WASHINGTON — A Senate trade bill could include three provisions that already have set off debate.
The Senate Finance Committee is considering proposals that would lower the value-added threshold to 30 percent from 50 percent on apparel made in the U.S. territories of the Northern Marianas, Guam and American Samoa; establish a federally funded trust fund for importers and makers of pima cotton apparel and fabric, and exempt woven performance outerwear pants made in China from U.S. quota restrictions.
The Northern Marianas came under scrutiny for labor abuses and sweatshop conditions in the Nineties. U.S. retailers and apparel companies have sourced apparel in U.S. territories for years. The bulk of production centers in Saipan, the capital, which employs guest workers primarily from China.
More recently, the Northern Marianas drew attention for its connection to convicted former lobbyist Jack Abramoff and ex-House Majority Leader Tom DeLay (R., Tex.), who allegedly worked together to block legislation that would have raised the minimum wage and strengthened labor and immigration laws in the territory.
The finance committee is examining public comments on various provisions of the omnibus tariff legislation, which often has hundreds of initiatives attached to it, including measures that would suspend duties on products.
Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said the proposal would allow apparel companies in the Northern Marianas to use more foreign fabrics, which would “negatively affect U.S. textile producers currently supplying those yarns and fabrics as well as U.S. apparel producers forced to compete with duty free imports made by exploited workers.”
Benigno R. Fitial, governor of the Northern Marianas, said enacting the change in value-added requirements would “help halt the decline of the [territory’s] apparel industry,” which has seen its sales drop to roughly $50 million a year from $1 billion in 1999, due to the removal of apparel and textile quotas and a shift in business to China. “The manufacturers cannot add 50 percent value and remain competitive with neighboring Asian producers,” said Fitial. “The reduction in expense would increase the CNMI’s competitiveness and allow factories to retain employees,” as well as stabilize and possibly increase revenue to the government.
Stephen Lamar, senior vice president at the American Apparel & Footwear Association, which supports the provision, said it could give the garment industry in the Northern Marianas a boost by making the region more competitive for U.S. companies.
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“You can see some of the business coming back that they have lost” with this change in the value-added requirements, said Lamar. “The island’s economy has very little besides that.”
The Senate panel also is considering a bill that would temporarily suspend duties on imports of woven cotton shirting fabrics and establish a federally funded trust fund for importers and producers of pima cotton apparel and fabric.
Joe Dixon, vice president of production and sourcing at Brooks Bros., said in his public comments that eliminating duties on the specified imported fabrics would help its wholly owned subsidiary, Garland Shirt Co., which produces high-quality men’s and boys’ shirts.
“While foreign makers of such shirts from many countries can import finished shirts into this country duty free using two-ply shirting fabrics from any source, United States manufacturers continue to pay duties on fabric that the United States Congress and government have repeatedly found is no longer made in the United States,” he said. “As a result of this unintended duty inversion, the United States shirt manufacturing industry has suffered tremendously.”
Missy Branson, senior vice president of the National Council of Textile Organizations, said U.S. textile producers still make one-ply cotton shirting fabric and will oppose the bill if it covers that category. NCTO also opposes the proposed pima cotton trust fund because it allocates more federally funded dollars — there is a proposed $16 million annual cap — to manufacturers and importers of pima cotton apparel than it does to yarn spinners.
Textile producers also are opposed to a measure under consideration that would exempt imports of certain woven performance outerwear pants (water-resistant or coated synthetic fiber fabric, ankle-length pants) made in China from quotas, while some pants makers support it. The U.S. has a bilateral import restraint agreement with China through 2008, which limits billions of dollars worth of apparel, including pants, and textile imports from China.