Note: Please go to AAFA's "Industry Social Responsibility" Web Page for the latest information on Corporate Social Responsibility issues affecting the apparel and footwear industries.

12.20.06
President Bush will sign the AAFA-supported trade and tax bill, H.R. 6111, into law this Wednesday, December 20. As a result, the temporary duty suspensions and reductions for footwear, yarn and fiber contained in the legislation will become effective January 4, 2007 (15 days after the bill is signed into law). The temporary duty suspensions and reductions in the legislation will save US footwear, apparel and textile companies over $20 million a year in duties alone. For a detailed AAFA summary of all of the trade-related provisions in the legislation, please go to AAFA's website.

According to recent reports, only four of China’s 1,200 shoe manufacturers will file lawsuits against the European Union’s 16.5 percent anti-dumping tariffs on imports of Chinese leather footwear before the appeal deadline of December 20. Meanwhile, in light of the debacle that was the footwear dumping case, the European Union (EU) has begun a comprehensive review of its anti-dumping laws. The results of this assessment could have a major impact on the EU’s current footwear dumping duties on China and Vietnam when those dumping duties come up for review in 2008.

Vietnam will formally become the 150th member of the World Trade Organization (WTO) on January 11, 2007. The United States must eliminate all quotas on US apparel and textile imports from Vietnam no later than this date. AAFA continues to urge the US government to issue an official notice as soon as possible on how it will handle the removal of quotas. Meanwhile, comments on the US government's new monitoring program for US apparel and textile imports from Vietnam are due December 27. The program arose out of a September 28 deal with two textile state Senators where the administration promises to monitor and possibly self-initiate anti-dumping cases against US apparel and textile imports from Vietnam.

The US International Trade Commission (ITC) has launched two AAFA-supported studies to determine the level of US production of performance outerwear and textile travel goods (luggage, travel bags, brief and computer cases, backpacks). The results of the studies will be used in the ongoing debate surrounding treatment of both products under US trade policy. AAFA encourages members to fully participate in the studies if contacted directly by the ITC. The ITC will also accept written comments from interested parties on each study. Comments on the performance outerwear study are due by April 30, 2007 and comments on the textile travel goods study are due by June 30, 2007.

In an effort to support their apparel industries, both Mexico and Canada have recently eliminated duties on imports of certain yarns and fabrics.
With the Democratic takeover of Congress raising fears of a protectionist backlash in Congress, particularly against China, a new study analyzing the trade views of the new incoming members of Congress indicates that the election will likely have only a minor impact on trade. The USA*Engage and National Foreign Trade Council (NFTC) 2006 Elections Analysis found instead that trade was not a decisive issue in most of this year's Congressional races.
The European Parliament approved a new chemical registration and regulation program (known by its acronym as REACH) on December 13. Enactment will take place before the end of the year and enter into force on June 1, 2007. Pre-registration requirements will not begin until June 1, 2008. REACH ultimately envisions the registration, providing for documentation of any health risks, of more than 30,000 chemical substances over the course of the next 11 years. About 1500 chemicals may be the subject of additional restrictions, including requirements that safer alternatives be found. More information can be found on the REACH website.

With the Democratic takeover of Congress raising fears of a protectionist backlash in Congress, particularly against China, a new study analyzing the trade views of the new incoming members of Congress indicates that the election will likely have only a minor impact on trade. The USA*Engage and National Foreign Trade Council (NFTC) 2006 Elections Analysis found instead that trade was not a decisive issue in most of this year's Congressional races.
The European Parliament approved a new chemical registration and regulation program (known by its acronym as REACH) on December 13. Enactment will take place before the end of the year and enter in, to force on June 1, 2007. Pre-registration requirements will not begin until June 1, 2008. REACH ultimately envisions the registration, providing for documentation of any health risks, of more than 30,000 chemical substances over the course of the next 11 years. About 1500 chemicals may be the subject of additional restrictions, including requirements that safer alternatives be found. More information can be found on the REACH website.

12.11.06
Thanks in part to intensive lobbying by AAFA and many AAFA members, Congress approved a package of AAFA-supported trade measures in the waning moments before Congress adjourned for the year. The trade package included 1) the Miscellaneous Trade Bill (MTB), which provides for duty-free access for a number of US footwear imports as well as for some textile products; 2) extensions of the Andean trade preference and the Generalized System of Preferences (GSP) programs, both of which would have otherwise expired at the end of this year; 3) additional trade preferences for US apparel imports from Haiti; 4) extension of the third-country fabric provisions under the African Growth and Opportunity Act (AGOA) until 2012; and 5) Vietnam PNTR legislation (See Summary of Bill; See Actual Text of Legislation). The US House of Representatives approved the trade package on Friday, December 8 at 7:45PM by a vote of 212-184. The US Senate followed suit at 4:30AM Saturday morning, December 9, approving the legislation by a vote of 79-9, only moments before the 109th Session of Congress ended.

The United States and Costa Rica reached a deal December 1 on pocketing under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). With completion of this deal, the United States has now reached deals with all six of its CAFTA partners and can now move towards convening all seven CAFTA countries together to combine, finalize and implement all of the pocketing deals, possibly by as early as February. Despite reaching this deal, Costa Rica will not likely join CAFTA until the summer of 2007 at the earliest. In other news, many hope the Dominican Republic will join by the end of the year. Meanwhile, the US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) has indicated that it will soon extend the time period for which to submit refund claims under the retroactivity provisions of CAFTA since neither the Dominican Republic nor Costa Rica have yet joined the agreement.

In a December 5 press release, the International Apparel Federation (IAF) announced that it has moved its headquarters from London to Amsterdam (Zeist) in The Netherlands. The move is part of an overall restructuring program, which included a review of the Federation’s Charter and Articles of Association.
The IAF is the prestigious international association of national associations of apparel and textiles that was founded in 1972 at Williamsburg, USA by the trade federations of Europe, the US and Japan. IAF’s membership includes apparel associations from 33 countries representing over 150,000 apparel companies and over 5 million employees.

At a recent members meeting at its new headquarters in Zeist, IAF appointed the first Executive Committee that will lead the Federation for the next two years. The committee includes the President, Mr. Vassilis Masselos, (Hellenic Clothing Association, Greece); two Vice Presidents: Mr. Roland Tsai, (TTF, Taiwan) and Mr. Harry van Dalfsen, (MODINT, Netherlands); Treasurer, AAFA President & CEO Kevin Burke; and four members: Mr. Alejandro Faes, as IAF Past President (CNIV-Mexico); Mr. William Lakin (Euratex-Belgium); Mr. Hasan Arat (TCMA-Turkey); and AAFA members Mr. Fred Jackson (American & Efird, USA); and Dr. Mike Fralix ([TC]2, USA)

12.05.06
Vietnam's National Assembly approved the legislation required for entry into the World Trade Organization (WTO), meaning that Vietnam will formally join the WTO the first week of January. Quotas on US apparel and textile imports from Vietnam will end immediately upon Vietnam's WTO accession. For those US imports likely to be caught up in embargoes before the end of this month, the US government will likely implement a staged entry program for those imports similar to the one used for the embargoes under the China safeguard quotas.

In related news, the US government has issued a Federal Register notice requesting comments on the development of its new monitoring program for US apparel and textile imports from Vietnam. The program arose out of a September 28 deal with two textile state Senators to secure their votes for passage of legislation granting Vietnam Permanent Normal Trading Relations (PNTR) status. Despite the publication of the Federal Register notice, the Bush administration has yet to respond to a November 3 letter from US Senators Gordon Smith (R-OR) and Diane Feinstein (D-CA) requesting clarifications regarding the import monitoring program. Comments are due December 27.

Meanwhile, the fate of the Vietnam PNTR legislation remains unclear (See Related Article) as Congress enters the final week of its "lame-duck" session. Without passage of PNTR, many of the commitments that Vietnam made to open its market will not be available to US exporters, farmers and service providers while the rest of the world will enjoy dramatically improved access to the Vietnamese market.

The United States and Mexico completed the first step in implementing the cumulation provisions under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) when they signed a customs cooperation agreement on November 17. The Mexicans and the CAFTA countries now must pass amendments to their free trade agreements to allow cumulation to move forward. Once implemented, cumulation will allow a limited amount of apparel made in the CAFTA countries from Mexican yarn and fabric to enter the United States duty-free. Meanwhile, due to delays in passage of legislation in the Dominican Republic, the Dominican Republic did not join CAFTA as expected on December 1. The Dominican Republic is still expected to join CAFTA before the end of the year.

European Union politicians have reached an informal deal that paves the way for approval of a far reaching chemical registration scheme before the end of the year. Known as REACH – which stands for Registration, Evaluation and Authorization of Chemicals – the program envisions the registration of 30,000 chemicals used in everyday household products including footwear and apparel. The most dangerous chemicals - so-called persistent, bioaccumulative and toxic substances – will be refused authorization if safer alternatives exist while makers of another 1,500 risky chemicals - such as hormone disruptors - will have to submit “substitution plans” and prove they operate with “adequate controls.” More information can be found on the REACH website.
AAFA joined with almost 200 other business organizations and companies, including many AAFA members, in sending a December 1 letter urging Congress to pass a slew of trade-related measures critical to the US footwear and apparel, industries before Congress formally adjourns for the year at the end of this week.
In particular, the US business community wants Congress to pass: 1) extensions of the Andean trade preference and the Generalized System of Preferences (GSP) programs, both of which otherwise expire at the end of this year; 2) the Miscellaneous Trade Bill (MTB) (AAFA Support Letter), which provides for duty-free access for a number of US footwear imports as well as some textile products; 3) additional trade preferences for US apparel imports from Haiti; 4) extension of the third-country fabric provisions under the African Growth , and Opportunity Act (AGOA); and 5) Vietnam PNTR legislation (See Related Article).

Passage of these provisions remain in jeopardy due to: 1) the short amount of time remaining for Congress to act; 2) the uncertainty surrounding passage of the underlying tax extenders package on which the trade measures would be included; and 3) the controversy surrounding some of the trade measures as Congressional leaders hope to pass the legislation without objection and without amendment due the short time remaining in the session.
As the United States and Korea begin their next round of negotiations towards a Korea-US Free Trade Agreement (KORUS FTA), AAFA joined with the Korea Federation of Textile Industries (KOFOTI) and the US Association of Importers of Textiles & Apparel (USA-ITA) in issuing a November 29 statement urging the two sides to negotiate a "commercially-meaningful" agreement for the apparel and textile industries in both countries. Specifically, the joint statement urged negotiators to include immediate and reciprocal duty-free access for all apparel and textiles under flexible rules of origin in the KORUS FTA.

11.20.06
The outgoing House Republican leadership canceled a November 15 vote during the current "lame-duck" session of Congress on legislation granting Vietnam Permanent Normal Trading Relations (PNTR) status after the bill failed to garner the required 2/3 vote for passage under a House provision called "suspension of the rules" on the evening of November 13. Even though Vietnam PNTR garnered the support of the majority of the House in the suspension vote -- 228 - 161 -- the House leadership postponed the vote until at least the week of December 4.

Meanwhile, the Bush administration has still failed to respond to a letter sent by US Senators Gordon Smith (R-OR) and Diane Feinstein (D-CA) on behalf of US apparel importers and retailers to clarify the recent deal the administration made to monitor and possibly self-initiate anti-dumping cases against US apparel and textile imports from Vietnam.

China has issued new regulations imposing import duties and eliminating the 11 percent Value-Added Tax (VAT) export rebate for imported, leather used in finished leather products that are exported. These new rules could dramatically increase the cost of leather for US footwear firms sourcing in China (See AAFA Primer on Issue). Meanwhile, rumors, which AAFA has been unable to substantiate, abound that the Chinese government has recently imposed a moratorium on these new rules. AAFA will continue to track this developing issue. Please contact AAFA's Nate Herman at 703.797.9062 if you have any questions or would like additional information.

AAFA joined with more than a dozen other companies, business associations and prominent non-governmental organizations in sending a November 13 letter, to Congressional leaders urging them to pass legislation sponsored by retiring House Ways & Means Committee Chair Bill Thomas (R-CA) before Congress adjourns its "lame-duck" session in December. The legislation would provide new preferences for Haiti, extend and expand the third-country fabric provisions in the African Growth and Opportunity Act (AGOA) and extend the Generalized System of Preferences (GSP) program. AAFA and three other associations sent a November 13 letter to US Trade Representative Susan Schwab urging the Bush administration to implement the cumulation provisions of the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) as soon as possible. Cumulation would allow duty-free access for a limited amount of apparel made in the CAFTA region from Mexican yarn and fabric.

A November 14 report sponsored by the Natural Resources Defense Council and other groups claims that US apparel and footwear firms (and all other importers/exporters moving freight through the Ports of Los Angeles/Long Beach) are responsible for rising pollution related health costs in California, including premature deaths, throat cancer and other illnesses. In a message reminiscent of the fight over new container fees earlier this fall, the report recommends that importers and exporters pay for fixing these health costs through a $30 container fee. This report is the first salvo in a likely new battle over container fees and environmental costs expected in California, and possibly elsewhere, next year. 11.14.06 As a result of the elections, the controversial US/Peru Free Trade Agreement (FTA) has been pulled from the agenda for this week's "lame-duck" session of Congress and the expected signing of the US/Colombia FTA, originally scheduled for later this month, could be delayed. Meanwhile, the Andean Trade Promotion & Drug Eradication Act (ATPDEA) -- which provides duty-free access for apparel and footwear from Colombia and Peru -- is still set to expire at the end of this year. As a result, there will be a big push by the US business community, including both the US apparel and textile industries (see November 10 industry letter) and many prominent members of Congress to pass legislation in this week's "lame-duck" session to extend ATPDEA through next year in order to provide US apparel and footwear firms continued duty-free access while the new Congress considers the Colombia and the Peru FTAs.

Dumping duties against US-branded footwear in Mexico, import quotas and licensing requirements imposed on US-branded footwear in Argentina, new safeguard measures against US-branded footwear in Brazil, Turkey, Jordan and elsewhere, onerous labeling requirements proposed for US-branded apparel in Korea and excessive documentation requirements for US-branded apparel elsewhere are just a few of the barriers to US-branded footwear and apparel worldwide listed in AAFA's November 8 comments for the US government's next annual National Trade Estimate Report on Foreign Trade Barriers. The US government utilizes the report to determine priorities for its trade agenda for the next year.

The World Trade Organization's (WTO) General Council approved Vietnam's accession to the WTO on November 7. Under WTO rules, Vietnam will likely formally join the WTO on December 28. On that date, the United States will remove all quotas o, n US imports of Vietnamese apparel and textiles.
Because Congress had not yet approved legislation granting Permanent Normal Trading Relations (PNTR) status, the United States was forced to take a "non-application" on Vietnam's WTO membership. "Non-application" means that US businesses, workers and consumers will not benefit fully from Vietnam’s accession because Vietnam does not have to grant WTO benefits to the United States. President Bush has asked Congress to approve Vietnam PNTR during this week's "lame-duck" session before he arrives in Vietnam on November 18 for a meeting of regional leaders.

Approval of PNTR, however, could hinge on the Bush administration's response to requests by various US Senators on behalf of US apparel importers and retailers to clarify the recent deal the administration made to monitor and possibly self-initiate anti-dumping cases against US apparel imports from Vietnam.
Sandinista leader Daniel Ortega won the presidency of Nicaragua in a November 5 three-way election with a vote of 38 percent for Ortega and 29 percent for his nearest competitor, Eduardo Montealegre. Ortega has hinted that he might review Nicaragua's participation in the US/Central America-Dominican Republic Free Trade Agreement (CAFTA).

Jordan has begun a legal process that could lead to temporary safeguard duties being imposed on imports of most footwear. AAFA, through its Fighter Footwear Restrictions Worldwide (FFRW) Task Force (See Related Article) will track this situation as it develops.
AAFA requests your assistance in responding to a US government request for comments on the US/China trade relationship.

11.9.06
Twenty-eight members of Congress sent a November 1 letter to Congressional leaders urging them to push for approval of legislation during Congress' "lame-duck" session later this month to extend the Andean trade preference program to "bridge the gap" between the expiration of the program on December 31 and the implementation of separate US free trade agreements with Peru and Colombia, expected sometime next year.
While all 28 members of Congress on the letter, including members from textile states, pledged to work for Congressional passage of the free trade agreements during the "lame-duck" session, the signatories noted that even if approval occurs, there is no way to implement the agreements before the Andean trade preference program expires at the end of this year.

In an unexpected expression of unanimous support, the usually divisive US government Industry Trade Advisory Committee on Textiles and Clothing (ITAC 13), which represents US textile, apparel, footwear and travel goods firms, sent a similar letter October 25 to Bush administration officials expressing the urgency of this situation, and the need to "bridge the gap" now so US apparel firms don't unexpectedly lose duty-free benefits and leave the Andean region, which, in turn, would critically damage one of the US textile industry's fastest growing export markets.

US Senators Gordon Smith (R-OR) and Diane Feinstein (D-CA) sent a November 3 letter to the Bush administration expressing serious concerns about, and requesting clarifications on, the Administration’s commitment to monitor and possibly initiate anti-dumping investigations against apparel imports from Vietnam. The letter requests that the Bush administration guarantee that it will administer this commitment in a fair and transparent process that is open to all interested parties and in accordance with US law.

Five influential US religious organizations sent letters October 31 urging Congress to immediately pass AAFA-supported legislation granting Haiti new apparel benefits (HR 6142) when Congress reconvenes for its "lame-duck" session later this month.
The organizations wrote that HR 6142 would provide Haiti new economic opportunities and new hope just as the country has again embraced democracy and rule of law with the recent election of President René Prevail. HR 6142, sponsored by House Ways & Means Commit, tee Chair Bill Thomas (R-CA), would also extend and revamp the third-country fabric provisions in the African Growth and Opportunity Act (AGOA) and renew the Generalized System of Preferences (GSP) program, which expires at the end of this year.

10.30.06
AAFA needs you to contact your Senators now to urge them to support quick passage of the 2006 Miscellaneous Trade Bill (MTB) during Congress' "lame-duck" session in mid-November. If approved, the bill would immediately eliminate duties on US imports of over two dozen specific types of footwear, including footwear from China. The bill also would eliminate duties on specific types of textiles and textile products. To learn more, please click here.

10.25.06
AAFA continues to work with the Bush administration to dispel the uncertainty surrounding the commitment the administration made to US Senators Elizabeth Dole (R-NC) and Lindsey Graham (R-SC) to self-initiate anti-dumping cases against US apparel imports from Vietnam in exchange for the two Senators removing their "holds" on legislation granting Vietnam Permanent Normal Trading Relations (PNTR) status , (See October 11 apparel importer/retailer letter).
AAFA hopes the administration will clarify the man, y issues surrounding the Dole/Graham deal before Congress votes on Vietnam PNTR the week of November 14, only days before President Bush goes to Vietnam to attend a regional summit. PNTR is required for US manufacturers, farmers and service providers to benefit from the opening of Vietnam's market that is required by WTO accession.

Regardless of when PNTR is approved by Congress, quotas on US apparel imports from Vietnam will be eliminated on the date of Vietnam's WTO accession.
Most experts believe that Dominican President Leonel Fernández's trip to Washington, DC on October 25 to meet President Bush will be used as the occasion to announce that the Dominican Republic will formally join the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) on November 1.
The National Council of Textile Organizations (NCTO) on October 19 formally endorsed US free trade agreements with Peru and Colombia. While both agreements, completed last winter and spring, contain virtually all of the restrictive provisions sought by the US textile industry, the industry had failed to endorse the agreement until last week. The US textile industry's support for the agreements clears one of the many hurdles blocking Congressional approval of each agreement. While the Bush administration is pushing for a Congressional vote on the US/Peru Trade Promotion Agreement in November, its fate remains uncertain.

Meanwhile, AAFA submitted comments October 16 to the US government on the US/Colombia Trade Promotion Agreement. AAFA applauded the agreement's footwear provisions, but expressed deep disappointment with the agreement's restrictive apparel and textile rules. AAFA, however, urged the US government to immediately address the impending gap between expiration of the duty benefits under the Andean Trade Promotion & Drug Eradication Act (ATPDEA) at the end of this year and the implementation of the Colombia agreement.

AAFA joined more than a dozen businesses and non-governmental organizations and companies in sending an October 5 letter to key members of Congress and Bush administration officials urging them to extend the third-country fabric provisions under the African Growth and Opportunity Act (AGOA). There is still some hope that Congress will address this issue in its "lame-duck" session after the elections in November.

10.17.06
AAFA joined a group of other leading trade associations and major US apparel retailers, importers and apparel manufacturers in sending an October 11 letter to the Bush administration insisting that the Bush Administration rescind a commitment handed to two textile state senators to self-initiate dumping cases against US imports of Vietnamese apparel in return for dropping their objections to Senate consideration of Permanent Normal Trade Relations (PNTR) legislation for Vietnam.

The letter's signatories condemned the deal, noting that it politicizes the normally transparent and objective anti-dumping process, by committing the US government to self-initiate dumping cases for political reasons on behalf on an industry that otherwise would not have standing under US law or international trade rules to bring such a case. The letter stated that the deal, unless rescinded or otherwise vitiated, would likely have a negative impact well-beyond the apparel and textile industries by seriously jeopardizing Vietnam's chief export earning, industry and, in turn, jeopardizing Vietnam's ability, or willingness, to buy US manufactured or agricultural products or utilize, or provide licenses for, US service providers.

