WASHINGTON — The omnibus trade and tax bill passed by Congress last week is causing angst for apparel importers that are sourcing in Vietnam and Haiti and domestic textile manufacturers that feel threatened by expanded trade benefits for the developing countries.
The House and Senate approved the legislation before adjourning for the year, ostensibly providing more certainty for importers. But last-minute assurances and commitments related to trade with Vietnam and Haiti have clouded the picture again.
Importers, concerned about committing apparel orders to Vietnam because of a pledge the Bush administration made to Sens. Lindsey Graham (R., S.C.) and Elizabeth Dole (R., N.C.) to monitor Vietnamese imports and possibly undertake antidumping cases, were hoping for clarifications and parameters from the White House before the vote. Graham and Dole represent key textile-producing states.
The administration made the commitments to Dole and Graham in a nonbinding letter, but importers were still concerned political pressure would force the White House to follow through on the commitments.
So they enlisted the help of Sens. Dianne Feinstein (D., Calif.) and Gordon Smith (R., Ore.) to get clarification on how and what kind of Vietnamese apparel and textile imports would be monitored. In addition, importers sought assurances that the new program would not establish more burdens for apparel and textile importers and exporters, and that any antidumping cases would be fully consistent with requirements in current U.S. law.
Feinstein and Smith said on the Senate floor the night of the vote that they had received new verbal assurances from the administration. Both then voted for the broad tax and trade legislation, which passed in the Senate by 79 to nine.
The senators said they met with U.S. Trade Rep. Susan Schwab and David Spooner, assistant secretary for import administration at the Commerce Department.
“Specifically, USTR and Commerce told us that it is their intention that any investigation would only cover those textile and apparel products imported from Vietnam that are like or identical to a product also produced in the United States,” Smith said on the Senate floor. “This makes sense to me, because why would the U.S. government monitor a product from Vietnam that is not produced in the United States or that the U.S. domestic industry is not interested in being monitored in the first place?”
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Retail and apparel importing lobbyists said last week the assurances to Feinstein and Smith were not substantive in nature and did not definitively eliminate uncertainty, but provided political cover for the senators to vote for the bill.
“I think it was the best we could do under the circumstances,” said Erik Autor, vice president and international trade counsel at the National Retail Federation. “I think USTR made it clear that with the Federal Register notice out seeking public comments, they weren’t going to make any premature substantive commitments, and we’ve just got to live with that fact.”
Autor said the USTR office has “left a lot of wiggle room” in its responses to Feinstein and Smith that he called a “bunch of open-ended statements,” as well as the commitment to Graham and Dole.
“The textile industry believes this commitment means one thing, and we obviously believe these commitments mean something else,” he said. “USTR has been very quiet about which viewpoint is correct.”
Stephen Lamar, executive vice president at the American Apparel & Footwear Association, said companies are looking for the administration to directly and publicly make clarifications.
“Until that really happens and until we see the process take shape, people will still be tentative when looking at Vietnam” as a sourcing place, Lamar said. “Their colloquy added to the record of what people understand the process to be, but I think that record is still being developed.”
Brad Figel, global director of government and public affairs at Nike Inc. who heads the company’s Washington lobbying office, said the assurances the senators received was “exactly what we need,” but he acknowledged the industry has “a lot of work ahead of us” to help shape the monitoring program and antidumping regulations.
Separately, a promise made by Sen. Max Baucus (D., Mont.), the incoming chairman of the Senate Finance Committee, could delay the expanded apparel trade benefits for Haiti for as long as a year and force companies producing apparel there to wait longer for the benefits to kick in. However, that new pledge could help domestic textile firms and lawmakers work with Customs & Border Patrol agents to improve the system for monitoring shipments that might contain transshipped apparel items from China.
Baucus told Graham, Dole and Jeff Sessions (R., Ala.) the night of the vote that he would try to honor their request to pass an amendment to the omnibus bill next year to provide the president as much as one year to certify the benefits for Haiti. Baucus also said he has the support for such a move from Rep. Charles Rangel (D., N.Y.), who led the effort in the House to pass new benefits for Haiti.
As the bill stands, the president has 90 days to certify that Haiti has made sufficient progress in meeting the conditions of the law.
The proposed change would extend that period to one year and would not preclude the president from certifying the benefits for Haiti at any point during the year, the senators said. Any amendments to the bill would have to be passed by the House and the Senate.
The three senators also asked for a hearing on the benefits for Haiti and their impact on the U.S. textile industry when the Democratic-controlled Congress returns for its session next year. Baucus said he could “accommodate” their request.
“I believe this Haiti trade package needs to be thoroughly reviewed,” Dole said.
Importers argued the Baucus pledge could undermine the benefits in the bill Congress just passed and force companies to reconsider placing orders in Haiti.
“The longer this takes to come into force, the less likely it will have real meaning for Haiti” or importers, said Brenda Jacobs, counsel for the U.S. Association of Importers of Textiles & Apparel.
Textile officials downplayed the commitment and said it was made to give Customs officials adequate time to develop a system for screening illegal transshipments, possibly from China, through Haiti.
“One of the key facts that came out of this debate was a real concern over whether Customs has the ability to enforce this legislation,” said Cass Johnson, president of the National Council of Textile Organizations. “This agreement is a step toward making sure Haiti is not used as a transshipment route for Chinese-made goods.”