabric provisions for the African countries, as well as the GSP program, could be included. Mulveny cautioned, however, that Republican leaders might not have the “stomach to do intense negotiations” with Thomas and could forgo including any trade-related item.
“They want to get in and out this week, and they have to come up with a package that can be swallowed by the Senate without any problems,” she said.
A business coalition comprising industry trade associations and companies such as Levi Strauss & Co., Wal-Mart Stores Inc., Jones Apparel Group, Liz Claiborne Inc., Hanesbrands, Jockey International, Procter & Gamble and Phillips-Van Heusen sent a letter Friday to House and Senate Republican and Democratic leaders pressing them to extend and expand trade preferences for Andean countries, African countries and Haiti.
Passage of the Vietnam bill is also a priority, but a group of retailers and apparel importers have made it contingent on clarifications of a commitment the Bush administration made to two textile-state senators, Lindsey Graham (R., S.C.) and Elizabeth Dole (R., N.C.), to monitor Vietnamese imports and possibly undertake antidumping cases.
Importers have enlisted the help of two senators, Gordon Smith (R., Ore.) and Dianne Feinstein (D., Calif.), who have asked for clarity on the program before they vote on normalizing trade with Vietnam.
“Vietnam is our priority,” said Brad Figel, global director of government and public affairs at Nike Inc., who heads the company’s Washington lobbying office. “If Vietnam goes this week, we have to eliminate most of our concerns, and we are doing everything we can to get it cleaned up and move forward on it, because it is very important.”
Scott Gerber, a spokesman for Feinstein, said that the administration has not yet sent a final response to Feinstein and Smith to satisfy their concerns. As for whether Feinstein has put a hold on the bill, Gerber said, “I think it is fair to say she remains concerned about the legislation as it stands and hopes an agreement can be reached by USTR and retailers to address their concerns.”