Echoing that sentiment was an October 6 letter from the American Chamber of Commerce in Vietnam to President Bush expressing grave concern that the commitment to self-initiate dumping cases could endanger the benefits of PNTR and Vietnam's entry into the World Trade Organization (WTO) for US exporters and US service providers.

While the furor over this deal casts the timing into doubt, President Bush still hopes Congress approves PNTR before he leaves for Vietnam November 17 to attend a regional summit. Congress must approve PNTR for US exporters and service providers to enjoy the opening of the Vietnamese market that will occur when Vietnam joins the WTO, which is expected before the end of the year. Regardless of whether Congress has passed PNTR, the United States will eliminate all quotas on imports of Vietnamese apparel and textiles when Vietnam joins the WTO.

China has announced the procedures for the allocation of 2007 quotas under the US/China Bilateral Textile Safeguard Agreement. In the most heavily used quota categories -- 338/339, 340/640, 347/348, 349/649, 638/639, 647/648 and 847 -- China will auction one-half of each quota through electronic bidding between November 15 and 24. For all other quota categories, the Chinese government will distribute one-half of each quota based on export performance during January-June 2006. It is unclear when or how the second half of the quotas will be allocated.
In addition, new reports coming out of China indicate that the Chinese government has moved to start reining in China's leather tanning sector, which the Chinese government blames for some of the pollution problems plaguing the country. The government has reduced the Value-Added Tax (VAT) rebate for exports of finished leather products that use domestic tanned leather from 13 percent to 8 percent. The VAT on domestically produced leather remains at 17 percent.

Meanwhile, Canada's International Trade Tribunal (CITT) on October 6 rejected a petition from clothing workers' union, UNITE HERE Canada. The petition requested that Canada impose safeguard quotas on Canadian imports of Chinese apparel. The CITT found that the union did not have standing to bring a case under the China WTO textile safeguard.

In related news, the European Union (EU) issued a new report October 2 on European apparel imports from China. The report found that China’s share of apparel and textile exports to Europe since the elimination of quotas on January 1, 2005 has risen only modestly -- both in the 35 categories where quotas were eliminated as well as in total exports. The report also found that, as a result of a June 2005 China/EU agreement to impose safeguard quotas on EU apparel imports from China, European apparel imports from China in the first seven months of 2006 have declined and unit prices have increased. The report also found that overall EU apparel and textile imports declined slightly in the first seven months of 2006. The report did not address whether European apparel production has increased or even, stabilized since the introduction of safeguard quotas.

Hundreds of people have been injured and factories torched and vandalized as garment workers in Bangladesh continue to protest a new pay deal. At the beginning of October, factory owners and trade union leaders agreed a new monthly minimum wage for garment workers of 1,662 takas (US$25.40). Representatives of the protesters, however, are calling for a minimum wage of 3,000 taka per month. Garment workers in Bangladesh currently earn a minimum monthly wage of 950 takas (US$14.50), which was set in 1994. New salary negotiations began after some workers rioted last May.
Meanwhile, Charles Kernaghan's National Labor Committee released a new report October 12 alleging widespread child labor violations at Harvest Rich, a factory in Bangladesh supplying US and European apparel brands/retailers. The report alleges that problems at Harvest Rich are likely indicative of larger child labor violations in Bangladesh.

President Bush indicated last week that he will submit the US free trade agreement with Peru, called the US/Peru Trade Promotion Agreement (PTPA), to Congress in November. AAFA joined with over 300 other companies and business organizations (including many AAFA members) in sending an October 10 letter to President Bush urging Bush to submit the agreement as soon as possible and push for final passage of the agreement when Congress returns to Washington, DC for a "lame-duck" session after the November elections.

10.12.06
In a controversial decision that will likely lead to numerous legal challenges, the 25 member states of the European Union (EU) on October 6 "approved" a European Commission proposal to impose final dumping duties (on top of normal duties) of 16.5 percent and 10 percent, respectively, on European imports of leather footwear from China and Vietnam for a two-year period beginning October 5. 

The member states approved the Commission's proposal by a vote of 9 member states in favor, 12 member states against and 4 member states abstaining. Under EU rules, an abstention counts as a vote in favor, meaning the proposal was approved by a vote of 13-12.For the latest information on the EU dumping issue, please join AAFA's EU Footwear Dumping Task Force by contacting AAFA's Nate Herman at 703.797.9062.

On September 30, Congress approved the AAFA-supported Security and Accountability for Every (SAFE) Port Act (H.R. 4954) with the passage of the bill’s conference report by a vote of 409 to 2 in the House and by Unanimous Consent in the Senate. The final bill, which now goes to President Bush for his signature, does not include an AAFA-opposed measure that would have required 100 percent screening of all incoming cargo before it left foreign ports. Instead, the legislation creates a pilot screening program at three foreign ports.
The US Senate on September 30 approved the nomination of John Veroneau as Deputy US Trade Representative (USTR). Prior to his return to USTR, Veroneau was a Partner at the law firm of DLA Piper. From 2003 to 2005, he served as USTR’s General Counsel, and served as Assistant USTR for Congressional Affairs from 2001 to 2003.

AAFA and other organizations sent a September 28 letter to members of Congress urging them to approve the AAFA-supported Miscellaneous Trade Bill (MTB) as soon as possible. Among the hundreds of provisions in the MTB are dozens of AAFA-supported provisions that would allow certain types of footwear, apparel, textiles and backpacks to enter the United States duty-free.

10.04.06
US Senators Charles Schumer (D-NY) and Lindsey Graham (R-SC) agreed to remove their China currency bill from full Senate consideration in the waning moments before Congress adjourned for the November elections. The legislation (S. 295), if approved by Congress, would have imposed a 27.5 percent punitive tariff on all US imports from China in retaliation for China allegedly undervaluing its currency. The two Senators withdrew the measure after reaching an agreement with the Bush administration, which allows the Bush administration time to implement a formal dialogue with China on revaluing its currency. Congress could return to the issue again next year if it is perceived that no progress has been made on currency revaluation.
Just a day before the measure was expected to be overwhelmingly approved in the US House of Representatives, the House Republican leadership on September 25 pulled from the House calendar legislation (HR 6142), introduced by House Ways and Means Committee Chair Bill Thomas (R-CA), to extend and modify three preferences programs – the Africa Growth and Opportunity Act (AGOA), the Generalized System of Preferences (GSP) and Haiti ((through the Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE)). House leadership pulled the legislation after a small group of textile state lawmakers expressed opposition to the measure.

The legislation changes the AGOA provision by extending the third-country fabric benefit at current levels through 2008. It then replaces that program with a modified value added rule of origin and a new commercial availability program. The GSP program would be extended for two years with modifications to ensure that the preferences are enjoyed primarily by least developed countries. Haiti would receive additional preferences including a small tariff preference level for woven fabric and a provision that permits the use of third-country inputs provided those inputs come from other trade preference or free trade agreement partners.Many believe Congress will return to the legislation in a "lame-duck" session shortly after the November elections.

On September 21, the AFL-CIO and the National Textile Association (NTA) filed the first petition ever under the US–Jordan Free Trade Agreement (FTA) alleging labor abuses against guest workers in apparel factories in Jordan. Under the FTA, the US government can formally request consultation when allegations of labor abuses are made. If the situation is not rectified, the FTA allows the United States to remove Jordan's tariff benefits in retaliation. The petitioners request that the US government invoke the dispute resolution mechanism of the FTA to force Jordan to reform its labor laws and improve enforcement. Ironically, Jordan, in consultation with the US government, has already undertaken ALL of the recommendations made by the petitioners.
The US Department of Homeland Security's Bureau of Customs & Border Protection (Customs) published new instructions to the ports on issuing refunds under the retroactivity provisions of the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). These new instructions update the instructions issued earlier in the year to take into account the co-production changes enacted by Congress in August (that mostly addressed the retroactivity problem with CAFTA products using inputs from countries not yet part of CAFTA). Please note that Customs has still not addressed the issue relating to the early end date for the retroactivity window. Customs indicates in the new notice that they are aware of the problem, which will be most acute for Costa Rica and the Dominican Republic. From the notice, it also appears that Customs is willing to address the problem at a later date, but probably only with respect to goods relating to those two countries. Thus, AAFA recommends that, if you have a refund application that can be sent in now, and it is not dependent upon entry into force of CAFTA with respect to the Dominican Republic or Costa Rica, you submit the refund application to Customs as soon as possible.
In related news, the US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) approved a short supply request, effective September 26, determining that certain 2-way stretch woven fabrics (as described in the notice) are not available in commercial quantities in a timely manner in the CAFTA region. With this approval, apparel made in the CAFTA region from the subject third-country fabric can enter any CAFTA country duty-free.
In a desperate bid to remove the remaining holds that have prevented the US Senate from voting on legislation to grant Vietnam Permanent Normal Trading Relations (PNTR), the Bush administration sent letters September 28 to US Senators Elizabeth Dole (R-NC) and Lindsey Graham (R-SC) that provide for the establishment of a "monitoring" program of US apparel and textile imports from Vietnam and guarantees that, if certain unspecified thresholds are met, the US Department of Commerce will "self-initiate" anti-dumping cases against US imports of specific apparel and textile products from Vietnam, . These guarantees could devastate the US/Vietnam trade partnership creating immense uncertainty for US apparel firms sourcing from Vietnam. Some US apparel firms reportedly are already reviewing their sourcing strategy in light of the letters.

President Bush wants Congressional passage of Vietnam PNTR before he flies to Vietnam in mid-November for, the annual Asia-Pacific Economic Cooperation (APEC) Summit. While Congress has already adjourned for the November elections, lawmakers will return to Washington, DC for a "lame-duck" session on November 13, only a few days before Bush arrives in Vietnam.

While the legislation enjoys overwhelming bipartisan support, Dole and Graham placed holds on the legislation because the US textile industry argued that textile safeguards in the WTO accession agreement were too weak. Other Senators placed holds on the bill for unrelated reasons. After receiving the letters, Dole and Graham removed their holds. However, other holds remain. If those holds remain in place, the US Senate will be unable to vote on Vietnam PNTR before Bush leaves for Vietnam.

Vietnam PNTR would allow US businesses and farmers to enjoy significantly-improved access to the Vietnamese market upon Vietnam's accession to the World Trade Organization (WTO), expected before the end of the year.

9.26.06
On September 19, the Senate approved the U.S./Oman Free Trade Agreement by a vote of 63-31. Although the Senate had previously approved the Oman FTA, by a vote of 60 to 34, last June, parliamentary rules required a second vote since trade legislation is supposed to originate in the House (which did not approve the legislation until late July). Tuesday’s Senate vote clears the legislation for Presidential action. No date has been set yet for entry into force. The Republican leadership of the US House of Representatives has announced that the House will vote on legislation granting Permanent Normal Trading Relations (PNTR) to Vietnam on November 13, the first day of a proposed "lame duck" session of Congress. The House hopes to approve Vietnam PNTR before President Bush's November 17 visit to the Asia Pacific Economic Cooperation (APEC) Summit in Hanoi.

Meanwhile, US Senators Elizabeth Dole (R-NC) and Lindsey Graham (R-SC) sent a September 19 letter to President Bush again requesting that Bush renegotiate the terms of Vietnam's WTO accession to allow for a China-style textile safeguard or allow US textile firms to bring anti-dumping cases. Dole and Graham both have holds on the Vietnam PNTR bill that have prevented the Senate from voting on the legislation.
As AAFA has noted previously, quotas on US imports of apparel and textiles from Vietnam will be removed on the date of Vietnam's accession to the World Trade Organization (WTO), expected sometime in November, regardless of whether Congress approves Vietnam PNTR or not. Please note that quotas on US imports from Vietnam are based on date of export from Vietnam, not date of import into the United States.

South Africa has postponed safeguard quotas on South African imports of 28 categories of Chinese apparel and textiles. The quotas, originally, scheduled to be imposed October 1, were postponed until January 1, 2007 after South African retailers said quotas would put the holiday shopping season in peril. Once imposed, the quotas will remain in place until the end of 2008.

Senate leadership has signaled that a vote could happen this week on legislation offered by Senators Charles Schumer (D-NY) and Lindsey Graham (R-SC) that would impose a 27.5 percent tariff on China in retaliation for China’s alleged currency manipulation. Schumer and Graham have threatened to force a vote all year, but have repeatedly delayed it to give the Administration more time to deal with China through bilateral consultations.
Although Treasury Secretary Henry Paulson recently concluded a trip to China, at which a new “economic dialogue” on trade and currency issues was announced, the two Senators seem ready to push forward on the vote anyway. Ironically, Senator Schumer was quoted last week as opposing enactment of the bill, stating, “Obviously, we don't want our legislation to take effect.”

Conventional wisdom suggests there is strong support for the legislation in the Senate, which had earlier in the year defeated a motion to table the legislation. Continued frustration over China, combined with slow progress in achieving a significant revaluation of the Chinese currency, has led many to speculate that the Senate will approve the legislation if it is put to a vote. Many observers agree that there is little chance the House will approve, or the President would enact, the legislation.

AAFA signed onto a multi-industry letter last week to oppose the legislation, noting that it violates international trade rules and that it would undermine progress that has been made on these bilateral issues thus far.
On September 21, House Ways and Means Committee Chair Bill Thomas (R-CA) introduced a bill (HR 6142) to extend and modify three preferences programs – the Africa Growth and Opportunity Act (AGOA), the Generalized System of Preferences (GSP), and Haiti ((through the Haitian Hemispheric through 2008. It then replaces that program with a modified value added rule of origin and a new commercial availability program. The GSP program would be extended for two years with modifications to ensure that the preferences are enjoyed primarily by least developed countries. Haiti would receive additional preferences including a small tariff preference level for woven fabric and a provision that permits the use of third country inputs provided those inputs come from other trade preference or free trade agreement partners.

The legislation may be considered by the House as early as this week. Timing for Senate consideration is unclear, particularly since Senator Max Baucus (D-MT), together with Representative Charlie Rangel (D-NY), recently introduced a separate bill that would provide for straight two year extensions for the AGOA, GSP, and Andean programs. In addition, Senate Finance Chair Charles Grassley (R-IA) and Senate Majority Leader Bill Frist have indicated support for different approaches with respect to GSP and AGOA.

On September 19, the House approved legislation Wool Suit Fabric Labeling Fairness and International Standards Conforming Act -- HR 3911 by voice vote. The legislation modernizes wool and cashmere product labeling rules, primarily by creating definitions to permit the use of the “supers” marketing terminology. If enacted by Congress, the rules will take effect for goods manufactured on or after January 1, 2007.
AAFA had earlier expressed support for this legislation to the bill’s House sponsors ((Reps. Marsha Blackburn (R-TN) and Jan Schakowsky, (D-IL)). The bill will now be considered by the Senate, where a companion bill was introduced by Senators Lamar Alexander (R-TN), Dick Durbin (D-IL) and Bill Frist (R-TN).

Last week, Governor Schwarzenegger vetoed legislation (SB 927), recently approved by the California State legislature, that would have imposed a new fee on containers transiting the ports of Long Beach and Los Angeles. The veto came after many in the business community, including AAFA and many AAFA member companies, wrote letters, sent emails and placed phone calls urging the Governor to reject this legislation.
In his veto message, Governor Schwarzenegger noted numerous flaws in the legislation including his concern that the legislation contained insufficient accountability or mechanisms to adequately use the money that would be collected. It remains unclear if the legislation will be modified and resubmitted. AAFA thanks member companies for their help in this successful effort.

9.19.06
AAFA sent a September 6 letter to California Governor Arnold Schwarzenegger urging him to veto SB927, which would require new container fees at California ports. Governor Schwarzenegger has until the end of September 2006 to sign or veto the bill, but could make a decision as early as next week.
SB927 requires the ports of Los Angeles and Long Beach to impose a $60 container (feu) fee to fund undefined transportation, clean air and port security programs. AAFA and others believe SB927 is unconstitutional on several grounds and, more importantly, will drive business away from California ports. While Governor Schwarzenegger has vetoed such measures in the past, a series of powerful national and state interests have lined up to support the bill, blaming poor air quality and road congestion in southern California on big corporations moving freight through San Pedro Bay. Several polls suggest that these arguments are playing well among likely California voters. In fact, the Los Angeles Times and other major newspapers have already issued editorials in support of SB927.
Therefore, AAFA urges AAFA members to immediately mail and fax letters to Governor Schwarzenegger with the subject line -- Attention: Legislative Unit: Veto Request -- urging him to veto the legislation (see AAFA letter for address and fax number). Please fax copies of your letter to Mr. Richard Costigan, Deputy Chief of Staff and Legislative Affairs Secretary (Fax# 916.327.1009) and Mr. Michael Prosio, Deputy Legislative Secretary (Fax# 916.327.1009). Please also share your letters with AAFA's Nate Herman.

The US Senate on September 14 unanimously approved (98-0) legislation to improve port security (H.R. 4954). The AAFA-supported legislation, which is similar to the Security and Accountability for Every (SAFE) Port Act passed by the US House of Representatives in May, would require Custo, ms to put in place pilot programs and increase funding to improve technology that would eventually allow screening of virtually all incoming cargo for nuclear materials. The legislation would also increase requirements for participants in Customs' Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT) program.

The Senate successfully fought off two AAFA-opposed amendments that would have immediately required 100 percent radiation screening of US-bound cargo before it left foreign ports.

With time running short before the end of the legislative session and November Congressional elections, the House and Senate must US Senators Chuck Schumer (D-NY) and Lindsey Graham (R-SC) on September 14 formally requested a full US Senate vote before September 30 on their legislation to impose sanctions against China in response to its alleged currency manipulation. If approved by both the Senate and the US House of Representatives, and signed into law by President Bush, the bill would impose 27.5 percent punitive duties on all US imports from China. Even if the full Senate approves the measure, the House Republican leadership has already indicated that the full House has no plans to consider the measure before Congress adjourns for the November elections, likely dooming the legislation for the year.

Meanwhile, the Chinese government announced that, effective October 1, the export tax rebate for textiles and apparel will be cut from 13 percent to 11 percent. The cut was just one of many announced by China to slow the growth of rapidly-growing and energy-intensive industries as part of the government's effort to improve the environment and reduce the country's trade surplus.

Senior leaders in the US House of Representatives have indicated the legislation granting Permanent Normal Trading Relations (PNTR) to Vietnam will not be approved by Congress until a "lame duck" session of Congress shortly after the November elections. However, the US business community continues to push the House Ways & Means Committee to markup the legislation before Congress adjourns at the end of this month so Congress has sufficient time to approve Vietnam PNTR between the beginning of the lame duck session and President Bush's November 17 visit to the Asia Pacific Economic Cooperation (APEC) Summit in Hanoi.

As AAFA has noted previously, however, a senior US government official has again confirmed that quotas on US imports of apparel and textiles from Vietnam will be removed on the date of Vietnam's accession to the World Trade Organization (WTO), expected sometime in November, regardless of whether Congress approves Vietnam PNTR or not. Please note that quotas on US imports from Vietnam are based on date of export from Vietnam, not date of import into the United States.
South Africa will, impose safeguard quotas on South African imports of 28 categories of Chinese apparel and textiles as of October 1. The quotas will remain in place until the end of 2008.

The US Department of Labor on September 6 released its 2006 Annual Report on the World Forms of Chi ld Labor (Note: Actual Report 3.5MB). Following the downward trend over the last few years, the report cited child labor in footwear and apparel factories in only a handful of countries, mostly in Eastern Europe and the Middle East. Further, the citations were brief as the major child labor violations in those countries did not occur in the footwear and apparel industries.

9.11.06
US Senate is expected to approve legislation to improve port security (H.R. 4954) this week. The AAFA-supported legislation, which is similar to the Security and Accountability for Every (SAFE) Port Act passed by the US House of Representatives in May, would require Customs to put in place pilot programs and increase funding to improve technology that would eventually allow screening of virtually all incoming cargo for nuclear materials. The legislation would also increase requirements for participants in Customs' Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT) program.

AAFA and others, however, sent a September 7 letter to the Senate opposing any amendment that would immediately require 100 percent radiation screening of US-bound cargo before it leaves foreign ports. The fate of the amendment is uncertain at this time.
AAFA sent a September 7 letter to California Governor Arnold Schwarzenegger urging him to veto SB927, which would require new container fees at California ports. Governor Schwarzenegger has until the end of September 2006 to sign or veto the bill, but could make a decision as early as next week. SB927 requires the ports of Los Angeles and Long Beach to impose a $60 container (feu) fee to fund undefined transportation, clean air and port security programs.

AAFA and others believe SB927 is unconstitutional on several grounds and, more importantly, will drive business away from California ports. While Governor Schwarzenegger has vetoed such measures in the past, a series of powerful national and state interests have lined up to support the bill, blaming poor air quality and road congestion in southern California on big corporations moving freight through San Pedro Bay. Several polls suggest that these arguments are playing well among likely California voters. In fact, the Los Angeles Times has already issued an editorial in support of SB927

Therefore, AAFA urges AAFA members to immediately send letters to Governor Schwarzenegger urging him to veto the legislation. Further, AAFA encourages AAFA member CEOs and other senior executives to call the governor's Chief of Staff Susan Kennedy at 916.445.5106 to register their opposition to SB927. Please share with AAFA your letters and phone calls.

Despite overwhelming bipartisan support, it appears that legislation to grant Vietnam Permanent Normal Trading Relations (PNTR) status will fall prey to election year politics. With both parties looking to avoid any trade vote before the November Congressional elections, it seems that a vote on Vietnam PNTR will not occur until a proposed November post-election "lame-duck" session of Congress at the earliest.

Almost the entire US business community, including AAFA, however, continues to push for approval of Vietnam PNTR as soon as possible. Approval of PNTR is required for US businesses and farmers to enjoy increased market access to the Vietnamese market as part of Vietnam's World Trade Organization (WTO) accession, which is expected to occur in November.

On a bright note, however, the opinion prevailing in Washington, DC currently is that the United States must eliminate its apparel and textile quotas on Vietnam when Vietnam joins the WTO, regardless of whether Congress has approved PNTR or not. For this reason, AAFA joined with other organizations in sending a September 6 letter to the Vietnamese government urging them to not delay their WTO accession. There have been growing rumors that Vietnam would delay its WTO accession in protest of Congressional delays in approving Vietnam PNTR.

In response to an August 3 letter from AAFA and other organizations, Congressman Robin Hayes (R-NC) on September 6 introduced legislation (H.R. 6032) to redesignate the US government's Special Textile Negotiator as the Chief Textiles Negotiator and confer the rank of Ambassador upon that position
Jim Leonard, Chair of the US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) and Deputy Assistant Secretary of Commerce for Textiles & Apparel, will leave his post at the end of this month after 4 1/2 years in the position. He will return to his home in Jamestown, NC and continue doing work in the textile and trade arenas.

The US International Trade Commission (ITC) on September 5 released its long-awaited report on the possible economic impact of redefining baby booties under the Harmonized Tariff Schedule of the United States (HTSUS). Even with extensive comments from AAFA and others, the report found that, of two possible definitions, the first one would have no impact, but could not make a definitive determination on the second definition. The purpose of the report was to define baby booties separately under the HTSUS and, as a result, remove US imports of Chinese baby booties from safeguard quotas under the November 2005 US/China Bilateral Safeguard Agreement.

AAFA requests your assistance in responding to an Office of the US Trade Representative (USTR request for comments on foreign trade barriers. Meanwhile, AAFA requests your assistance in responding to a US International Trade Commission (ITC) request for comments on apparel trade flows under the African Growth and Opportunity Act (AGOA). Please submit comments on both requests to AAFA's Nate Herman by Friday, October 27. Finally, the US Department of Commerce requests applications for the 2007 worsted wool fabric tariff-rate quota (TRQ) allocations. Applications are due September 28.

9.7.06
Ignoring the fact that it has already been rejected once, the European Commission on August 30 re-submitted its previous proposal to the 25 member states of the European Union (EU) for final/definitive dumping duties in the ongoing dumping case against European imports of leather shoes from China and Vietnam.  The EU member states had already rejected the same proposal in an August 3 vote of the working-level Anti-Dumping Committee (14 member states opposed, 2 member states abstained, and 9 member states in favor). Under the proposal, the EU would impose final dumping duties of 16.5 percent and 10.0 percent, respectively, on imports of all leather footwear (except for athletic (STAF) footwear) from China and Vietnam starting on October 7. The dumping duties would be imposed on top of normal duties and would remain in place for five years (October 6, 2011). Please note that the proposal removes the previous exemption for children's footwear.  A final decision by the EU member states is likely to come in a September 25 meeting of member states' ambassadors to the EU. If the Commission cannot get approval of its proposal at this September 25 meeting, the current preliminary dumping duties on EU imports of leather footwear from China and Vietnam will end October 6 as scheduled, ending all dumping duties on the subject footwear at that time.  In related news, the European Commission formally closed its dumping investigation into European imports of safety footwear from China and India. The Commission found no evidence of injury to European safety footwear manufacturers. As a result, no dumping duties were imposed in the case.  For the latest information on the EU dumping issue, please join AAFA's EU Footwear Dumping Task Force by contacting AAFA's Nate Herman at 703.797.9062.

According to published reports, the recent auction for abandoned or "wasted" quota under the US/China Bilateral Safeguard Agreement has greatly reduced the price for quota for virtually all apparel and textile categories. With only four months left in the year, it is unclear if these price reductions will translate into increased US apparel and textile imports from China and increased quota utilization for the rest of 2006. It also remains unclear whether the Chinese government has resolved the problems that led to the abundance of abandoned or "wasted" quota for its 2007 quota allocation.

The California General Assembly on August 30 passed AAFA-opposed SB 927 by a narrow vote of 41-36. The California Senate approved the measure shortly afterwards. Governor Arnold Schwarzenegger has until the end of September 2006 to sign or veto the bill.  SB 927 requires the ports of Los Angeles and Long Beach to impose a $60 container (feu) fee to fund undefined transportation, clean air and port security programs. The text of the bill specifically identifies cargo owners as the sole entity responsible for paying the fee. The fee, if enacted into law, is expected to generate about half a billion dollars a year.  AAFA and others believe the container fee structure outlined in SB 927 is unconstitutional on several grounds and, more importantly, will drive business away from California ports.  While Governor Schwarzenegger has vetoed such measures in the past, a series of powerful national and state interests have lined up to support the bill, including the American Lung Association, the Natural Resources Defense Council and the influential California Nurses Association. These groups have placed responsibility for poor air quality and road congestion in southern, California on big corporations moving freight through San Pedro Bay. Several polls suggest that these arguments are playing well among likely California voters.  AAFA will continue to lobby Governor Schwarzenegger to veto SB927 and encourages AAFA members to do the same. AAFA blasted US import restraints on apparel, footwear and travel goods in comments submitted August 11 to the US International Trade Commission (ITC). The comments, submitted for the ITC's annual report on The Economic Effects of Significant Import Restraints detailed the immense costs these restraints have on US consumers, particularly low-income families while providing little, if any, benefit to those the import restraints are supposed to protect.

A new report found that firms that had increased their supply chain security reaped many benefits from the investment. The report, titled Innovators in Supply Chain Security, found that the 14 companies surveyed reaped a substantial return on their investment in terms of significant reductions in theft, loss and excess inventory, increases in on-time delivery (in part because of significant reductions in customs inspections and cargo delays), increases in customer satisfaction and other benefits.

AAFA sent a letter August 14 to Guatemalan President Oscar Berger congratulating Guatemala on joining the US/Central America-Dominican Republic Free Trade Agreement (CAFTA), but expressing concern about the surge in gang violence in the country. Guatemala has already responded to the letter by crafting a plan to fight the gang violence.

In related news, the US Department of Homeland Security's Bureau of, Customs & Border Protection (Customs) issued a new ruling July 13 allowing for the use of certain non-originating sewing thread -- textured polyester 200 denier single multifilament yarn that is dyed, finished with a sewing lubricant, “Z” twisted, and put up on reels weighing less than 1000 grams -- under CAFTA. As a result, apparel made in a CAFTA country from third-country subject yarn can enter the United States duty-free under CAFTA.

Meanwhile, the US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) received an August 17 petition from Lido requesting that certain two-way stretch fabrics, classified under 5515.11.00 of the Harmonized Tariff Schedule of the United States (HTS), in which both warp and filling yarns are a blend of chief weight polyester staple mixed with viscose rayon staple, plied and , wrapped around a core of filament spandex yarn be declared not available in commercial quantities in a timely manner under CAFTA.

The rebuttal period has already closed without any rebuttals being submitted. If CITA approves the petition, apparel made in a CAFTA country from third-country subject fabrics can enter the United States and any other CAFTA country duty-free under CAFTA.
AAFA submitted comments August 11 to the Senate Finance Committee in support of the dozens of provisions in Congress' Miscellaneous Trade Bill (MTB) that would temporarily eliminate duties on certain types of footwear, apparel, textiles and related products. Congress is expected to consider and approve the overall MTB legislation sometime this fall.

AAFA blasted US import restraints on apparel, footwear and travel goods in comments submitted August 11 to the US International Trade Commission (ITC). The comments, submitted for the ITC's annual report on The Economic Effects of Significant Import Restraints detailed the immense costs these restraints have on US consumers, particularly low-income families while providing little, if any, benefit to those the import restraints are supposed to protect.

The World Customs Organization (WCO) recently released its first-ever review of customs and counterfeiting. The report provides a global overview of the increase in the trade and trafficking in counterfeit and pirated goods, while also demonstrating the efforts by Customs administrations worldwide to combat the problem. The trends and statistics uncovered by the WCO include more than 4,000 cases involving the seizure of more than 166 million counterfeit or pirated articles. Fine leather goods (+46 million articles valued at almost $3 billion) was top with products of the textile sector (+3 million articles) also making the top five.

On August 10, Turkey imposed safeguard measures against Turkish imports of virtually all types of footwear. While directed at Turkish footwear imports from China, the measures cover Turkish footwear imports from virtually all countries, including Vietnam, the European Union and the United States. As a result, Turkish footwear imports will face additional import duties ranging from $1.80 - $3 per pair, depending on the type of shoe, for a period of three years. In response, the European Union has already requested consultations under the World Trade Organization (WTO)'s dispute settlement procedures on Turkey's action.

The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) requests comments on a July 21 request from the Government of Mexico alleging that filament yarn of cellulose acetate, classified in heading 5403 of the Harmonized Tariff Schedule of the United States (HTSUS), cannot be supplied by the Mexican industry in commercial quantities in a timely manner under the North American Free Trade Agreement (NAFTA). Comments are due September 20. If CITA approves the request, apparel made in Mexico from third-country subject yarn can enter the United States duty-free under NAFTA.

8.11.06
The US Senate on August 3 approved by 93-5 AAFA-supported House-passed pension reform legislation that includes important fixes to the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). Once signed by President Bush and implemented, the fixes will provide US apparel firms the ability to get refunds on CAFTA eligible textile and apparel products already imported at full duty and CAFTA-eligible textile and apparel products that have yet to be imported, but which will still have to pay full duty because neither the Dominican Republic nor Costa Rica have yet acceded to CAFTA. In addition, the provisions provide authority for the President to limit the Nicaragua TPL (as an enforcement mechanism related to the 1:1 provision) and make proclamations related to the pocketing side deals (both those done and those yet to be done). The pension reform bill also contains a number of miscellaneous trade provisions that suspend duties on US imports of a range of selected footwear, apparel and textile products and inputs. Meanwhile, talks are continuing on resolving issues surrounding the Dominican Republic's decision, effective July 1, imposing a new 0.4 percent Customs container tax on the CIF value of ALL goods imported into the Dominican Republic, including imported inputs destined for the free trade zones. Finally, the US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) rejected a petition August 4 requesting that certain 100 percent cotton napped (flannel) fabrics be deemed in "short supply" under CAFTA. In rejecting the petition, CITA instead claimed that a CAFTA-based company can supply the subject fabric. If CITA had approved the petition, CAFTA-qualifying apparel made in a CAFTA country using third-country subject fabric would have qualified for duty-free entry into any CAFTA country.

The 25 member states of the European Union (EU) on August 3 rejected (14 Member States opposed, 2 Member States abstained, 9 Member States in favor) the European Commission's proposal on final/definitive dumping duties for EU imports of leather footwear from China and Vietnam. Under the Commission's rejected proposal, the EU would have imposed final dumping duties of 16.5 percent and 10.0 percent, respectively, on imports of all leather footwear ((except for athletic (STAF) footwear)) from China and Vietnam starting on October 7. The Commission can still submit a new proposal. However, most of Europe is on vacation during August. Moreover, the proposal must be submitted to and approved by EU member states by early September so that a regulation can be published in time under EU law for the definitive duties to be imposed on October 7. If the Commission cannot get approval for some form of final dumping duties by early September, the current dumping duties on EU imports of leather footwear from China and Vietnam will end October 6 with the expiration of the preliminary dumping duties. The Commission does not have the authority to extend the preliminary dumping duties beyond October 6. Therefore, the Commission will be forced to close the dumping case and remove all dumping duties on October 7 if it does not receive approval of some form of final dumping duties before October 6.

Shortly after the Senate Finance Committee unanimously approved legislation granting Vietnam Permanent Normal Trading Relations (PNTR) status on July 31, Senators Elizabeth Dole (R-NC) and Lindsey Graham (R-SC) placed "holds" on the legislation. Vietnam PNTR is necessary for the United States to obtain the benefits of Vietnam's accession to the World Trade Organization (WTO). Vietnam could join the WTO by October, regardless of whether Congress has approved PNTR legislation or not. Under Vietnam's WTO agreement, Vietnam must open its market to US products and services while the US does not have to provide any new market access except for eliminating quotas. However, if Congress has not approved PNTR before Vietnam joins the WTO, US manufacturers, farmers and service providers will NOT be able to benefit fully from the substantial opening of the Vietnamese market that Vietnam agreed to as part of its WTO accession. Meanwhile, under WTO rules and pursuant to the terms of our bilateral textile agreement, the United States must eliminate its quotas on Vietnamese apparel and textiles when Vietnam joins the WTO, regardless of whether Congress passes PNTR or not. Under Senate rules, any individual Senator can "hold" legislation from coming to a vote before the full Senate. In placing her "hold" on the bipartisan bill, which is supported by the overwhelming majority of Congress, Senator Dole alleged in a statement that US apparel imports from Vietnam are severely damaging the US textile industry and that Vietnam's government supports its industry through massive subsidies. She argues that the Bush administration should renegotiate the entire agreement to ensure that quotas remain on Vietnam at least through 2009 as well as change US trade remedy law to allow the US textile industry to bring anti-dumping cases against US imports of apparel from Vietnam. In countering these arguments, Administration officials note that US negotiators secured an unprecedented provision in the agreement where Vietnam agreed to eliminate ALL WTO-prohibited subsidies (export and local content) immediately upon WTO accession. Further, Vietnam agreed to a safeguard that allows the US government to re-impose ALL current quotas at 2006 levels immediately if it is found that Vietnam is still providing WTO-prohibited subsidies to its industry. Because it is impossible to reopen the agreement, further action in the Senate will take place after Senators Dole and Graham can be persuaded to remove their “holds” or after the Senate invokes a parliamentary move – known as “cloture” – that cuts off debate and forces a vote. At this point, a full Senate vote on Vietnam PNTR has been delayed until September at the earliest. Timing for a House vote remains unclear.

AAFA joined with more, than a dozen other companies and organizations in sending an August 8 letter to the House leadership urging Congress to extend the third-country fabric provisions of the African Growth and Opportunity Act (AGOA) until 2015. Under current law, AGOA's third-country fabric provisions will be reduced by 50 percent on October 1, 2006 and eliminated completely on October 1, 2007. In related news, the United States Trade Representative (USTR) announced that, effective August 4, US imports of AGOA-eligible products from Burkina Faso now qualify for textile and apparel benefits under AGOA.

The US Department of Homeland Security's Bureau of Customs & Border Protection (Customs) issued final regulations for the Andean Trade Promotion & Drug Eradication Act (ATPDEA) on August 7, less than five months before ATPDEA is set to expire. The final regulations attempt to clarify many of the uncertainties generated by Customs' interim regulations, including ATPDEA's provisions on apparel and footwear. Customs has yet to issue final regulations for the Caribbean Basin Trade Partnership Act (CBTPA) and the African Growth and Opportunity Act (AGOA) more than five years after the programs were implemented.

AAFA requests your assistance in responding to a US government request for comments on China's compliance with its World Trade Organization (WTO) commitments.

AAFA requests your assistance in responding to a US Department of Homeland Security Bureau of Customs & Border Protection (Customs) request for comments on its proposed standards for determining whether footwear should be classified as unisex footwear. The tariff rates for unisex footwear under tariff heading 6403 are about 1.5 percent higher that those applicable to footwear for men's, boys and youth. Customs proposes that men's, boy's or youth footwear will be classified as such, and not unisex footwear, if one of the following conditions are met: 1) the shoe is labeled as "men's, boy's or youth size ____;" 2) the importer also imports women's and girls' shoes; 3) marketing material describes the footwear as such; or 4) less than one in four of those shoes are shown to be sold to females.

President George W. Bush nominated John K. Veroneau to be the next Deputy US Trade Representative (USTR) on August 3. Veroneau, currently a Partner at the law firm of DLA Piper, will replace Susan Schwab, who left the post when she became US Trade Representative. Veroneau formerly served as General Counsel at USTR.

According to the US Department of Labor's Bureau of Labor Statistics August 4 release of July 2006 (June 2006 for wholesale apparel trade and footwear) employment figures, US total apparel manufacturing employment declined 4.0 percent in July versus July 2005 and dropped significantly (-2.6 percent) from June to 248,000 employees. US employment in apparel knitting mills fell 3.8 percent to 35,200 in June versus June 2005, while employment in cut and sew apparel plants declined 3.9 percent to 198,800. For its part, employment in apparel accessory mills and other apparel mills declined 2.4 percent to 20,600 during the same period. June US apparel wholesale trade employment grew 1.0 percent from both May 2006 and June 2005 to 150,100 employees. Job creation in this sector has been fairly strong in women’s and children’s wholesale establishments and particularly sluggish in men’s and boys’ wholesale establishments. June US total footwear manufacturing employment dropped 0.6 percent from the previous month to 17,100 employees and was 5.0 percent lower than in June 2005. US textile mill (yarn, fabric, etc.) employment declined for the fourteenth consecutive month in July, down by a rather large 2.5 percent from the previous month to 194,400 employees, and was 10.5 percent lower, than in July 2005. For its part, July US textile product mill (sheets, blankets, towels, curtains, auto/furniture upholstery, etc.) employment fell 0.5 percent from June and was 2.0 percent lower than in July 2005. Please note that the manufacturing figures include total employment (distribution, management, sales & marketing, R&D, administrative, etc., as well as production workers) at all US apparel, footwear and textile manufacturers.

8.1.06
Late last week, the House approved legislation making key fixes to the U.S./Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) as part of an unrelated bill addressing pension reform. The legislation now goes to the Senate which is hoping to take up and approve the legislation this week. If enacted, the fixes would provide importers the ability to get refunds on CAFTA eligible textile and apparel products already imported at full duty and CAFTA eligible textile and apparel products that have yet to be imported, but which will still have to pay full duty because neither the Dominican Republic nor Costa Rica has yet acceded. In addition, the provisions would provide authority for the President to limit the Nicaragua TPL (as an enforcement mechanism related to the 1:1 provision) and make proclamations related to the pocketing side deals (both those done and those yet to be done). In addition, the pension reform bill contains a number of miscellaneous trade provisions that suspend duty on a range of selected footwear, apparel, and textile products and inputs.

In a sudden about face, the European Commission on July 26 submitted to European Union (EU) member states a completely different proposal for final dumping duties in the ongoing dumping case against EU imports of Chinese and Vietnamese leather footwear. Under the new proposal, the EU would eliminate the previously proposed Deferred Duty System (DDS) and would instead impose dumping duties of 16.5 percent and 10 percent (above normal duties) on ALL EU imports of Chinese and Vietnamese leather shoes, respectively, for a period of five years starting on October 7, 2006. While special technology athletic (STAF) footwear would still be excluded, children's shoes would now be subject to the dumping duties. Presented with this proposal only one day before their July 27 Dumping Committee meeting, the 25 EU member states refused to vote on the new proposal. The Commission has requested that each member state respond to the proposal in writing by August 3. If the member states refuse to do so, the Commission must try to convince the EU's Council of Ministers to approve the proposal in early September. If the Council does not approve the measure before September 7, the current preliminary dumping duties could expire on October 7 without new duties being put in place. For the latest information on the EU dumping issue, please join AAFA's EU Footwear Dumping Task Force by contacting AAFA's Nate Herman at 703.797.9062.

The Doha Round of global trade negotiations were halted on July 24 after the 149 members of the World Trade Organization (WTO) failed to break a stalemate over agriculture (See AAFA Press Release). While WTO members will continue to try to find ways to restart the talks, negotiations will not likely start again until sometime next year, if not longer. If they had been successful, the talks could have lowered tariff and non-tariff barriers worldwide to US-made and US-branded apparel, footwear and textiles.

The AAFA-supported Supply Chain Security Coalition (SCSC) sent a July 27 letter to Senate leadership urging the US Senate to quickly pass legislation to improve security at the nation's ports. The letter outlines what the US business community believes should and should not be included in any such legislation.
The Bush administration on July 21 rejected an AFL-CIO Section 301 safeguard petition that urged the US government to impose sanctions against China over labor issues. In rejecting the petition, the Bush administration noted that China has made much progress in improving the labor situation over the past few years, thanks in part to the Bush administration's policy of constructive engagement. Meanwhile, as part of their effort to prevent their economy from overheating and to deflect mounting criticism of their trade surplus, China confirmed July 24 that it will reduce tax rebates by two percent on exports of resource-intensive and environmentally-harmful products, including apparel and, possibly footwear, sometime this fall. These moves come amid growing speculation that the US Senate will hold a vote this fall on a measure that would impose an across the board 27.5 percent tariff on all US imports from China to express Congress' growing frustration with the country.

The US Senate on July 26 followed the lead of the House in approving by voice vote the AAFA-supported extension of the total US import ban on Burma (See AAFA Press Release). The legislation extends the current ban, which was set to expire July 31, for one year, giving Congress the option to vote to extend the ban for two additional one-year periods.

According to a the World Trade Organization's (WTO) Annual 2006 Report, issued July 24, the worldwide elimination of apparel and textile quotas on January 1, 2005 had little impact on global apparel trade. Global apparel trade expanded only 5 percent in 2005 versus 12 percent in 2004. Further, the report found that import prices remained relatively stable in 2005. The report acknowledged, however, that some shifts did occur in the principle suppliers to major markets.
A vote on H.R. 2965, the Federal Prison Industries Competition in Contracting Act of 2005, was delayed last week. The comprehensive FPI reform bill, which was approved by the House Judiciary Committee a week earlier, was supposed to be voted on under a special parliamentary procedure -- known as the suspension calendar -- which requires a two-thirds majority but prevents any amendments. This two-thirds approval requirement was not expected to be a problem as a similar bill to H.R. 2965 passed the House overwhelmingly in the last Congress. Unfortunately, the legislation was not able to overcome another procedural hurdle which bars the suspension calendar from being used for legislation that provides new spending authority. The legislation is now expected to be taken up in September when Congress returns from its August recess. Efforts will continue to be made this month to secure introduction and support for a companion bill in the Senate.

On July 27, the House Judiciary Committee held a hearing on H.R. 5055, which would provide three-year copyright protection for fashion designs. Fashion designers were represented by Jeffrey Banks on behalf of the Council of Fashion Designers of America (CFDA). Law professors in support and opposition testified and also in opposition, David Wolfe, Creative Designer for Doneger Creative Services, presented testimony based primarily on the inability to determine originality in design and the affect that H.R. 5055 could have on trends. Both proponents and opponents were well represented though no consensus emerged on how beneficial the legislation would or would not be. AAFA, which has taken a neutral position on the legislation so far, is organizing meetings with the interested parties including CFDA to identify the issues and attempt to come up with solutions amenable to all.

7.26.07
The 25 member states of the European Union (EU) delayed a July 20 scheduled vote on the European Commission's draft proposal on final dumping duties in the ongoing dumping case against EU imports of leather footwear from China and Vietnam. Based on published reports, the Commission proposed a Delayed Duty System (DDS) similar to the tariff-rate quota (TRQ) system Japan imposes on imports of leather footwear. Under the Commission's proposal, EU imports of the first 140 million pairs of leather footwear from China and the first 95 million pairs of leather footwear from Vietnam would be subject to normal duties. EU imports of leather footwear above these levels would be subject to a dumping duty (above the normal duty) of 23 percent and 29.5 percent for China and Vietnam, respectively. The Commission would impose an import licensing scheme in the 25 E, U member states to allocate and track the DDS/quota. The final dumping duties would be imposed on October 7 and would remain in place for 5 years. During the July 20 meeting, a majority of member states expressed concern over the proposal, particularly the potential administrative burden that could be caused by 25 different individual customs authorities administering an import licensing system as well as the legality of imposing quotas under international trade rules. A new vote on the Commission's proposal, which will likely be revised, has been tentatively scheduled for July 27. For the latest information on the EU dumping issue, please join AAFA's EU Footwear Dumping Task Force by contacting AAFA's Nate Herman at 703.797.9062.

AAFA is helping to spearhead a new coalition lobbying for Congressional passage of legislation that would completely eliminate duties on US imports of certain types of synthetic footwear. Please contact AAFA's Nate Herman at 703.797.9062 if you have any questions or would like additional information.

There is growing support in California's General Assembly for legislation sponsored by California Senator Alan Lowenthal (S.B. 760) that would impose a new tax on containers entering the Ports of Los Angeles/Long Beach. The push for a new container tax comes on the heels of ongoing discussions on how to fund the Clean Air Action Plan proposed by the ports.

The US House of Representatives approved implementation of the US/Oman Free Trade Agreement (FTA) on July 20 by a vote of 221-205 (See AAFA Key Vote Letter). The US senate had already approved the measure on July 11. Congressional approval of the US/Oman FTA hopefully clears the way for Congressional passage of other important trade measures before the end of the year, including Vietnam Permanent Normal Trading Relations (PNTR), co-production fixes for the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) and the US/Peru Trade Partnership Agreement.
AAFA submitted written testimony to the House Ways & Means Committee in reference to their July 12 hearing on the US/Peru Trade Partnership Agreement. AAFA applauded the free trade agreement's footwear provisions while criticizing the agreement's flawed apparel provisions. Nevertheless, AAFA urged Congress to quickly approve the agreement as the best way to continue, without interruption, the current duty-free status for apparel products made in the region using regional inputs. The Andean Trade Promotion & Drug Eradication Act (ATPDEA), which currently offers these benefits, expires at the end of this year. Prominent members of Congress have indicated that Congress will likely not renew ATPDEA before it expires.

On the eve of the conclusion of the second round of negotiations on a US/Malaysia Free Trade Agreement (FTA) in Washington, DC, AAFA and the Malaysian Textile Manufacturers Association (MTMA) on July 21 issued a joint press release urging negotiators to recognize that the FTA must be beneficial to both the US and Malaysian textile and apparel industries, with sufficient flexibility built into the agreement to maintain and grow the viable partnership between Malaysia and the United States now and into the future. The second round of negotiations for the US/Malaysia Free Trade Agreement as well as for the US/Korea FTA, which concluded July 14 in Seoul, yielded little progress in regards to apparel, footwear and textiles. Negotiators will meet again on both FTAs in September, with the goal of completing the agreements by the end of the year.

The Committee for the Implementation of Textile Agreements (CITA), effective July 20, has determined that certain polyester and nylon yarns classified in subheadings 5402.31.6000, 5402.62.0000, and 5605.00.1000 of the Harmonized Tariff Schedule of the United States (HTSUS), cannot be supplied by the domestic industry in commercial quantities in a timely manner under ATPDEA. Therefore, apparel containing lace fabrics made in the Andean region using the subject third-country yarns can enter the United States duty-free under ATPDEA. Meanwhile, CITA requests comments on a July 5 petition from Shibani Inwear alleging that a certain combed and ring spun yarn, of a 92 percent cotton/ 8 percent cashmere blend, comprised of 2/32 Nm resulting in a 16 Nm yarn count, classified in subheading 5205.42.00.20 of the Harmonized Tariff Schedule of the United States (HTSUS), cannot be supplied by the domestic industry in commercial quantities in a timely manner under the African Growth & Opportunity Act (AGOA). If approved, men's knit sweaters made in sub-Saharan Africa from the subject third-country yarn can enter the United States duty-free under AGOA. Comments are due July 27. Finally, CITA, effective July 17, has determined that "handloomed, handmade, folklore articles, or ethnic printed fabrics" can now enter the United States duty-free under AGOA.

7.19.06
The Senate Finance Committee held a hearing July 12 on legislation granting Vietnam Permanent Normal Trading Relations (PNTR) status (See AAFA's testimony). The tenor of the hearing was overwhelmingly positive, fueling hopes that Congress could make substantial progress towards approval of Vietnam PNTR legislation before Congress' August recess. Furthering the positive momentum for the legislation, over 130 companies and organizations representing virtually the entire US business community, including AAFA and many AAFA members sent a July 12 letter to Congressional leadership urging quick passage of Vietnam PNTR legislation. That letter followed a July 11 eminent persons letter to Congressional leadership signed by 18 prominent former US Secretaries of State and Treasury, US Trade Representatives and National Security Advisors supporting quick Congressional approval of Vietnam PNTR. A major Vietnam Veterans group also recently wrote in support of Vietnam PNTR. Vietnam will likely join the World Trade Organization (WTO) this fall. If Congress passes PNTR legislation by the time of Vietnam's PNTR entry, the United States will immediately eliminate quotas on US imports of apparel and textiles from Vietnam. In return, Vietnam will significantly open its market to the distribution and sale of US-made and US-branded apparel, footwear and textiles as well as all other US products and services.

AAFA sent a July 12 letter to US Secretary of Commerce Carlos Gutierrez requesting the Secretary to correct press statements regarding the urgency of implementation of the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) and urged the Secretary and his staff to recommit to implementing CAFTA both correctly and quickly. Due to continued delays in implementation of the agreement and the resulting co-production problems they cause, US apparel imports from and US textile exports to the CAFTA region continue to slide (See latest AAFA chart as well as related article below). AAFA continues to work with the Bush administration and Congress to resolve the problems generated by staggered implementation of CAFTA.

According to published reports, the Chinese government plans a major overhaul of its management rules governing apparel quotas. The purpose of the overhaul is to prevent unused quota as US imports from China in the categories covered by quota so far this year have fallen and much quota has gone unused. Meanwhile, AAFA submitted comments July 11 to the US International Trade Commission (ITC) regarding the ITC's ongoing study on proposed definitions for baby booties. The purpose of the study is to determine if baby booties are defined separately from baby socks, and therefore removed from the current China safeguard quotas, would it have any impact on domestic manufacturers. US imports of baby socks from China were included at the last minute in the November 2005 US/China Bilateral Textile Agreement, which re-imposed safeguard quotas on US imports of a number of types of apparel and textiles from China through 2008. Because of the structure of the current Harmonized Tariff Schedule (HTS), US imports of Chinese baby booties were also inadvertently subject to quotas under the agreement.

The US House of Representatives on July 11 approved a three-year extension of the US import ban on Burma by voice vote. The US Senate is expected to approve the measure this week.

On July 12, the Judiciary Committee reported H.R. 2965, the Competition in Contracting Act of 2006 out of committee. This was the second attempt to report the bill after having to pull it from consideration approximately one year ago over a substitute amendment, sponsored by Rep. Steve Chabot (R-OH). The Chabot amendment went down 28 to 9 this round and no other weakening amendments were added. This legislation will phase-out the mandatory source for FPI, which will open up opportunities for private contractors by requiring that FPI compete for contracts. H.R. 2965 also provides additional training and educational programs that have a better rate of reducing recidivism. AAFA has been a long-time supporter of this legislation and will continue to work with Congress to ensure House passage this year. Similar legislation has passed the House in the past; however, the Senate will be a much greater challenge.

7.10.06
Guatemala formally joined the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) on July 1. Prior to Guatemala's formal entry into CAFTA, the United States and Guatemala exchanged letters on pockets. Each CAFTA country must exchange side letters with the United States over pocketing before they can join CAFTA (summary of side letters to date). While the date of Costa Rica's entry into force remains unclear, the Dominican Republic hopes to join CAFTA by August 1.

Trade ministers from the 149 member countries of the World Trade Organization (WTO) again failed to reach a breakthrough in the ongoing Doha Round of world trade negotiations in meetings held the week of June 26 in Geneva. While the United States and others refused to call the talks dead, many experts believe that a failure to reach a consensus on the framework of an agreement by the end of July could doom the talks. AAFA continues to lobby the US government and its counterparts around the world for an ambitious agreement that would significantly reduce tariffs and non-tariff barriers to US-made and US-branded apparel, footwear and textiles worldwide.

China is reportedly considering cutting export tax rebates for its apparel, textile and other high-resource industries as part of its environmental clean-up efforts. Industries could face cuts in the rebate as high as 2 percent. Meanwhile, India has reportedly slammed Indian imports of Chinese apparel and textiles with dumping duties as high as 115 percent. China and South Africa also reached an agreement where South Africa will impose quotas on its imports of up to 31 different categories of Chinese apparel and textiles.

Peru's Congress ratified the US-Peru Free Trade Agreement on June 28. It is unclear if the US Congress will consider the agreement before it adjourns for the year. Meanwhile, Congressional renewal of the Andean Trade Promotion & Drug Eradication Act (ATPDEA), which expires at the end of this year, remains uncertain.

The European Commission circulated to the 25 European Union (EU) member states on June 27 its draft proposal on final dumping duties in the ongoing dumping case against EU imports of leather footwear from China and Vietnam. Based on published reports, the Commission is proposing a Delayed Duty System (DDS), which is similar to the tariff-rate quota (TRQ) Japan imposes on imports of leather footwear. Further, the Commission's proposal eliminates the exclusion for children's shoes, but maintains the provisional exclusion for high-end athletic (STAF) footwear. Under the Commission's proposal, EU imports of the first 140 million pairs of leather footwear from China and the first 95 million pairs of leather footwear from Vietnam would be subject to normal duties. EU imports of leather footwear above these levels would be subject to a dumping duty (above the normal duty) of 23 percent and 29.5 percent for China and Vietnam, respectively. The final dumping duties will remain in place for 5 years. The EU member states could vote on the Commission's proposal as early as July 20. The final dumping duties/system will be implemented October 6. For the latest information on the EU dumping issue, please join AAFA's EU Footwear Dumping Task Force by contacting AAFA's Nate Herman at 703.797.9062.

The US government's interagency Committee for the Implementation of Textile Agreements (CITA) has determined that certain 100 percent cotton, yarn-dyed, 3- or 4-thread twill weave, flannel fabrics, of combed, ring spun single yarns, of the specifications detailed below, classified in subheading 5208.43.0000 of the Harmonized Tariff Schedule of the United States (HTSUS), for use in products in Categories 340, 341 and 350, cannot be supplied by the domestic industry in commercial quantities in a timely manner under the Caribbean Basin Trade Partnership Act (CBTPA). As a result, woven shirts, robes and dressing gowns made in Central America or the Caribbean from third-country subject fabric can now enter the United States duty-free under CBTPA.
The US Senate approved the US/Oman Free Trade Agreement on June 28 by a vote of 60 to 34. Attention now turns to the US House of Representatives, where a vote on the agreement is expected before the end of July.

Liza Jones, Group General Manager of Clery's Department Store, a leading department store in Ireland, is traveling to New York City the week of July 20, and has requested meetings with American brands interested in expanding into Europe. Clery's is interested in new partnerships with American brands, preferably using the 'store-within-store' concession concept but open to all discussions. Clery's wants to meet with brands targeting the female shopper - aged 18-55+, but is also interested in childrenswear and associated merchandise, men's fashion and cosmetics. Ms. Jones would like to set up informational meetings with AAFA members on July 19 in New York City at its showrooms/offices for those interested. Ms. Jones is also willing to travel to other parts of the United States for a meeting on July 21 if the brand fits with the store's strategy. Please contact Anastasia Xenias (Tel: 212.809.2685) at the US Department of Commerce's New York Export Assistance Center as soon as possible if you are interested or would like additional information.

6.28.06
AAFA and a number of AAFA members joined over 100 other companies and organizations representing the entire US business and agricultural community in sending a June 21 letter to Congressional leadership urging Congress to immediately consider and pass legislation implementing the US trade agenda. Specifically, the signatories urged Congress to immediately pass legislation implementing Vietnam Permanent Normal Trading Relations (PNTR) status, the US/Oman Free Trade Agreement and the US/Peru Free Trade Agreement. Despite overwhelming US business and agricultural community support, Congressional consideration of these measures has stalled due to the current politically contentious environment in Washington, DC.

With a September 7 decision looming on the European Union's (EU) final anti-dumping duties on EU imports of leather footwear from China and Vietnam, the rhetoric surrounding that decision is heating up. Sweden last week took the European Commission to task for the anti-dumping measures, using the "mistaken and counter-productive sanctions" as an example of why Europe's anti-dumping rules need to be overhauled. British retailers have also joined in the growing chorus of concerns over the way anti-dumping measures are being used. Meanwhile, as rumors of a possible settlement between the EU and Vietnam are growing, one of the leading development organizations in Vietnam issued a new study June 19 that found that a half million Vietnamese footwear jobs would be lost once full anti-dumping measures are imposed. Unlike Vietnam, China continues to fight the anti-dumping measures. Representatives of an alliance of 150 Chinese footwear companies are in Europe now pressing European officials to revisit the anti-dumping measures. As expected, European manufacturers and their governments continue to urge the EU to expand the current anti-dumping measures by eliminating the current exceptions for children's and high-tech athletic shoes and increasing the level of duties. For the latest information on the EU dumping issue, please join AAFA's EU Footwear Dumping Task Force by contacting AAFA's Nate Herman at 703.797.9062.

House Ways & Means Committee Ranking Member Charles B. Rangel (D-NY) sent a June 22 letter to the House leadership urging them to pass the AAFA-supported Haitian Hemispheric Opportunity Partnership Encouragement (HOPE) Act immediately. Rangel argued passage of the HOPE Act now would help set the government of recently democratically elected Haitian President Rene Preval on a course to sustained economic growth and stability, while advancing US economic and national security interests. The HOPE Act is a bipartisan measure that would provide Haitian apparel with improved duty-free access to the United States.

Last week, US Secretary of Commerce Carlos Gutierrez, European Union (EU) Trade Commissioner Peter Mandelson and EU Commissioner for Industry Gunter Verheugen announced a joint-action program to combat the illegal trafficking in counterfeit goods. The plan will allow for cooperation between Europe and the United States for training of customs officials, exchanging intelligence and helping to improve enforcement of intellectual property rights in other countries. The joint-action program will initially focus on China and Russia before expanding to other countries. AAFA welcomes this collaboration as it signifies that the two governments recognize the enormity of the counterfeiting problem.

In cooperation with the Consumer Product Safety Commission (CPSC), Adjmi Apparel Group, a licensee of Reebok International Ltd., voluntarily recalled about 55,000 children’s windsuits. The recalled windsuits are full zip boys’ polyester jacket and pants sets with a clear rubber zipper pull on the jacket that can detach, posing a choking or aspiration hazard to young children. Consumers should either return the recalled suit or cut off the clear zipper pull to eliminate the hazard. For more information, contact Adjmi toll free at 800.873.5570 or visit the Reebok website

6.20.06
A bipartisan group of members introduced AAFA-supported legislation June 13 in Congress to give Vietnam permanent normal trading relations status (PNTR) (AAFA Press Release). Congressional passage of PNTR is necessary for US businesses and US consumers to enjoy the benefits of Vietnam's accession, expected this fall, to the World Trade Organization (WTO). When Vietnam joins the WTO, the United States will remove all quotas on US imports of Vietnamese apparel and textiles. In return, the Vietnamese government will eliminate all prohibited subsidies it currently provides to its apparel and textile industry and the Vietnamese government will lower some tariffs and remove all non-tariff barriers to US-made and US-branded apparel and footwear as well as all other US products and services entering the Vietnamese market. If Vietnam does not eliminate its subsidies, the United States can bring a case before the WTO. If the WTO finds that prohibited subsidies still exist, the United States can impose safeguard quotas on US imports of products from Vietnam that are currently under quota for a period of up to a year at 2006 quota levels. While the process is much more transparent and fact-based than the China textile safeguard, the Vietnam safeguard provides a real threat of quotas through mid-2009. Vietnam PNTR enjoys broad bipartisan support in Congress and is supported by virtually every part of the US business community (See Below Article). Unlike a free trade agreement, which is a two-way agreement, the US/Vietnam agreement is a one-way agreement where Vietnam must provide virtually all of the concessions (opening its market to US products and services) in order to join the WTO, while the United States must make no concessions. If you want to join the US-Vietnam WTO Coalition (which is free), click here.
Despite the strong safeguard mechanism in the US/Vietnam WTO Accession Agreement, 44 members of Congress, at the behest of the US textile industry, sent a June 13 letter to new US Trade Representative Susan Schwab demanding that the Bush administration negotiate a much tougher safeguard with Vietnam and support a separate, watered-down approach to apparel and textiles in the ongoing Doha Round of global trade talks. Otherwise, the members will consider withholding their support not only for Vietnam PNTR, but for the entire Bush trade agenda (Doha, Oman, Peru, Colombia, Korea, Malaysia, etc.) Ironically, most of these members of Congress have supported few, if any, free trade agreements or other trade bills considered by Congress in the past. Concerned about growing signs that the ongoing Doha Round of global trade talks continue to falter, the US business community, including AAFA, sent a strongly-worded letter June 12 to the trade negotiators of the 150 WTO member countries clearly stating that action is needed now and that any agreement must be ambitious or the US business community will withhold its support for the agreement. The 150 WTO member countries still seem far from reaching a deal for the framework of an agreement ahead of a late June deadline. Meanwhile, Turkey last week introduced yet another proposal to remove apparel and textiles from the tariff-cutting requirements of the overall deal and instead create a separate "sectoral" agreement where there will be little, if any, reductions in apparel and textile tariffs worldwide. (See Above Article).

According to the US Department of Labor's Bureau of Labor Statistics June 14 release of the May Consumer Price Index (CPI), retail prices for all types of apparel declined 0.8 percent for the month, primarily as a result of substantially lower prices for women’s outerwear (-3.9 percent), men’s shirts and sweaters (-3.2 percent), girls’ apparel (-2.8 percent) and women’s suits and separates (-2.4 percent). Meanwhile, overall footwear prices fell in May for the first time in five months, down by 0.2 percent from April, as higher prices for juvenile footwear (+1.1 percent) and men’s shoes (+0.2 percent) could not offset a 1.1 percent drop in prices for women’s shoes. Despite the significant deflationary activity registered in May, overall prices for apparel were unchanged from May 2005 levels. Prices for men’s and boys’ apparel (-2.7 percent) and infants’ garments (-1.3 percent) remained below May 2005 levels, while prices for women's and girls' apparel were 0.2 percent higher. May overall retail prices for footwear were well above year-ago levels (+2.1 percent), led by sizable increases in prices for women’s footwear (+2.4 percent), juvenile footwear (+2.1 percent) and men’s shoes (+1.7 percent). Overall retail prices grew 0.5 percent in May spurred by higher prices at the pump. Retail prices were also higher on year-on-year terms, increasing by 4.2 percent from May 2005.
According to the US Census Bureau's June 13 release of May Advanced Monthly Sales, May seasonally adjusted retail sales at US clothing and clothing accessories stores, including shoe stores, increased 0.2 percent above April sales and were 6.0 percent higher than in May 2005. The good performance of clothing and clothing accessory stores over the past year has been driven by higher sales by women’s clothing stores, family and other clothing stores and shoe stores. Specifically, April seasonally adjusted retail sales (most recent data available) at women’s clothing stores rose 6.4 percent from April 2005, while sales at family and other clothing stores increased 5.2 percent and sales at shoe stores went up by 5.0 percent. For their part, April sales at men’s clothing stores could only manage a far more modest 1.1 percent growth rate from April 2005. May seasonally adjusted retail sales at US department stores rose slightly from April (+0.1 percent) and were unchanged from May 2005. May seasonally adjusted retail sales at all US general merchandise stores (which includes discount stores like Kohl's, Target and Wal-Mart as well as regular department stores) increased by a somewhat more upbeat 0.3 percent from April and were 6.0 percent higher than in May 2005.

In cooperation with the Consumer Product Safety Commission (CPSC), Nine West Footwear has voluntarily recalled roughly 6,700 pairs of Sam & Libby girl’s thong sandals. The metal tack that joins the strap to the sole can detach, posing a “laceration hazard.” The sandals were produced in Fish, Starfish and Angelfish models in girls’ sizes six to 12. For additional information, please contact Nine West Footwear's Customer Relations Department at 800.999.1877, or visit the Jones Apparel Group, Inc. website

6.13.06
In letters sent June 6 to Congressional leaders and the Bush administration (See AAFA Press Release), AAFA urged Congress to quickly renew the current ban on imports from Burma (the ban expires in August). AAFA also urged the Bush administration to do more to encourage other countries to impose similar sanctions against Burma. The international community, led by the International Labor Organization (ILO) and the United Nations, has universally condemned the deplorable human and labor rights situation in Burma.

The Dominican Republic will likely miss a July 1 deadline to join the US/Central America-Dominican Republic Free Trade Agreement (CAFTA), but will likely join by the end of the summer. Guatemala will likely join CAFTA on July 1. Meanwhile, Costa Rica will not likely ratify and implement CAFTA before the end of the year. AAFA continues to work with the Bush administration and Congress to resolve the problems generated by staggered implementation of CAFTA.
The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) on June 9 approved a May 2 short supply petition finding that certain yarn dyed woven 100 percent cotton napped fabrics (flannels) of three or four-thread twill classifiable under 5208.43.00 of the Harmonized Tariff Schedule of the United States (HTSUS) are not available in commercial quantities in a timely manner under CAFTA. Meanwhile, CITA requests comments on a June 6 petition alleging that certain woven 100% cotton flannel fabrics in a variety of thread counts, weights and widths, classifiable under HTSUS 5208.52.30, 5208.52.40 and 5209.51.60, is in short supply. Comments are due June 20. If approved, apparel made in a CAFTA country from third-country subject fabric can enter any CAFTA country duty-free.

A bipartisan group of members will introduce legislation tomorrow, June 13, in Congress to give Vietnam permanent normal trading relations status (PNTR). Congressional passage of PNTR is necessary for US businesses and US consumers to enjoy the benefits of Vietnam's accession, expected this fall, to the World Trade Organization (WTO), including the elimination of quotas on US imports of Vietnamese apparel and textiles. A vote is expected this summer.
The US Senate unanimously confirmed Sue Schwab as the next US Trade Representative on June 8 (See AAFA Press Release). Schwab replaces Rob Portman, whom the Senate just confirmed as President Bush's next Budget Director.

As a follow-up to the June 5, 2006 AAFA Newsbreaker, the US International Trade Commission (ITC) requests comments for its report on the probable economic impact on domestic manufacturers of creating a definition for "baby booties" under the US Harmonized Tariff Schedule (HTS). The report is in reaction to the growing outcry over the last-minute inclusion of quotas on US imports of Chinese baby socks and baby booties in the November 2005 US/China Bilateral Safeguard Agreement. If a new definition is approved, it would exempt baby booties from the China safeguard quota.
Two members of Congress and the AFL-CIO filed a petition June 8 under the Trade Act of 1974 alleging that China represses workers' rights, which has driven down wages and, in turn, the price of Chinese exports. The petitioners request that the Bush administration impose trade sanctions on China ranging from 10 to 77 percent on all US imports from China to offset the alleged price suppression. The Bush administration has 45 days to respond to the petition
Despite running his country's economy into the ground as Peru's president in the 1980s, Alan Garcia, a "reformed" leftist who now supports the US/Peru Free Trade Agreement (US/Peru FTA) and economic reforms, beat Ollanta Humala, an avowed leftist and ally of Venezuelan President Hugo Chavez, 54 percent to 46 percent in a June 4 election to regain the presidency. Reformist Alvaro Uribe, who supports the US/Colombia Free Trade Agreement, won re-election in late May as Colombia's president in a landslide, beating his nearest opponent by more than 40 percentage points. Meanwhile, a June 7 report (Large File - 2.1MB) from the US International Trade Commission (ITC) on the potential economic effects of the proposed US/Peru FTA found that while the FTA would have a positive overall impact, trade in apparel and textiles would remain essentially unchanged because of the highly restrictive rules of origin negotiated in the agreement.

In a June 5 letter to Senate Finance Committee Chair Charles Grassley (R-IA), AAFA urged Congress to include new trade benefits for the Commonwealth of the Northern Marianas Islands (CNMI) in current trade legislation moving through Congress. The legislation would allow duty-free access for apparel entering the United States from the US territory if 30 percent of the value-added was performed in the CNMI, down from the current 50 percent requirement.

6.5.06
The United States and Vietnam formally signed an AAFA-supported bilateral agreement on May 31 that removes a major hurdle in Vietnam's effort to join the World Trade Organization (WTO) by the end of year. Vietnam must now reach an agreement with the entire WTO membership and the US Congress must approve Permanent Normal Trading Relations (PNTR) status for Vietnam before Vietnam can formally join the WTO. If Vietnam joins the WTO, the United States will remove all quotas on US imports of Vietnamese apparel and textiles., In return, the Vietnamese government will eliminate all prohibited subsidies it currently provides to its apparel and textile industry and the Vietnamese government will lower tariffs and remove non-tariff barriers to US-made and US-branded apparel, footwear and textiles as well as all US products and services entering the Vietnamese market. AAFA is part of a broad-based coalition of businesses and non-governmental organizations urging Congress to approve PNTR for Vietnam as quickly as possible.

Over 40 US apparel companies, retailers and trade associations sent a May 31 letter to Deputy US Trade Representative Sue Schwab urging the US government to implement the "cumulation" provisions of the US/Central America/Dominican Republic Free Trade Agreement (CAFTA) by July 1. CAFTA's cumulation provisions allow duty-free access for a limited amount of woven apparel made in the CAFTA region from Mexican and Canadian yarn and fabric. Cumulation is a key step in promoting a competitive industry in the region. The Mexicans are said to be close to reaching the necessary agreements with the US government to implement cumulation. Meanwhile, Guatemala did not join CAFTA on June 1 as hoped due to Guatemala's failure to sign certain international treaties on intellectual property rights (IPR) and delays in signing a deal on pocketing fabrics due to unrelated issues over beer tariffs. Guatemala could still join CAFTA on June 15 or July 1 depending on how quickly these issues are resolved. In a piece of good news, the US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) on May 26 approved the first-ever request under the new, streamlined CAFTA short supply procedures. The decision allows apparel made in CAFTA countries using certain third-country 100 percent cotton napped flannel fabrics to enter the United States or any other CAFTA country duty-free.

The Cambodian apparel industry continues to grow despite the end of worldwide quotas on January 1, 2005, according to a new report by the International Labor Organization's (ILO) Better Factories Cambodia program. The report found that Cambodia’s apparel and textile exports had jumped by nearly 10 percent in value terms in 2005, with exports to the United States up by just more than 10 percent in quantity and almost 20 percent in value. Between January 1, 2005 and April 30, 2006, almost 30,000 new jobs were also created in the Cambodian apparel industry, bringing the total number of garment workers to 293,600 in April 2006. Moreover, the number of factories increased about 13 percent in 2005 despite some closures. Under a unique arrangement begun almost a decade ago, the ILO monitors labor standards in Cambodia's apparel industry through its Better Factories Cambodia program. The program has found continued improvements in Cambodia's labor situation year after year, encouraging sourcing and investment in the region.

In reaction to the growing outcry over the last-minute inclusion of quotas on US imports of Chinese baby socks and baby booties in the November 2005 US/China Bilateral Safeguard Agreement, the Office of the US Trade Representative (USTR) has requested that the US International Trade Commission (ITC) conduct a study on the probable economic effect of removing US imports of Chinese baby socks and baby booties from the safeguard quotas. The ITC is expected to complete its study within three months. It is unclear whether the announcement of the study precludes any action on this important issue until the study is concluded. Meanwhile, China and South Africa have announced a deal under the overall China WTO safeguard where restrictions will be placed on South African imports of certain types of Chinese apparel and textiles.

AAFA President and CEO Kevin M. Burke sent a letter to Representatives Marsha Blackburn (R-TN) and Jan Schakowsky (D-IL) thanking them for recently introduced legislation that modernizes the Wool Labeling Act. Specifically, the legislation revises the labeling requirements for certain wool and cashmere products set forth in 1939 when the original act was created. The AAFA is appreciative of the bill’s incorporation of “supers” as accepted terminology used to identify the quality of a wool product. The original Wool Labeling Act of 1939 failed to reflect the current market practice of using “supers” as an international identifier of the quality of wool products. The AAFA is eager to aid in moving this legislation forward, and hopes to assist Blackburn and Schakowsky in any way possible.

5.31.06
Senator Chuck Schumer (D-NY) put on hold the nomination of Susan Schwab to be US Trade Representative on May 26. Schumer is holding up Schwab's confirmation to express concern over the Bush administration's handling of the China currency issue. Under Senate rules, the full Senate cannot vote on a nominee until all holds by individual Senators are removed. The US Senate would have likely been overwhelmingly confirmed Schwab as US Trade Representative on May 26 if Schumer had not imposed a hold.

The Jordanian government on May 18 released the findings of its investigation into allegations of labor abuses in Jordanian apparel factories made in an April report from the National Labor Committee. Jordan is actively working to correct any problems found and establish mechanisms to ensure that these problems do not occur again.

House International Relations Committee Ranking Member Tom Lantos (D-CA) introduced new legislation May 19 to renew current US import sanctions against Burma (sometimes called Myanmar). On May 26, Senators Mitch McConnell (R-KY), Diane Feinstein (D-CA) and John McCain (R-AZ) introduced companion legislation in the US Senate along with 47 Senators as co-sponsors. The bills would renew legislation, passed in 2003, that imposes a total ban on all US imports from Burma, including apparel and footwear. The current US import ban expires in August and cannot be extended without Congressional approval of new legislation. In its latest annual Human Rights Report, the State Department charged that the human rights situation in Burma has "worsened" over the past year. Burma's ruling military junta refused to step down in 1999 after overwhelmingly losing a free and fair election. Instead, it imprisoned the winner of the election, Nobel Peace Prize Laureate Aung San Suu Kyi, and thousands of her supporters and began an eight year reign of terror that includes forced labor, political repression and widespread human rights abuses. AAFA was the only major business or trade association to support the original ban. AAFA continues to support sanctions against Burma and supports Bush administration efforts to encourage other countries to impose similar import bans on Burma.

5.23.06
Guatemala's Congress approved a package of implementing legislation on May 18 that brings Guatemala into almost full compliance with the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). After Guatemala formally signs a number of required international treaties on intellectual property rights (IPR) this week and after it signs a required reciprocity agreement on the textile and apparel retroactivity provisions in the agreement, Guatemala should meet all of the requirements necessary to implement CAFTA on June 1. There are some questions, however, surrounding the reciprocity agreement. Meanwhile, Nicaragua issued the allocation procedures (procedures & guide) for its Tariff Preference Level (TPL) allocation under CAFTA. The Dominican Republic is still expected to implement the agreement on July 1. Most experts hope that Costa Rica will implement CAFTA, which it has yet to ratify, by the end of the year. AAFA's Nate Herman delivered a speech May 18 at the Apparel Sourcing Show in Guatemala highlighting how the delays in CAFTA implementation and other outstanding issues have impacted apparel and textile trade in the region. The speech also addressed ways the region could work to fix these issues.

The United States has proposed harmonizing labeling for apparel, footwear, textiles and travel goods in the ongoing World Trade Organization (WTO) Doha Round of global trade talks. The AAFA-supported proposal would standardize and limit the amount of information required on labels to country of origin and care information (for apparel only) among all 150 WTO member countries. The European Union has also introduced a number of AAFA-supported proposals. The first would eliminate all non-tariff barriers in the apparel, footwear and textile sectors. The second proposal would eliminate all export taxes worldwide, particularly those that prevent the export of raw hides and skins and partially prepared leather. Separately, the United States recently submitted a paper to the WTO on how it will implement its commitment to allow 97 percent of all exports from least-developed countries (LDCs) to enter the United States duty-free. The US government does not want to provide 100 percent access since it wants to be able to keep some duties in place for some products from some countries (i.e. some apparel and footwear from Bangladesh or Cambodia and some agricultural products from other LDCs). The US document mostly makes clear that (a) the United States is serious about moving forward on this proposal (since there was some question that they were not serious) and (b) that there will be a fairly detailed public input process to develop the final US proposals. The commitment was made as part of the Doha Round talks and will only be implemented if the 150 WTO member countries reach an agreement. In their "mock" mark-up of the US/Oman Free Trade Agreement on May 18, the Senate Finance Committee unanimously approved an amendment banning any imports from Oman made with forced labor -- a veiled reference to the recent allegations of mistreatment of foreign guest workers in Jordan -- and approved by voice vote an amendment that would require the US government to regularly report to Congress on labor issues in free trade agreements. Under Trade Promotion Authority (TPA) procedures, any amendments approved by the Committee are advisory. It is unclear whether the Bush administration will include these amendments when it submits the final legislation implementing the US/Oman FTA to Congress

According to the US Department of Labor's Bureau of Labor Statistics May 17 release of the April Consumer Price Index (CPI), retail prices for all types of apparel rose 1.1 percent for the month primarily as a result of higher prices for men's furnishings (+2.2 percent), men's shirts and sweaters (+1.9 percent), women's underwear, nightwear, sportswear and accessories (+1.8 percent), and women's suits and separates (+1.6 percent). Meanwhile, overall footwear prices rose for the fourth consecutive month in April, up by 0.6 percent from March, after years of deflationary activity. The consumer price index for footwear was led by an increase in retail prices for women's shoes (+1.0 percent). On the other hand, prices for men's shoes and juvenile footwear were little changed in April. Despite the significant price increases registered during February-April, overall April prices for apparel remained just below April 2005 levels (-0.2 percent). Prices for men's and boys' apparel (-2.0 percent), women's and girls' apparel (-0.3 percent) and even infants' garments (-2.6 percent) all remained below April 2005 levels. April overall retail prices for footwear, on the other hand, remained well above year-ago levels (+1.9 percent), led by sizable increases in prices for men's footwear (+2.1 percent), juvenile footwear (+2.1 percent) and women's footwear (+1.5 percent). Overall retail prices increased by 0.9 percent in April spurred by higher energy and transportation prices. Retail prices were also higher on year-on-year terms, increasing by 3.5 percent from April 2005.

5.15.06
The US Treasury Department again failed to cite China as a "currency manipulator" in its latest semi-annual report foreign exchange rates and currency manipulation. Congressional critics blasted the report with Senators Chuck Schumer (D-NY) and Lindsey Graham (R-SC) again threatening to bring their legislation to a vote by September if no action is taken by either China or the Bush administration. The bill would impose a 27.5 percent punitive tariff on ALL US imports from China.

The United States and Vietnam on May 14 reached a bilateral agreement in principle that clears another hurdle in Vietnam's efforts to join the World Trade Organization (WTO). Among other commitments, the United States will immediately eliminate all quotas it maintains on US imports of Vietnamese apparel and textiles when Vietnam formally joins the WTO. Vietnam, however, must also immediately eliminate all forms of WTO-prohibited subsidies to its apparel and textile industries upon WTO accession. If Vietnam does not eliminate its subsidies, the United States can bring a case before the WTO. If the WTO finds that prohibited subsidies still exist, the United States reserves the right to re-impose quotas on Vietnam for a period of up to a year. The two sides will formally sign the agreement in June. The US Congress must still grant Vietnam Permanent Normal Trading Relations (PNTR) status and the WTO must still reach an agreement with Vietnam before Vietnam can join the WTO. A Congressional vote on Vietnam PNTR is expected by this fall.

Nobel Peace Prize Laureate Oscar Arias formally became president of Costa Rica on May 8. At his inauguration, Arias vowed to push through ratification of the US/Dominican Republic-Central America Free Trade Agreement (CAFTA) as soon as possible. Meanwhile, Guatemala's Congress is expected to vote this week on implementing legislation that will allow the country to join CAFTA on June 1. The Dominican Republic is still expected to join CAFTA on July 1.

The European Union announced May 12 that they had withdrawn the re-introduction of 14 percent punitive duties on exports of US-made apparel and footwear to Europe. The sanctions had been scheduled to be implemented on May 16. The EU decision was in response to tax reconciliation legislation passed by Congress the week of May 8 that includes a provision fixing the last remaining irritant in the long-running EU/US dispute over the US Foreign Sales Corporation (FSC) program.

In an unprecedented move, Paraguay on May 9 blocked a World Trade Organization (WTO) waiver for the United States to continue its unilateral trade preference programs - the Caribbean Basin Trade Partnership Act (CBTPA), the African Growth and Opportunity Act (AGOA) and the Andean Trade Promotion & Drug Eradication Act (ATPDEA) because the programs do not include all developing countries. Waivers for unilateral preference programs, which need such a waiver because they violate WTO rules on reciprocity and equal treatment, are typically granted without debate. It is unclear what will happen next since no country has ever tried to block such a waiver. As a consensus organization, all 150 members of the WTO must agree to grant the waiver.

After months of delay, the US government finally posted the draft text of the US/Colombia Trade Promotion Agreement on May 9. The agreement, signed February 27, has still not been submitted to Congress for consideration, potentially delaying implementation beyond the December 31, 2006 expiration of the current Andean Trade Promotion & Drug Eradication Act (ATPDEA) program. Meanwhile, AAFA, working in conjunction with the US government, successfully lobbied Colombia to dramatically revise a December 2005 proposed regulation that, if enacted, would have effectively closed the Colombian market to apparel, footwear and textile imports. While the revised regulation (in Spanish with English translation and summary) still requires some additional paperwork for Colombian importers, it does not restrict the flow of goods into Colombia. Finally, the US International Trade Commission (ITC) requests comments for its next annual report on the economic impact of the ATPDEA trade preference program. Comments are due June 9.

The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) on May 5 denied a March 6 petition alleging that certain combed and ring-spun yarn, of a 92-percent cotton and 8-percent cashmere blend, comprised of 2/32 Nm resulting in a 16 Nm yarn size, classified in subheading 5205.42.00.20 of the Harmonized Tariff Schedule of the United States (HTSUS), cannot be supplied by the domestic industry in commercial quantities in a timely manner under the African Growth and Opportunity Act.

5.8.06
A new report released May 3 (LARGE FILE) alleges widespread mistreatment of workers, particularly foreign workers, in Jordan's apparel factories. The report, based almost exclusively on interviews by the National Labor Committee with workers, many of which were ex-foreign workers interviewed in Bangladesh, reviewed 26 out of an estimated 100-150 apparel factories located in Jordan. The report alleges 80-120 hour work weeks and failure to pay workers at many of those factories. In addition, the report alleges widespread abuse of foreign guest workers, mostly from Bangladesh, including physical abuse and involuntary servitude. The government of Jordan has already responded by launching a widespread investigation into the allegations listed in the report. AAFA is following the issue closely.

The 150 countries of the World Trade Organization (WTO) missed their self-imposed April 30 deadline to reach an agreement on the framework ("modalities") for an agreement in the ongoing Doha Round of global trade talks. With the passage of the deadline, the AAFA-supported American Business Coalition for Doha (ABCDoha) sent a May 3 letter to all 150 WTO trade ministers urging them to remain committed to an ambitious agreement. The US business community will not accept a "Doha Lite" deal or a weak deal just for the sake of reaching an agreement. If successful, the Doha Round could result in the lowering of tariffs and the elimination of non-tariff barriers worldwide for US-made and US-branded apparel, footwear and textiles.

AAFA sent a letter May 4 to US Trade Representative (USTR) Designate Susan Schwab congratulating her on her nomination. The letter also urges Schwab to make Congressional passage of a legislative fix to the current co-production problems plaguing the implementation of the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) one of her first priorities as USTR. In related news, the US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) requests comments on a May 2 petition from B*W*A alleging that certain yarn dyed woven 100 percent cotton napped fabrics (flannels) of three or four-thread twill classifiable under 5208.43.00 of the Harmonized Tariff Schedule of the United States (HTSUS) are not available in commercial quantities in a timely manner under CAFTA. If approved, apparel made in Central America or the Dominican Republic from subject third-country fabric can enter the United States duty-free under CAFTA. Comments are due May 16. To register for CITA's automatic e-mail short supply notification system, go to CITA's CAFTA Commercial Availability website.

Vietnam and the United States hope to wrap up negotiations this week on a bilateral agreement that will remove yet another obstacle to Vietnam's World Trade Organization (WTO) accession. AAFA and the larger business community continue to fight US textile industry efforts to include a China-style textile safeguard in the agreement. Once the two sides reach an agreement, the last of over 20 bilateral agreements Vietnam has already reached with other WTO members, Vietnam must still reach an overall agreement with the WTO. Further, Congress must approve permanent normal trading relations status (PNTR) for Vietnam.

The US House of Representatives overwhelmingly approved (421-2) the Security and Accountability for Every (SAFE) Port Act May 4. Meanwhile, the Senate Homeland Security and Governmental Affairs Committee approved similar legislation, called the GreenLane Maritime Cargo Security Act, on May 2. It is unclear when the full Senate will consider the legislation. Both bills would require Customs put in place pilot programs and increase funding to improve technology that would eventually allow screening of virtually all incoming cargo for nuclear materials. The legislation would also increase requirements for participants in Customs' Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT) program and require background checks of all workers at US ports. The full House rejected, by a party line vote, an AAFA/US business community-opposed amendment that would have required 100 percent screening of US-bound cargo before departure from foreign ports. The amendment would also have required electronic seals on all US-bound cargo containers. The House also rejected an amendment that would have removed the lower scoring that C-TPAT participants receive under Customs' Automated Targeting System (ATS). Customs uses ATS to assign a risk score to US-bound cargo to determine which cargo should be flagged for further inspection. Neither amendment was offered in the Senate Committee markup of the GreenLane legislation. In related news, the US Department of Homeland Security (DHS) issued its Maritime Infrastructure Recovery Plan on April 28. Among other things, the report includes a plan for a coordinated response to quickly resume cargo traffic in the case of a "major disruption" to US maritime commerce. Both bills would require DHS to beef up these plans, which some consider inadequate.

AAFA, the US Chamber of Commerce, and Caribbean Central American Action (CCAA) sent a joint letter May 5 to House Majority Leader John Boehner urging swift Congressional action on Haitian trade preference legislation known as the HOPE bill.

The European Union (EU) announced May 3 that it will re-impose retaliatory duties on European imports of a wide range of US-made products, including a wide range of US-made apparel and footwear. The retaliatory duties of 14 percent (on top of regular duties) will be imposed on all subject US-made goods imported into Europe on or after May 16 (See Annex on p. 3 of European Council Regulation (EC) 171/2005 for complete list of products subject to sanctions).

An AAFA-supported coalition sent letters May 1 to Congressional leaders urging Congress to quickly renew the US Generalized System of Preferences (GSP) program. GSP, which expires at the end of this year, grants developing countries duty-free access to the US market for a wide-variety of products. Under current rules, apparel and footwear are not eligible for the program.

5.3.06
The US House of Representative's Homeland Security Committee unanimously approved the Security and Accountability for Every (SAFE) Port Act April 26. The full House will likely vote on the measure this week while that timeline for the legislation's counterpart bill in the US Senate is less certain. The bill would require Customs to eventually screen 98 percent of all incoming cargo for nuclear materials, increase requirements for participants in Customs' Container Security Initiative (CSI) and the Customs-Trade Partnership Against Terrorism (C-TPAT) program and require background checks of all workers at US ports. The Committee rejected, by an 18-16 vote, an AAFA/US business community-opposed amendment that would have required 100 percent screening of US-bound cargo before departure from foreign ports. The amendment would also have required electronic seals on all US-bound cargo containers. If the amendment had passed, international trade would have likely slowed to a crawl as limited resources at Customs struggled to physically inspect a slew of containers registering false positives for nuclear materials and equipped with faulty electronic seals because today's technology cannot provide reliable screening or secure and reliable seals. Therefore, the Committee approved another amendment to increase resources to improve current technology. The supporters of the reject amendment have vowed to bring it to a vote again when the full House considers the legislation. The Committee also rejected an amendment that would have removed the lower scoring that C-TPAT participants receive under Customs' Automated Targeting System, (ATS). Customs uses ATS to assign a risk score to US-bound cargo to determine which cargo should be flagged for further inspection.

Due to delays in passage of necessary implementing legislation in Guatemala's Congress, Guatemala will NOT join the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) on May 1 as expected. Guatemala will now likely join the agreement on June 1. Meanwhile, most experts still believe that the Dominican Republic will join on July 1. Costa Rica's Congress has yet to even approve the agreement, possibly pushing enactment of CAFTA for Costa Rica into late fall or early 2007. 

More than 30 Republican and Democrat Members of Congress and Senators from 17 States have sent letters to US Secretary of Commerce Carlos Gutierrez and US Trade Representative Rob Portman urging changes to the way in which performance outerwear pants are defined under the US/China bilateral trade agreement. The agreement excludes US imports of all Chinese ski and other performance outerwear pants from quota, but there is growing concern that Customs is restricting the exemption by only allowing pants where all seams are sealed and all pockets are enclosed to be exempted from the quota. AAFA strongly supports the change, and has been working with the Outdoor Industry Association and its Washington counsel, Sander, Travis & Rosenberg, to get several Members and Senators to send or sign on to letters to the Bush administration on this important issue. Similar letters have also been sent to the Bush administration to seek a definition to clarify a distinction between baby socks and booties and to fix on-going implementation problems associated with provisions dealing with light weight knit to shape sweaters under the US/China bilateral trade agreement.

The Chinese government has recently announced that it plans to impose a 22 percent tariff on imported raw hides and skins. It is unclear if the 22 percent is a new tariff or actually a combination of the 17 percent VAT tax, which it has begun collecting, and required payment of the normal 5 percent tariff on imported hides used in the production of finished leather that is then exported out of China. The supposed purpose of the new tariff is to reduce the pollution caused by older leather tanneries that are processing imported raw hides for leather production. Please note that most modern tanneries use wet blue hides in leather production. The likely effect of such a rule would be to put many of the thousands of older tanneries in China out of business while, at the same time, dramatically increasing world demand (and prices) for wet blue hides. At this point, it is unclear if the regulation has been implemented, although AAFA has learned that tanneries have been allowed to take stock of all outstanding hide orders until the regulation will go into effect. AAFA will continue to track this developing issue.

The Senate Finance Committee issued a request for the submission of measures to be included in a Miscellaneous Tariff Bill (MTB). Senators must introduce the bills by May 26 in order to be considered for the MTB. The Committee will accept measures that would eliminate US tariffs on US imports of specific inputs used in the manufacture of US products or finished products that are not made in the United States. Each measure must be non-controversial (i.e. no domestic competition) and must amount to less than $500,000 worth of lost revenue to the US Treasury per year. Under Senate rules, the MTB must pass by unanimous consent. The US House of Representatives on March 15 already approved its version of the MTB by a vote of 412-2. The House bill, which contains hundreds of non-controversial provisions, includes measures to eliminate duties on US imports of 19 types of synthetic footwear as well as on US imports of certain camel hair and kashmir. The House bill would also extend the third-country fabric provision of the African Growth and Opportunity Act (AGOA) to 2015. This provision currently expires in 2008.

In April 26 comments submitted to the Office of the US Trade Representative (USTR) and the US International Trade Commission (ITC), AAFA urged the US government to negotiate a commercially-meaningful free trade agreement with Malaysia for the US apparel, footwear and textile industries. Specifically, the US government should negotiate flexible rules of origin for apparel that not only embodies flexible rules for products no longer made in the United States, but robust cumulation and short supply provisions to ensure that the agreement is not just commercially-viable today, but also remains so into the future. On footwear, the agreement should include flexible rules of origin and immediate and reciprocal duty-free entry for virtually all footwear. The comments, which also outline other AAFA goals for the proposed free trade agreement, were in response to USTR and ITC requests for information for use in their investigations on the potential economic effects of a US/Malaysia Free Trade Agreement.  

Effective April 26, US apparel imports from Chad are now eligible for duty-free entry under the African Growth and Opportunity Act (AGOA).
Venezuela formally withdrew from the Andean Community on April 22 in "retaliation" for two other members of the Andean Community - Colombia and Peru - reaching free trade agreements with the United States. Bolivia's President Evo Morales, a close ally of Venezuelan President Hugo Chavez, has indicated that Bolivia could soon follow suit. The Andean Community, comprised of Bolivia, Colombia, Ecuador, Peru and Venezuela, is a Customs Union that allows free trade among member countries.  

The ASTM Standards on Occupational Footwear Protection manual contains the twelve standards you need to help you comply with mandatory federal regulations on occupational foot protection. AAFA and many of its members helped craft many of these standards to best serve the needs of the industry and the customers our industry serves. This is a MUST-HAVE RESOURCE for occupational footwear manufacturers supplying protective footwear to construction and building trade professionals, occupational health and safety specialists and homeland security personnel. For the low price of $139, you can purchase all of the standards in one easy-to-use manual. To order, please call ASTM at 610.832.9585 or order online through the ASTM website.

4.25.06
Negotiators from the 150 member countries of the World Trade Organization (WTO) failed to make any progress on the Doha Round of global trade negotiations in critical meetings the week of April 17 in Geneva. With negotiations stalled, the negotiations will likely miss the April 30 deadline for establishing "modalities" or the rough outlines of a trade deal. With passage of this deadline, the whole trade talks come into doubt as time runs short to reach a full agreement by the end of this year. Meanwhile, AAFA joined with importer and retailer associations in sending an April 18th letter to President George W. Bush urging the Bush administration to oppose a recent proposal by the government of Turkey to exempt textiles and apparel from trade liberalization in the talks. The letter argues that US support for such a proposal would not only violate the Bush administration's repeated commitment to free trade, but could further destabilize the already fragile global trade negotiations by setting the precedent where other countries could take other industries important to the United States off the table.

Chinese President Hu Jintao's meetings April 20 with President George W. Bush in Washington, DC produced few concrete results. The lack of progress from the high-profile meeting has caused many experts to speculate whether Congress will now step into the vacuum and aggressively push legislation to "punish" China for its alleged transgressions on IPR, currency, subsidies and a host of other issues. As per specific legislation, US Senators Chuck Schumer (D-NY) and Lindsey Graham (R-SC) announced March 28 that they are again delaying a Senate vote until September on their legislation to impose a 27.5 percent punitive duty on all US imports from China in retaliation for perceived Chinese currency manipulation. The Senators hope significant action will be taken on currency before then. Senate Finance Committee Chair Chuck Grassley (R-IA) and Ranking Member Max Baucus (D-MT) also introduced new legislation March 28 that would provide new tools to the US government to define, determine and prosecute currency manipulation by other countries as well as elevate the US government's chief trade enforcer to a Senate-confirmed position. The bill is a much milder version of legislation passed by the US House of Representatives last year that would have also subjected U.S. imports from China to Counter-veiling Duty (CVD) cases and other new trade enforcement measures. Meanwhile, a number of prominent Democrats on the House Ways & Means Committee introduced anti-China legislation March 29 that would dramatically lower the hurdles for successful prosecution of trade cases against China, including lowering the thresholds for the overall WTO China Safeguard (Section 421). Many experts believe the US textile industry will likely use the Section 421 overall safeguard against US imports from China once the currency textile safeguard agreement expires at the end of 2008. The prospect for passage of the Schumer-Graham, Grassley-Baucus or House Democrat anti-China bills or Congressional passage of some combination of those bills is unclear at this time. Meanwhile, the WTO issued its first-ever Trade Policy Review (TPR) of China on April 19. The TPR found that ongoing trade and structural reforms have made China the third largest trade in the world, but much reform still needs to be done.

President George W. Bush announced April 18 that he has nominated Susan Schwab to be the next US Trade Representative (USTR). Ms. Schwab, currently Deputy USTR, will replace Rob Portman, who Bush nominated to be the next Director of the White House's Office of Management and Budget (OMB). Once her appointment is confirmed by the US Senate, Ms. Schwab will lead US efforts to secure an agreement in the ongoing Doha Round of global trade talks (See Related Article), lead US negotiations towards free trade agreements with Thailand, Korea, Malaysia and a number of other countries and work with the US Congress to secure passage of these and other trade agreements.

The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) requests comments on an April 17 petition from B*W*A alleging that 100% cotton napped flannel fabrics of 3 or 4 thread twill; HTS 5208.43.00; of ring spun combed cotton yarns; 67- 69 metric warp and filling; thread count – 44-48 warp end/cm X 31-39 filling picks/cm; yarns of different colors, plaids, checks and stripes, napped on both sides, pre-shrunk; 98 – 152 grams per m2 are not available in commercial quantities in a timely manner under the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). If approved, woven shirts, blouses and dressing gowns made in Central America or the Dominican Republic from subject third-country fabric can enter the United States duty-free under CAFTA. Comments are due May 1. To register for CITA's automatic e-mail short supply notification system, go to CITA's CAFTA Commercial Availability website

AAFA submitted comments April 17 to the US International Trade Commission on the potential economic effects of the recently signed US/Peru Free Trade Agreement (FTA). In its comments, AAFA noted that the agreement would have a minimal impact on the US apparel and footwear industries, particularly because of the FTA's restrictive rules for apparel and textiles. AAFA applauded the US government for achieving duty-free access and liberal rules of origin for footwear. AAFA expressed growing concern that the FTA for Peru and the US/Colombia FTA are currently not joined in any way, eliminating the ability to use regional inputs as is now allowed under the current trade preference program. Further, AAFA highlighted potential problems with implementation, noting that neither FTA was likely to be implemented prior to January 1, 2007, when the current Andean Trade Promotion & Drug Eradication Act (ATPDEA) expires. Congress must still approve the agreement, with a vote expected this summer.

PierPass will increase the traffic mitigation fee (TMF) at the Ports of Long Beach/Los Angeles by 25 percent on April 24. As a result, shippers moving cargo by truck during the day shift will pay $100 per FEU (forty-foot equivalent unit or larger), up from $80 per FEU. In related news, China has announced that it will impose a new fee on all incoming and outgoing cargo (except empty containers) to cover port security costs. The new fee, to be implemented June 1, will equal approximately $2.49 per TEU (20-foot container) and $3.75 per FEU.

The US Department of Agriculture announced April 18 that the "Step Two" cotton program will be eliminated August 1.
The US Department of Homeland Security's Bureau of Customs & Border Protection (Customs) issued a series of training manuals April 17 on how to interpret the rules of origin for apparel and textiles in all US trade preference programs and free trade agreements.

4.18.06
On April 13, nine prominent non-apparel, non-retail US business organizations representing a broad swath of the US business community sent a letter to US Trade Representative (USTR) Rob Portman expressing strong opposition to a recent proposal by the government of Turkey to exempt textiles and apparel from trade liberalization in the ongoing World Trade Organization (WTO) Doha Round of global trade negotiations. Echoing a similar letter that had been sent by AAFA and several apparel and retail organizations in late March, the groups expressed concern that the proposal could create incentives for other countries to try to exclude other sectors critical to US businesses and the US economy from trade liberalization in the 150 country global trade talks. The business groups urged the US government to oppose the Turkey proposal.

US Secretary of Agriculture Mike Johanns, US Secretary of Commerce Carlos M. Gutierrez, Chinese Vice Premier Wu Yi, and US Trade Representative Rob Portman announced a number of positive results from their annual high-level Joint Commission on Commerce and Trade (JCCT) meeting that concluded April 11. Among the results was a renewed commitment by China to increase enforcement of intellectual property rights (IPR). The Chinese also agreed to formally publish all new rules and regulations, whether at the local, provincial or national level, 30-days prior to implementation in a single official journal that is similar to the US government's Federal Register publication. While the outcomes are significant, the real success of the JCCT meeting will come with the implementation of these decisions. The currency issue was not discussed during the meetings. However, many expect some action on currency prior to or during Chinese President Hu Jintao's visit to the United States this week.

The United States and Peru formally signed a free trade agreement (FTA) on April 12. The US/Peru FTA must now be approved by the respective Congresses of each country. The US Congress will begin consideration of the agreement this summer. AAFA applauds the hard work of the US government in ensuring that the agreement contains immediate and reciprocal duty-free access under very flexible rules of origin for virtually all footwear. AAFA is disappointed, however, that the FTA's apparel and textile provisions contain a very restrictive yarn-forward rule of origin with only a few very limited exceptions. AAFA is particularly concerned because the US/Peru FTA erases the appropriate balance and flexibilities achieved in the apparel and textile provisions of the previously negotiated US/Central America - Dominican Republic Free Trade Agreement (CAFTA).

The US government's inter-agency Committee for the Implementation of Textile Agreements (CITA) requests comments on a March 24 petition from Biederlack of America alleging that acrylic staple fiber, not carded, combed or otherwise processed for spinning, classified in subheading 5503.30 of the Harmonized Tariff Schedule of the United States (HTSUS), cannot be supplied by the domestic industry in commercial quantities in a timely manner under the North American Free Trade Agreement (NAFTA). The petition further requests that CITA change the NAFTA rule of origin for blankets classified under HTSUS subheading 6301.40 to allow the use of non-North American acrylic staple fiber. If CITA approves the request, blankets made in Mexico or Canada from third-country subject fiber can enter the United States duty-free under NAFTA. Comments are due May 12.

4.11.06
The European Commission formally issued its regulation imposing preliminary anti-dumping duties of 19.4 and 16.8 percent, respectively, on European leather footwear imports from China and Vietnam as of April 7. The regulations also outline the Commission's rationale for imposing the dumping duties. The battle now turns to the decision on definitive duties in this case, which must be formally approved by European Union (EU) member states in early September. As part of this next phase, the regulation requests comments from all interested parties on the impact of the preliminary duties. Comments are due May 4. Early word is that the battle over definitive duties will not only center on the level of the dumping duties (should they be higher or lower than the preliminary duties), but whether the current children's footwear exemption should be maintained. Italy and others are pushing to eliminate this exemption. Meanwhile, the European Commission has still not issued a formal notice announcing its decision NOT to impose preliminary dumping duties on EU imports of Chinese and Indian safety footwear. According to published reports, the Commission was unable to find injury to European manufacturers in the case. Please note that the safety footwear case is still officially open and that the Commission could return to EU member states in August or September and urge some form of definitive dumping duties. This is highly unlikely since no duties were imposed in the preliminary phase. Finally, there is still no word yet on if the European Commission will now proceed with a dumping case against EU imports of Chinese textile-upper footwear. This case was delayed due to the leather and safety footwear cases. For the latest information on the EU dumping issue, please join AAFA's EU Footwear Dumping Task Force by contacting Nate Herman at 703.797.9062.

The Maine Legislature on April 4 approved legislation to require suppliers of apparel and footwear to the state of Maine, as well as all of their subcontractors, to comply with a code of conduct. The legislation also provides for the convening of a code of conduct working group to "explore whether the State Purchasing Agent should investigate alleged violation of the state purchasing code of conduct established in the Maine Revised Statutes." Further, the legislation authorizes the working group to explore "the creation and use of an independent fact-finding consortium" to conduct investigations. If the working group is in favor of such a consortium, they will "examine the means by which such a consortium would be created and function." Meanwhile, Maine Governor John Baldacci has sent a letter to the nation's governors urging them to follow Maine's lead on this issue. Other states, including California and Illinois, have indicated some interest in exploring similar legislation.

Shortly after an April 2 election marred by an opposition boycott, Prime Minister Thaksin Sinawatra resigned and appointed a caretaker Prime Minister. It is now likely a new election must be called to restore a government because the opposition boycott left over one-third of all seats in Thailand's Parliament vacant. As a result of the ongoing political turmoil, no new date has been set for restarting talks towards a US/Thailand Free Trade Agreement. Further, the turmoil has delayed the planned April 2 signing of the Japan/Thailand Free Trade Agreement.
AAFA sent a letter April 5 to the Bush administration urging the administration to quickly address industry concerns about the implementation of the ski and snowboard pants exemption under the US/China Bilateral Safeguard Agreement. Under the agreement, all ski pants are supposed to be exempted from quota. AAFA has received reports, however, that the US Department of Homeland Security's Bureau of Customs & Border Protection (Customs) has instead interpreted the agreement to only allow pants where all seams are sealed and all pockets are enclosed to be exempted from the quota.

4.3.06
In a March 28 speech, AAFA President & CEO Kevin M. Burke cautioned that imposition of quotas, duties and other mechanisms designed to protect country markets, including the United States from import competition, is a costly – and counterproductive -- mistake. Delivering the opening speech at the Prime Source International Apparel Forum in Hong Kong, Burke expressed hope that the Doha Round of global trade negotiations will lower tariffs and other trade barriers in the United States and worldwide.

Turkey's March 23 proposal to remove apparel and textiles from the overall negotiations in the ongoing Doha Round of World Trade Organization (WTO) negotiations created a firestorm last week, with even the head of the WTO stepping into the fray. The AAFA-opposed proposal, which is very vague, would exempt apparel and textiles from all market opening measures agreed to in the overall negotiations on industrial and consumer goods. Instead, it would attempt to "harmonize" apparel and textile tariffs at some unspecified level in a separate "sectoral" agreement. AAFA and others believe that this proposal would not only hurt apparel exporters, US apparel firms and consumers in the United States and around the world, but that such a proposal could jeopardize the entire Doha Round because the proposal would exclude an industry critical to such a large part of the developing world. Despite these warnings, International Trade Daily quoted US Trade Representative (USTR) Rob Portman last week as saying the proposal was "a constructive contribution" and that "a sectoral approach in some kind of textiles might make sense." Meanwhile, according to Women’s Wear Daily, a USTR spokeswoman also stated last week that "the US believes that this is a discussion that must be [led] by the developing world, and that is why we appreciate Turkey’s initiative in submitting its proposal." US officials are quick to assure, however, that the United States has not formally endorsed the proposal. On the other side, WTO Director General Pascal Lamy, in an unusually harsh statement for a senior WTO official, told the press that removing apparel and textile from significant trade liberalization "...would in my view be very strange, and that, by the way, was the reaction of a large part of the [WTO] members." While some smaller apparel exporting countries expressed support for Turkey's proposal, Lamy's views were indeed echoed by most larger apparel exporters, who expressed strong opposition to the proposal. Negotiators from the 149 WTO member countries face a deadline of April 30 for developing the "modalities" or structure of the negotiations to lower worldwide trade barriers for apparel, footwear, textiles and all other products so that the negotiations can conclude by the end of the year as scheduled.

US Senators Chuck Schumer (D-NY) and Lindsey Graham (R-SC) announced March 28 that they are again delaying a Senate vote on their legislation, which would impose a 27.5 percent punitive duty on all US imports from China in retaliation for perceived Chinese currency manipulation. The Senators delayed the vote because of assurances received during a recent visit to China as well as from Bush administration officials that China will soon address the currency issue. The Senators noted, however, that they will hold a vote on the legislation in September if China does not act. In a related note, Senate Finance Committee Chair Chuck Grassley (R-IA) and Ranking Member Max Baucus (D-MT) introduced new legislation March 28 that would provide new tools to the US government to define, determine and prosecute currency manipulation by other countries as well as elevate the US government's chief trade enforcer to a Senate-confirmed position. The bill is a much milder version of legislation passed by the US House of Representatives last year that would have also subjected US imports from China to Countervailing Duty (CVD) cases and other new trade enforcement measures. Meanwhile, a number of prominent Democrats on the House Ways & Means Committee introduced anti-China legislation the next day that would dramatically lower the hurdles for successful prosecution of trade cases against China, including the overall WTO China Safeguard (Section 421). Many experts believe that the US textile industry will attempt to utilize Section 421 against China when the current China textile safeguard quotas expire at the end of 2008. The prospect for passage of the Grassley-Baucus or House Democrat anti-China bills or Congressional passage of some combination of those bills is unclear at this time.

The World Trade Organization (WTO) announced March 27 that Vietnam accession talks were now in the final stage of negotiations. The United States and Vietnam are very close to reaching a bilateral deal on Vietnam market access commitments for US products and services that would clear the way for WTO accession. It remains unclear, however, if a China-style textile safeguard, opposed by virtually the entire US business community, will be included in Vietnam's accession agreement. Before Vietnam can formally join the WTO, however, the US Congress must still approve legislation giving Vietnam permanent normal trading relations (PNTR) status. Currently, Congress approves US trading relations with Vietnam on an annual basis. When Vietnam joins the WTO, quotas on US apparel imports from Vietnam will not only be eliminated, but Vietnam will also lower barriers to imports of US-made and US-branded apparel, footwear and textiles.

Honduras and Nicaragua formally joined El Salvador and the United States in the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) on April 1. Meanwhile, El Salvador, Honduras and Nicaragua have all reached deals with the United States to implement a last-minute Bush administration deal with certain members of Congress to require that pocket linings be formed and finished in the region for apparel that includes pockets to qualify under CAFTA. In exchange for agreeing to this rule change, Honduras received assurances that certain men's shirts will become subject to a single transformation rule of origin, El Salvador received assurances that women's and girls' man-made fiber suits (Category 644) and cotton coats (Category 335) as well as infant dresses will become subject to a single transformation rule of origin and Nicaragua received assurances that its Tariff Preference Level (TPL) would be increased for wool sport coats. Except for the Nicaragua TPL change, all CAFTA countries will benefit from the changes agreed to in these deals. All of these changes must still be formally approved by each of the CAFTA member governments and the US Congress. It is unclear at this time when such approval will occur. In a further sign of good news for the region, the US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) announced March 25 that it has designated the Port of Cortes in Honduras a Container Security Initiative (CSI) port. The partnership Customs has formed with the Port of Cortes, the largest port in Central America, under CSI, will enable expedited entry for cargo entering the United States from that port. This designation will hopefully further enhance the competitiveness of the region once CAFTA is fully implemented. Regrettably, a host of co-production and other implementation issues remain unresolved. AAFA continues to work with the Bush administration and Congress to find a resolution to these problems. 

As expected, the US government blasted China for rampant violations of, and an overwhelming lack of enforcement of, Intellectual Property Rights (IPR) as well as pervasive problems on providing market access (distribution and trading rights, etc.) for US-made and US-branded products and services in its March 31 release of its annual report on foreign trade barriers. In the report, the US government also again took Japan to task for refusing to eliminate its tariff-rate quotas on imports of leather footwear, which has effectively barred US brands from the Japanese market (except through licensees). The report acts as a playbook for US government action over the next year for addressing foreign trade barriers.
The Organization for Economic Co-operation and Development (OECD) is conducting a study to obtain more precise statistical information for the purpose of measuring the impact of counterfeiting and piracy in the global economy and in individual sectors. The study can be used to help enhance factual understanding of the problem, raise awareness of the harmful effects of counterfeiting, and encourage governments in OECD and non-OECD economies to take more action in this area. AAFA is encouraging member companies concerned about counterfeiting to participate in the survey so we can develop more information about the impact of this problem on apparel and footwear industries. The industry survey can be viewed on the OECD website.

3.27.06
The European Commission on March 23 formally approved a proposal to impose preliminary anti-dumping duties of 19.4 and 16.8 percent, respectively, on European leather footwear imports from China and Vietnam (AAFA Press Release). The battle now turns to the decision on definitive duties in this case, which must be formally approved by European Union (EU) member states in September. Early word is that the battle over definitive duties will not only center on the level of the dumping duties (should they be higher or lower than the provisional duties), but whether the current children's footwear exemption should be maintained. Italy and others are pushing to eliminate this exemption. Meanwhile, AAFA has learned that the European Commission will NOT impose preliminary dumping duties on EU imports of Chinese and Indian safety footwear because the Commission was unable to find injury to European manufacturers in the case. Please note that the safety footwear case is still officially open and that the Commission could return to EU member states in August or September and urge some form of definitive dumping duties. This is highly unlikely since no duties were imposed in the preliminary phase. Finally, there is no final word yet on if the European Commission will now proceed with a dumping case against EU imports of Chinese textile-upper footwear. This case was delayed due to the leather and safety footwear cases. For the latest information on the EU dumping issue, please join AAFA's EU Footwear Dumping Task Force by contacting Nate Herman at 703.797.9062. 

Honduras and Nicaragua have completed and implemented the necessary changes in their laws and regulations to join the United States and El Salvador in the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). The timing of the two countries joining the agreement remain in question, however, as the United States and El Salvador work to resolve a glitch in CAFTA which requires acceding countries to provide 90-days notice before joining the agreement. If this situation is resolved this week, then Honduras and Nicaragua will join CAFTA on April 1. If the situation is not resolved in time, implementation for these two countries could be pushed to as late as July 1. Guatemala continues to work on implementation issues while the Dominican Republic remains committed to a July 1 implementation date. Costa Rica's Congress has yet to pass the agreement. Meanwhile, AAFA continues to work with the Bush administration and Congress to address a multitude of co-production and other implementation issues. Stay tuned for more information.
The Indonesian government announced March 20 that it has rejected a request by the Indonesian apparel and textile industry to impose safeguard protections against Indonesian imports of Chinese apparel and textiles. To date, the United States, the European Union, Peru, South Africa, Turkey and Brazil have imposed restrictions on imports of Chinese apparel and textiles under the World Trade Organization's (WTO) China safeguard.

In March 24 comments submitted to the US government's inter-agency Committee for the Implementation of Textile Agreements (CITA), AAFA complimented CITA on the interim CAFTA short supply regulations issued by CITA as a great step forward in streamlining and bringing greater transparency to the short supply process. AAFA urged CITA, however, to fix specific parts of the interim regulations in order to bring even greater clarity and transparency to the process for all interested parties as well as the general public.

AAFA joined with a number of US and European retailer, travel goods and importer associations in opposing a March 23 Turkish proposal to remove apparel and textiles from the overall negotiations in the ongoing Doha Round of World Trade Organization (WTO) negotiations. The proposal, which is very vague, would exempt apparel and textiles from all market opening measures agreed to in the overall negotiations on industrial and consumer goods. Instead, it would attempt to "harmonize" apparel and textile tariffs at some unspecified level in a separate "sectoral" agreement. While US government officials, Europe and many small apparel exporting countries expressed initial support for the proposal, many larger apparel exporting countries denounced the proposal. In a view echoed by many in the US business community, one major apparel exporting country representative warned that if apparel and textiles are carved out, it could lead to the demise of the entire Doha Round. In its March 22 letter to the ambassadors from all 149 WTO member countries, AAFA and other associations urged them to reject any effort to separate apparel and textiles from the rest of the negotiations into a trade restricting sectoral because such an approach would be a step backwards that would benefit no one - developing countries, industrialized countries or world trade in apparel and textiles. Negotiators from the 149 WTO member countries were meeting in Geneva last week to discuss proposals for reducing tariffs and other trade barriers for all consumer and industrial products, including apparel and textiles. Any decision in the Doha Round, including any decision to carve out apparel and textiles, must be reached by consensus among the 149 WTO member countries.

In March 24 comments submitted to the Office of the US Trade Representative (USTR) and the US International Trade Commission (ITC), AAFA urged the US government to negotiate a commercially-meaningful free trade agreement with Korea for the US apparel, footwear and textile industries. Specifically, the US government should negotiate flexible rules of origin for apparel that not only embody flexible rules for product no longer made in the United States, but robust cumulation and short supply provisions to ensure that the agreement is not only commercially-viable today, but remains so into the future. On footwear, the agreement should include flexible rules of origin and immediate and reciprocal duty-free entry for virtually all footwear. The comments, which also outline other AAFA goals for the proposed free trade agreement, were in response to USTR and ITC requests for information for use in their investigations on the potential economic effects of a US/Korea Free Trade Agreement.

3.22.06
AAFA warned that the "approval" by European Union (EU) member states of a European Commission (EC) proposal to impose preliminary anti-dumping duties of 19.4 and 16.8 percent, respectively, on EU leather footwear imports from China and Vietnam was a "serious economic mistake." Although only 3 out of the 25 EU member states actually voted for the Commission’s proposal in the March 16 meeting of the Commission's Anti-Dumping Committee and 11 member states voted against it, the 11 other member states abstained. Under EU rules, an abstention is technically considered a vote "in favor" of the Commission’s proposal. Therefore, the Commission's recommendations were carried on a 14 (3 Yes + 11 Abstentions) to 11 vote. Based on this vote, EU Trade Commissioner Peter Mandelson announced shortly after the vote that the member states "approved" his proposal and that he will impose the preliminary dumping duties after the Commission formally approves the recommendations on March 22. The dumping duties, which could last up to five years, are in addition to the normal 8 percent tariff already imposed on European footwear imports. The dumping duties will go into effect on April 7. Because this was the first known vote ever where approval of EU dumping duties was actually done by an overwhelming number of abstentions, a number of importer/retailer groups as well as a number of member states have indicated that they will continue to fight the proposed duties. However, many expect the next fight will occur in late summer when the European Commission must recommend whether, and at what level, definitive dumping duties will be imposed in the case. For the latest information on the EU dumping issue, please join AAFA's EU Footwear Dumping Task Force by contacting Nate Herman at 703.797.9062.

AAFA joined with a number of retailer, travel goods and importer associations in urging the US government to oppose any effort to thwart trade liberalization for apparel and textiles in the ongoing Doha Round of World Trade Organization (WTO) negotiations. In its March 10 letter, the associations urged the Bush administration to reject US textile industry efforts to separate apparel and textiles from the rest of the negotiations into a trade restricting sectoral approach. Further, the groups opposed any efforts to re-impose a worldwide quota regime or extend or expand the current China safeguards. Negotiators from the 149 WTO member countries are meeting in Geneva this week to discuss proposals for reducing tariffs and other trade barriers for all consumer and industrial products, including apparel and textiles.  

The US House of Representatives on March 15 approved the Miscellaneous Trade and Technical Corrections Act of 2006 (H.R. 4944) by a vote of 412-2. The bill, which contains hundreds of non-controversial provisions reducing or eliminating duties on imported products and imported inputs (for use in US manufacturing) that are no longer made in the United States, now must go to the US Senate where passage is less certain. The bill contains provisions to eliminate duties on US imports of 19 types of synthetic footwear as well as US imports of certain camel hair and kashmir. The bill would also extend the third-country fabric provision of the African Growth and Opportunity Act (AGOA) to 2015. This provision currently expires in 2008.
China on March 7 issued a notice on the second bidding for visas under the 2006 apparel quotas. This bidding accounts for 12 percent of the total 2006 quotas. The auction will occur on April 6.

In response to a new World Trade Organization (WTO) ruling finding that AAFA-supported US measures to comply with an earlier WTO ruling do not actually comply, the European Union (EU) announced that it will re-impose 14 percent punitive duties on European imports of certain US-MADE apparel and footwear on May 13. AAFA, as well as the Bush administration and most members of Congress, believe legislation previously passed by Congress already brings the United States into compliance. It is unclear if the United States and the EU will resolve this issue before the May 13 deadline.  

The US government's interagency Committee for the Implementation of Textile Agreements (CITA) rejected on March 14 an AAFA-opposed petition requesting that CITA revoke a "short supply" designation under the Caribbean Basin Trade Preference Act (CBTPA) and the Andean Trade Promotion & Drug Eradication Act (ATPDEA). The January 10 petition from the National Council of Textile Organizations (NCTO) urged CITA to revoke the designation that certain compacted, plied, ring-spun cotton yarns, with yarn counts in the range from 42 to 102 metric, classified in subheadings 5205.42.0020, 5205.43.0020, 5205.44.0020, 5205.46.0020, 5205.47.0020 of the Harmonized Tariff Schedule of the United States, cannot be supplied by the domestic industry in commercial quantities in a timely manner under CBTPA, which allows apparel from the Caribbean Basin, Central America and the Andean region using third country subject yarn to enter the United States duty-free. NCTO alleged that a sufficient "substitutable product" was available. CITA rejected NCTO's claims, determining yet again that the subject yarns cannot be supplied by the domestic industry in commercial quantities and in a timely manner and that NCTO has not substantiated that ring spun yarns currently produced by the domestic industry are substitutable for the subject compact, plied yarns.
President George W. Bush signed H.R. 32, the Stop Counterfeiting in Manufactured Goods Act, last week at a ceremony attended by AAFA staff. This legislation was a priority for AAFA as the legislation strengthens the laws against counterfeiting in labels, including the mandatory destruction of equipment used to manufacture the labels. This legislation closes a loophole that allowed counterfeiters to circumvent the law by allowing the shipment of fake labels as long as they were not attached to the goods. This is a tactic that has been used widely to cheat consumers and undermine the success of legitimate brand owners of apparel, footwear and accessories. The Bush Administration and Congress, working closely with industry, have made great strides in the fight against counterfeiting and piracy in the United States and abroad. AAFA will continue to work with the Administration and Congress to further this effort through additional legislation and cooperation with our industry to provide the information needed to improve policies and regulations.

3.15.06
On March 7, the US Department of Homeland Security's Bureau of Customs & Border Protection (Customs) issued interim regulations regarding applications for duty refunds under the apparel and textile retroactivity provisions of the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). The deadline to request refunds for goods that qualify for retroactive treatment is December 31, 2006 (or 90 days after the date of entry into force of a particular country, whichever is later). This deadline may create some issues because it is unclear when CAFTA will enter into force with respect to Costa Rica. If that entry into force date is next April 1, 2007, and your article relies upon Costa Rican inputs but is imported from El Salvador, you are out of luck under the current scheme since your ability to file for refunds would expire on December 31, 2006 but you would need to wait until after April 1, 2007 before you would be eligible for a refund. More importantly, the regulation leaves unanswered whether an article made in El Salvador (the only country currently eligible under CAFTA) from inputs from another CAFTA signatory that has not yet acceded is still eligible for refunds. AAFA continues to work with the Bush administration and Congress on resolving this critical co-production issue. The major apparel and textile associations from all of the CAFTA countries have also recently expressed increasing concern over this issue. In more positive news, Honduras, barring a possible problem with a 90-day notice clause in the agreement, has completed most of the necessary work to clear the way for implementation on April 1. Further, Oscar Arias, now formally declared the winner in Costa Rica's recent presidential election, has vowed to push CAFTA through Costa Rica's Congress quickly. Approval by Costa Rica's Congress is by no means assured, however, since Arias' National Liberation Party does not have a majority in the Congress. Arias formally takes over the presidency on May 8.
The US House of Representatives on March 7 approved by voice vote The Stop Counterfeiting in Manufactured Goods Act (HR 32) (AAFA Press Release). The US Senate had already approved the legislation, which was sponsored by Congressman Joe Knollenberg (R-MI) in the House and Senators Arlen Specter (R-PA) and Patrick Leahy (D-VT) in the Senate. The legislation will close loopholes in US anti-counterfeiting laws by outlawing the trafficking in counterfeit labels, patches, stickers, handtags and medallions. It will also require the destruction of equipment used to make counterfeit goods in addition to the actual goods themselves. AAFA was a strong proponent of this legislation as labels often hold the value and allure for the buyers of counterfeit apparel and footwear items.

The United States and Malaysia on March 8 announced that they will launch talks towards a free trade agreement this summer. The two sides hope to reach an agreement by early 2007. Malaysia is the 23rd largest apparel supplier and the 35th largest footwear supplier to the US market.

The US government and US businesses have made positive advances in promoting human and labor rights worldwide. Despite those efforts, however, the US State Department's 2005 Country Reports on Human Rights Practices, released March 8, found that human and labor rights violations remain prevalent in many parts of the world. Burma's ruling military junta continues to lead the pack of violators, sanctioning an atmosphere where even the most basic labor rights are not protected or enforced. The report buttresses growing calls by the Bush administration in the United Nations Security Council and other international venues to internationalize the current AAFA-supported US import ban against Burma. Only with sustained international pressure will the regime in Burma begin to improve human and labor rights in the country.

he International Finance Corporation (IFC), the World Bank's private sector lending arm, recently adopted new environmental and social standardsfor private sector projects it finances in the developing world. The standards contain new requirements for loan recipients for community health, safety and security; labor conditions; pollution prevention and abatement; integrated social and environmental assessments; and management systems.

3.7.06
Colombia and the United States announced February 27 that they have reached a free trade agreement (FTA). Based on press reports, the agreement appears to contain immediate duty-free access and flexible rules of origin for virtually all footwear. On apparel, however, the agreement contains a very restrictive yarn-forward rule or origin for most products (bras received a cut and sew rule) and a very limited short supply list that is smaller even than the short supply lists in existence under current trade preference programs. This agreement also does not contain any cumulation provisions. It is unclear if this agreement will be packaged together or otherwise combined with the recently completed US/Peru FTA. US government officials hope for Congressional approval by the end of summer, with implementation January 1, 2007, the day the current trade preference program with the Andean region expires.

Thailand announced March 1 that free trade agreement talks with the United States will be put on hold until at least late spring. The announcement comes after Thai Prime Minister Thaksin Shinawatra on February 24 dissolved the government and called for snap elections on April 2 in a bid to defuse a growing political crisis over allegations of corruption in his government. But recent calls by the opposition to boycott the elections could jeopardize those efforts. Thailand also announced that it would delay the planned April 3 signing of the Thailand/Japan Free Trade Agreement.

President George W. Bush issued a proclamation February 28 implementing the US/Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) for the United States and El Salvador. The proclamation, combined with the US International Trade Commission publication outlining the changes to the Harmonized Tariff Schedule of the United States (HTSUS), provides the basic guides that other US government agencies can then use to publish various instructions and guidance on detailed implementation issues. For example, the US Department of Homeland Security's Bureau of Customs & Border Protection (Customs) will issue formal instructions to the ports this week on accepting CAFTA-eligible product and will hopefully soon follow that up with detailed interim implementation regulations. AAFA continues to work with the Bush administration and Congress to address a multitude of co-production and other implementation issues. Stay tuned for more information.

A broad coalition of trade associations representing every sector of the US business community, including AAFA, sent a letter February 22 to US Trade Representative Rob Portman strongly opposing any effort to include a China-style safeguard in Vietnam's World Trade Organization (WTO) accession agreement. The letter expresses concern that the United States would likely lose other important concessions from Vietnam - in areas such as market access, services and intellectual property rights - if it forced Vietnam to accept a safeguard. Vietnam hopes to join the WTO by the end of this year. The US government has repeatedly stated that quotas on US apparel imports from Vietnam will remain in effect until Vietnam formally joins the WTO.
AFA joined with other associations in the United States and Europe on February 28 in urging their respective governments to eliminate trade distorting export taxes and export restrictions on hides, skins and wet-blue leathers in the ongoing Doha Round of global trade negotiations. Such taxes and restrictions artificially inflate the global price of raw hides and intermediate leather, hurting leather and leather-using industries worldwide while providing an unfair competitive advantage to the leather and leather consuming industries in the countries where such restrictions exist.

The US Department of Homeland Security's Bureau of Customs & Border Protection (Customs)issued instructions to the ports on February 23 on the new labeling requirements for socks that went into effect on March 3.

A broad business coalition, including AAFA, sent a March 1 letter to Congressional leaders urging restraint as Congress reviews the sale of port management operations at six US ports to United Arab Emirates' (UAE)-owned Dubai Ports World. The letter notes that foreign investment in shipping terminals at US ports has been a long-standing trend. Yet, while foreign companies may own and operate these terminals, US national security at our ports has been and will continue to be managed by the US government, including US Customs and Border Protection and other units of the US Department of Homeland Security. All companies that operate in US ports, including Dubai Ports World, must adhere to high security standards set by the US government. The letter argues that the United States must maintain a fair and objective foreign investment review process that ensures US national security, while still encouraging investment that strengthens the US economy. Not only is foreign investment vital to the growth of the US economy, but so is the protection of US investment abroad. The letter urges Congress to approach this issue in such a way as to not jeopardize either.

2.28.06
Claiming that China and Vietnam provided non-market subsidies and other supports to their shoe industries, the European Commission on February 23 recommended the imposition of dumping duties of 19.4 percent and 16.8 percent, respectively, on European imports of Chinese and Vietnamese leather footwear. The dumping duties would be phased-in over a six month period starting April 7. Although the Commission recommended exempting certain athletic and children's shoes from the dumping duties, the proposed duties would still be imposed on the equivalent of almost 10 percent of all footwear sold in Europe, over 225 million pairs of shoes based on 2005 levels. The dumping duties could drive retail prices on that footwear, ranging from casual and dress shoes to hiking boots, basic tennis shoes and street sports shoes, up as much as 20-25 percent. The Commission claims that tax rebates, subsidized loans, tax holidays, non-market land rents, improper asset valuation and other "state intervention" caused the dumping. Ironically, the European Union (EU) itself, as well as many state governments here in the United States and in Europe, has utilized many of these same measures to support their own companies (aka Airbus) or attract investment. The original complaint was brought by the association representing European manufacturers, most of which are located in Italy, Spain, Portugal and the Czech Republic. The European Commission's recommendations are opposed by many European member states (Denmark, the Netherlands, Sweden, etc.) as well as virtually every major European footwear brand (FAIR PR and FESI PR) and the European retail community (Joint Retail/Importer PR). The 25 EU member states are tentatively scheduled to vote on the Commission's recommendations on March 9, but the vote could be postponed until March 21. For the latest information on the EU dumping issue, please join AAFA's EU Footwear Dumping Task Force by contacting Nate Herman at 703.797.9062.

US Trade Representative Rob Portman announced February 24 that it will recommend to President Bush that the United States implement the US/Central America-Dominican Republic Free Trade Agreement (CAFTA) with El Salvador on March 1. The implementation will become official with the issuance of an official proclamation by the White House and supplemented with guidance from Customs and others on regulations and technical issues covering key things like how to make entry, what exactly will qualify and how retroactivity refunds (for apparel and textiles) can be obtained. There had been some speculation that Nicaragua might make the March 1 deadline but apparently they couldn’t get their domestic business completed so they may end up being part of an April 1 announcement. Honduras is also shooting for the April 1 announcement. Guatemala will be sometime later, possibly April or May. The Dominican Republic is looking at July 1 and Costa Rica still remains an open question, although news that former President Oscar Arias may have won the recount (and thus will be the next President of Costa Rica) suggests that CAFTA may be approved in Costa Rica later this year. While countries like Honduras, Guatemala and the Dominican Republic were delayed largely because of non-textile and apparel issues, there are talks on-going with those countries on the pocket fabrics issue and, possibly, socks, which remain two pieces of business left over from the Congressional debate this past summer. AAFA continues to aggressively lobby for resolution of the many co-production issues that the March 1 entry into force with respect to El Salvador creates. In essence, on March 1, El Salvador ceases to be a Caribbean Basin Trade Partnership Act (CBTPA) country and starts becoming a CAFTA country. On that date, El Salvador will not be able to use CBTPA inputs since there is no apparent provision in CAFTA to do that. Similarly, since no other Central American country will be an implemented CAFTA country, Salvador will not be able to use any inputs from other non-US CAFTA signatory countries when origin rules would normally have permitted inputs from other Central American countries. (Ironically, the reverse is not the case. CBTPA countries can continue to avail themselves of CBTPA and CAFTA inputs for goods that meet the CBTPA rules of origin). The problem will begin to resolve itself naturally (and slowly) as the other countries make the transition from CBTPA to CAFTA. But the interim will cause many problems. Please note that this problem will not affect the footwear provisions of CAFTA. Bush administration officials have told AAFA that they are acutely aware of this problem and will work with Congress on ways to secure refunds for goods entered during this transitional period and which have to pay duty (even though they shouldn’t be subject to duty). There may still be other options the Administration can pursue with recourse to Congress. Others in Congress and in the CAFTA governments have been raising this issue at the highest levels as well.

2.22.06
The Office of the United States Trade Representative (USTR) released its Top-to-Bottom Review of US-China trade relations February 14. The report focuses on enforcement of Intellectual Property Rights (IPR), reduction of trade barriers and a larger role in the global trading arena, as areas needing further reform from China. The report outlines steps that the United States will take to address these concerns. The report received a lukewarm reception in Congress where a number of bills have been introduced to punish China for a host of perceived trade and other infractions.

The World Trade Organization (WTO) ruled February 13 that the corporate tax breaks provided in the American Jobs Creation Act of 2004 are illegal. The 2004 legislation was passed in part to bring into WTO compliance the US foreign sales corporation (FSC)/extraterritorial income (ETI) program, which was previously ruled illegal by the WTO. That previous ruling had allowed the European Union (EU) to implement punitive tariffs against US exports of a range of US-made products, including a long list of apparel, textile and footwear items prior to Congressional passage of the legislation. The United States now has 90 days to change the tax rules otherwise the EU may resume tariffs of 14-17 percent on exports of US-made apparel, textiles and footwear to Europe. AAFA will work with the US government and others to fight any possible re-imposition of the punitive tariffs.

hile last-ditch efforts are ongoing for a US/Colombia Free Trade Agreement (FTA), AAFA sent a letter February 16 along with over 30 other trade associations urging US Trade Representative Portman to negotiate a comprehensive and commercially meaningful agreement.
Following similar moves by the United States, Europe and other countries, Brazil signed a deal February 9 with China where China agreed to limit Brazilian imports of Chinese textiles and apparel through 2008. The deal will allow Brazil to put caps on the percentage increase of imports for 70 products in eight categories.

The US Department of Commerce released a study February 14 showing that the US government’s protection of the domestic sugar industry has resulted in the loss of over 10,000 jobs in the US sugar- containing products (SCP) industry as well as the overseas relocation of a significant number of US sugar consuming companies. Due to domestic protection like subsidized loans and tariff-rate quotas (TRQ), the US sugar price is currently 23.5 cents per pound, nearly two times that of the world sugar price of 10.9 cents per pound. In addition to the ongoing erosion of the US sugar consumer industry, the continuing debate over US sugar policy has led to a number of disputes with our trade partners and Congressional passage of US free trade agreements, including Congressional passage of the US/Central America-Dominican Republic Free Trade Agreement (CAFTA).

The Progressive Policy Institute (PPI), the think tank of the moderate New Democrats, published a report February 15 on falling prices for US consumers due to quota elimination. Using t-shirts as the example, PPI found that Americans bought 2.18 billion foreign made t-shirts in 2005, up 11 percent from 1.97 billion in 2004. The average price of imported t-shirts fell from $2.14 in 1996 to $1.51 in 2005.  

2.14.06
Over the past four months, the US Department of Homeland Security's Bureau of Customs and Border Protection (CBP) seized over $10 million worth of textiles and apparel that CBP claims was intentionally misdescribed in an effort to circumvent China safeguards that limited the amount of Chinese apparel allowed into the United States. In response, CBP will readjust the 2005 China safeguard limits for certain categories, possibly affecting the March 1 staged entry of those products that were already embargoed.

Preliminary results from Costa Rica's presidential election, February 5, show the front-runner, Nobel Peace Prize winner and former President Oscar Arias, a pro-free trader, in a virtual tie with opposition candidate Ottón Solís, of the Citizen Action Party (PAC), who is opposed to the US/Central America-Dominican Republic Free Trade Agreement (CAFTA). There will be a hand recount with results expected within two weeks. Costa Rica is the only signatory that has yet to ratify the trade pact with the United States.

AAFA is working with the US government to repeal a December 2005 Colombian government decree requiring importers to meet a series of thresholds and restrictions in order to import apparel and footwear. The issuing of the decree surprised many as it corresponded with ongoing negotiations between Colombia and the United States towards a free trade agreement (FTA) with the United States. The decree, purportedly implemented to fight "illegal" Chinese imports and money launderers, would make it very difficult to import apparel and footwear into Colombia, no matter the source.
Senior members of Congress are considering possible legislation that would address trade with China. No action will be taken until the Office of the US Trade Representative (USTR) completes a "top-to-bottom review" of US trade policy towards China, expected sometime this month. AAFA will continue to monitor any developments.

2.7.06
AAFA applauded the US House of Representatives' approval of the final version of the Deficit Reduction Act of 2005 on February 1, which included a provision to repeal the Byrd Amendment in 2007. The Byrd Amendment, enacted several years ago in secret, entitles US manufacturers who successfully petition for anti-dumping duties against imports of like products to receive the dumping duties collected by the US government. Congress' own watchdog agency, the Government Accountability Office (GAO), has found that the program is a wasteful and potentially fraudulent corporate welfare scheme that benefits only a small handful of companies at the expense of many other domestic competitors and provides artificial financial incentives for certain US companies to bring trade remedy cases against US imports.

In a letter sent February 3 to the US government's inter-agency Committee for the Implementation of Textile Agreements (CITA), AAFA disputed CITA's authority to even consider any petitions to revoke, much less actually revoke, a "short supply" designation under the Caribbean Basin Trade Partnership Act (CBTPA) or the Andean Trade Promotion & Drug Eradication Act (ATPDEA). AAFA notes that there is absolutely NO authority whatsoever to revoke short supply designations in the statutes. Furthermore, in Congressional report after Congressional report accompanying trade preference program and free trade agreement implementing legislation, Congress explicitly and repeatedly states that CITA has absolutely no authority to revoke "short supply" designations under CBTPA and ATPDEA. The letter is in response to a CITA request for comments on a January 10 petition from The National Council of Textiles Organizations (NCTO) requesting that CITA revoke its designation that certain compacted, plied, ring spun cotton yarns are not available from the domestic industry in commercial quantities in a timely manner (in "short supply") under CBTPA and ATPDEA. NCTO claims that "substitutable yarns," not the yarns designated in short supply, are now commercially available.

The White House announced January 30 that President Bush will nominate W. Ralph Basham to be Commissioner of the Bureau of Customs and Border Protection (CBP) in the US Department of Homeland Security.

President Bush announced February 2 that the United States intends to launch negotiations towards a US/Korea Free Trade Agreement. Both sides hope to reach an agreement by the end of this year. In 2005, Korea was the 18th largest apparel supplier and the 14th largest footwear supplier to the US market.
A CBS News poll, conducted at the end of January, found that 67 percent of Americans think that free trade is good for the US economy. The more education individuals had, the more positively they viewed trade. The poll also found, in what many see as a disturbing trend, that 64 percent thought that restrictions on trade were needed to protect domestic jobs. 

The United Nations (UN) released its World Economic Situation and Prospectus 2006 report forecasting world economic growth of 3.3 percent in 2006. The report anticipates that China will lead world growth in 2006, with China's exports increasing 12.6 percent and imports increasing 19.2 percent. Also, the report found that India, Pakistan, Bangladesh and Sri Lanka all have benefited from growth in textiles and apparel exports since the end of worldwide quotas.
The US-China Business Council (USCBC) released a study January 25 showing that the United States has benefited from trade with China in the form of lower-priced goods and increased productivity, which in turn has resulted in US GDP growth.

The European Commission (EC) has proposed new rules requiring all European imports of apparel, footwear, travel goods and other consumer products to contain country of origin labels. Under the proposed regulation, which is somewhat similar to US labeling requirements, the label must be permanent and legible and in a European language, preferably one easily understood in the final importing country. The country of origin would be based on the European Union's (EU) rules for non-preferential origin, which is usually the country where the last substantial transformation occurred. Apparel, footwear and travel goods produced in one of the EU's 25 member countries or certain non-EU member countries, such as Bulgaria, Romania and Turkey, however, would not be subject to the new labeling requirements, potentially violating global trade rules requiring equal treatment of domestic and imported products. The vagueness of the language requirement also raises concerns for companies that supply all of Europe through a single distributor or subsidiary. The Commission proposed the rule to "level the playing field" for European manufacturers who face similar requirements in their major export markets, like the United States and Japan. The proposed regulation, which must still be approved by the 25 EU member states and be subject to a final rule-making process, would likely be implemented in the second half of 2007.

1.30.06
As a result of several meetings between the Federal Trade Commission (FTC), AAFA and other interested parties, the FTC has announced that it will not take action against retailers selling socks received prior to March 3, 2006 that are correctly labeled under the old requirements. The announcement was in response to the new sock labeling rules issued under the recently amended Textile Fiber Products Identification Act.

Thailand's lead trade negotiator resigned January 19 amid criticism and mounting protests in Thailand after the conclusion of the most recent round of negotiations towards a US/Thai Free Trade Agreement (FTA). Despite the resignation and protests, both sides expressed optimism at the end of the talks, with the next negotiating round to be scheduled for sometime this spring.

While Colombia and Ecuador are in Washington, DC this week in a last ditch effort to join with Peru and the United States in a proposed US/Andean Free Trade Agreement, AAFA sent a letter to the Bush administration reiterating the apparel and footwear industries' goals for the FTA. AAFA also joined with other associations in sending letters to the Bush Administration and to Colombian President Álvaro Uribe urging that cumulation be included in the agreement's final provisions.

China has proposed a major restructuring of its textile industry as part of the Chinese government's 11th five-year plan (2006-2010). The purpose of the restructuring is to improve the competitiveness of China's textile sector, which, unlike China's privately-run, market-driven apparel industry, is riddled with inefficient and unprofitable state-run companies.

The International Monetary Fund (IMF) released a new report January 20 that found that the proposed lowering of tariffs worldwide in the ongoing Doha round of world trade negotiations will more than offset any losses to developing countries from "preference erosion" to developed country markets, resulting in net increases to market access for developing countries.

1.24.06
According to published reports, the Bush Administration has halted talks with Egypt towards launching negotiations for a free trade agreement due to Egypt's recent imprisonment of a political dissident. Last month, an Egyptian court sentenced Egyptian opposition leader and former presidential candidate Ayman Nour to five years of forced labor for alleged election law violations, which American officials claim are false. If talks don’t start soon, a critical window for completing and gaining Congressional approval for an agreement in the next two years will likely close.

On January 19, the United States signed a free trade agreement (FTA) with Oman. The agreement provides for immediate and reciprocal duty-free access for all footwear under flexible rules of origin (allows for the use of third-country uppers.) For apparel, many products will remain subject to tariffs for 5-10 years under an extremely restrictive yarn-forward rule of origin and allows for only a limited amount of Omani apparel made from third-country fabric under a Tariff Preference Level (TPL), ensuring that the agreement will provide little benefit to either party for apparel.

The government-run China Daily newspaper reports that 80 percent of private companies in China violate workers’ rights. The study by the Chinese government’s National People's Congress surveyed more than 2,000 companies about adherence to labor laws and found many were frequently in violation.
The United States, Canada and Mexico recently tentatively agreed to change the rules of origin for men's and boys' woven cotton boxer shorts to allow the use of certain fabrics from third-countries because the fabrics are in short supply in the United States. The US government recently requested that the US International Trade Commission (ITC) conduct a study on the possible economic impact of this change.

1.17.06
The Dominican Republic has announced that they would postpone entering in the CAFTA-DR free trade agreement until July 2006. This delay may be due to the recent economic uncertainties the country is facing and its lack of a 2006 budget.

President George W. Bush notified Congress January 6 of his intent to enter into a free trade agreement (FTA) with Peru. Under the agreement, trade in apparel and textiles (under essentially a regional yarn-forward essential character rule of origin) and footwear (under a somewhat flexible rule that allows for the use of third-country uppers) between the two countries will be duty free immediately. The United States had hoped for a region-wide Andean FTA, but Columbia and Ecuador are not yet ready. Negotiations continue with those two countries.

The National Retail Federation released a new Trade Partnership Worldwide study showing that the U.S. economy experienced an overall net gain in employment related to U.S. imports from China. According to the study, U.S. imports from China have benefited the US economy through the net creation of an additional 1 million jobs. Furthermore, the study found that many of these new jobs are in the higher wage business services sector.

US Trade Representative Rob Portman announced January 10 that the current Chief International Trade Counsel for the Senate Finance Committee, Everett Eissenstat, will replace retiring Regina K. Vargo as the new Assistant US Trade Representative for the Americas. Ms. Vargo led the US team that negotiated CAFTA-DR and the recently completed US/Peru FTA.

Two recent reports show that the United States has a very open economy. A World Bank report rates the United States as the most open major economy in the world, while a Heritage Foundation report ranks the US economy as 9th most free in the world.

President George W. Bush signed into law a free trade agreement (FTA) with Bahrain on January 13. Under the agreement, trade in apparel and textiles (under essentially a regional yarn-forward essential character rule of origin) and footwear (under a somewhat flexible rule that allows for the use of third-country uppers) between the two countries will be duty-free immediately. It is expected that this agreement will enter into force later this year. The United States has proposed a Middle Eastern FTA (MEFTA) that will hopefully link this FTA with another agreement currently being negotiated with the United Arab Emirates, existing FTAs with Jordan and Israel, and future FTAs with other Middle Eastern countries.

1.9.06
The US government announced December 30 that the US/Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) will be implemented on a rolling basis possibly starting February 1, 2006. Due to delays in implementing new legislation as required by the agreement on such issues as intellectual property rights (IPR), none of the CAFTA-DR countries were ready to join by the original January 1 start date. AAFA continues to work with the US Government to ensure that this new rolling admission will not disrupt the full retroactive duty benefits and refunds due to CAFTA-DR qualifying apparel nor the agreement's footwear provisions. In a related note, the US Department of Homeland Security's Bureau of Customs and Boarder Protection (Customs) announced December 15 that Honduras will be the first Central American country to participate in its Container Security Initiative (CSI). Honduras' participation in CSI should facilitate the movement of shipments from Central America to the United States.

The Footwear Association of Importers and Retail Chains (FAIR), a European group, recently released a study showing that 10,000 European jobs could be at risk if the European Union (EU) implements controversial anti-dumping measures against European imports of Chinese, Vietnamese and Indian footwear. AAFA has been working with its counterparts in Europe and certain EU member countries to oppose the proposed anti-dumping measures. Thanks to growing opposition from both within and without Europe, the European Commission has postponed a preliminary decision on this case until at least the end of January. If the European Commission imposes dumping duties, footwear companies could face dumping duties as high as 40-120 percent on the footwear they are selling into Europe by this spring, which in turn will cause soaring prices and/or empty shelves for European consumers.

A two-year phase out of the Byrd Amendment passed Congress the week of December 19. The AAFA-supported repeal is part of a larger budget reconciliation bill. The House voted 212-206 and the Senate voted 51-50 with Vice President Dick Cheney’s vote as the tiebreaker to pass the overall measure. The Byrd Amendment, enacted several years ago in secret, entitles US manufacturers who successfully petition for anti-dumping duties against imports of like products to receive the dumping duties collected by the US government. Congress' own watchdog agency, the Government Accountability Office (GAO), has found that the program is a wasteful and potentially fraudulent corporate welfare scheme that benefits only a small handful of companies at the expense of many other domestic competitors. Due to minor changes in the Senate version of the overall legislation, the House must again pass the measure when it returns from recess at the end of January before the bill is sent to President George W. Bush for his signature.
As of January 1, the European Union (EU) will provide duty-free access for all apparel and footwear under flexible rules of origin to 15 additional developing countries under its Generalized System of Preferences (GSP) program. The benefiting countries, rewarded for measures to improve good governance, include several Central and South American countries as well as Sri Lanka. In a related note, the EU announced December 19 that it is considering allowing duty-free access for a wide range of imported yarns and some textiles and fabrics where local production is weak or non-existent. If approved, the three-year exemptions will start retroactive to January 1.

President Bush issued a proclamation December 22 implementing the US-Morocco Free Trade Agreement, effective January 1, 2006.President Bush issued a proclamation December 28 designating Burundi as an eligible sub-Saharan African (SSA) country under the African Growth and Opportunity Act (AGOA). Bush also removed Mauritania’s SSA eligibility under AGOA.

The US Senate on December 17 approved by unanimous consent former US Special Textile Negotiator David Spooner as Assistant Secretary of Commerce for Import Administration. In his new role, Spooner will administer US anti-dumping laws. Scott Quesenberry, formerly Legislative Director for US Senator Elizabeth Dole (R-NC), has replaced Spooner as Special Textile Negotiator.