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INTERNATIONAL TRADE UPDATEA Monthly AAFA Newsletter on Trade March 2005
• CAFTA Update: Honduras/Guatemala Ratify Treaty as US Congress Begins Consideration Amid Increasing US Hispanic Support & More • China Apparel Safeguard Update: EU Rejects Safeguards & US Increases Monitoring As China Considers New Measures to Restrict Exports • AAFA Urges US Government to "Express Concern" over New EU Measures against Chinese Footwear Imports • Dispute Delays Implementation of New EU Trade Preferences for Developing Countries • US Loses Appeal on WTO Cotton Ruling • Bush Nominates Congressman Rob Portman for US Trade Representative • US Apparel/Footwear Imports Grow in Year Ending January While CAFTA Continues Fall • India Proposes Reducing Tariffs on Imports of Apparel & Footwear • Congress Requests Submissions for Miscellaneous Trade Bill • European Union Eliminates Apparel Restrictions on Ukraine • India and South American Mercosur Bloc Sign FTA • ITC Requests Comments for Annual Report on Andean Trade Program • New Travel Advisories/Warnings CORPORATE SOCIAL RESPONSIBILITY • International Toy Industry Agrees to Single Code of Conduct & Monitoring Program • US Government Establishes Advisory Committee on Labor Provisions of FTAs • US Government Announces Funding for Projects to Fight Child Labor in 7 Countries CUSTOMS NEWS • Customs Imposes New Mandatory Security Requirements for C-TPAT Participants with Little Notice • EU Announces New Customs Advanced Manifest Rules • Customs Issues Interim Regs for US/Chile FTA CUSTOMS RULINGS • Click here for information on how to obtain the latest Customs rulings. CITA NEWS/ANNOUNCEMENTS • CITA Rejects CBTPA Short Supply Petition/CITA/ITC Request Comments on New Petitions • CITA Rejection of CBTPA Short Supply Request Highlights Limitations of Current Caribbean Basin Trade Program • ITC Requests Comments on Proposed Modifications to US/Singapore FTA Rules of Origin NEW REPORTS ON TRADE • Report Finds Few Members of Congress Vote Consistently for Free Trade • New Report Shows Canadian Apparel/Textile Sector Shrinking NEW PUBLICATIONS/EVENTS/ANNOUNCEMENTS • AAFA Publishes New Apparel & Footwear Tariff & Trade Guides • Do You Need Help Facing the Challenges of Increased Competition? US GOVERNMENT MARKET RESEARCH • Czech Republic: The Czech Republic Industry Sector Analysis: Textiles • Hong Kong - Textile Furnishings, Beddings, Carpets • Switzerland: Sports and Outdoor Wear • Switzerland: Swiss Sportswear Market • Switzerland: Swiss Textile and Garment Industries: Upswing Predicted in 2005 • Venezuela: Textile Reference Prices for Customs Use
CAFTA UPDATE: HONDURAS/GUATEMALA RATIFY TREATY AS US CONGRESS BEGINS CONSIDERATION AMID INCREASING US HISPANIC SUPPORT & MORE Honduras, in a 100 to 28 vote, and Guatemala, in a 126 to 12 vote, overwhelmingly approved the US/Dominican Republic-Central America Free Trade Agreement (CAFTA) on March 3 and March 10, respectively, joining El Salvador as the second and third of the seven CAFTA countries to do so (AAFA Press Release). In response, the Senate Finance Committee announced that it will hold a CAFTA hearing April 6. The House Ways & Means Committee is expected to hold hearings in early April as well, starting Congressional consideration of the agreement that could culminate in a Congressional vote on CAFTA sometime around Memorial Day. Quick ratification of the agreement is becoming increasingly important. According to the latest trade numbers, released March 11, the delays in the implementation of CAFTA continue to cause the region to lose market share in the US apparel market (See AAFA Press Release). This decline has already caused 19,000 job losses in the Dominican Republic and tens of thousands of job losses in Central America since November 2004 and a slowdown in the growth of US yarn and fabric exports to the region. In a positive sign for US Congressional passage of CAFTA, however, the Hispanic Alliance for Trade, comprising dozens of local and national Hispanic groups and other organizations, announced its support for CAFTA. Further, on March 16, freshman Congressman Henry Cuellar (D-TX), a prominent member of the Congressional Hispanic Caucus and a Democratic member of Congress, announced his full support for the agreement. In a related note, AAFA released the 5th and 6th installments in its Weaving the Fabric of American Trade[TM][TM] series profiling employees of US apparel, textile and footwear companies and how those individuals and the companies themselves benefit from international trade. The latest installments feature Melissa Grier, Final Quality Auditor, Jockey International Inc. and Gloria McFarland, Material Warehouse Manager, Haggar Clothing Co., and how they and their companies prosper because of the U.S./Central American trade partnership. Meanwhile, http://www.AmericansForFairTrade.org, a small anti-CAFTA group comprised mostly of farmers' unions and sugar growers, released a deeply flawed and biased poll on March 1 that purportedly found that 51 percent of Americans oppose CAFTA. This number was arrived at only after the poll asked those surveyed to respond to misleading questions and, in many cases, incorrect descriptions on the impact of CAFTA. Before even asking those surveyed their opinions on CAFTA, the survey asked two questions implying that the North American Free Trade Agreement (NAFTA) had a negative impact on the United States and then equated NAFTA to CAFTA. Those questions were then followed by such questions as "Would you favor or oppose CAFTA if it reduces prices you pay as a consumer but eliminates jobs for US workers?" Despite the obvious bias in the poll, the poll found that 50 percent of all Americans and 55 percent of all American Hispanics support free trade agreements in general. Further, a plurality of American Hispanics surveyed supported the agreement (44 percent vs. 39 percent). Only after a list of misleading and inaccurate statements were read to those surveyed did that number change, with 47 percent of surveyed Hispanics opposing CAFTA and 40 percent supporting the agreement.
In a March 15 speech before the European Parliament, European Union (EU) Trade Commissioner Peter Mandelson formally rejected calls by the European apparel and textile industry to impose safeguard quotas on EU imports of certain categories of Chinese apparel and textiles. Mandelson instead announced that the EU would soon publish guidelines on the use of safeguard measures, setting out clear "danger zones" for import levels. If imports reached these levels, the EU would then initiate an investigation. In contrast, many observers believe the United States recently moved one step closer to imposing safeguard quotas on US imports of certain Chinese apparel products. The US Department of Commerce announced March 21 that it will institute a new system to monitor imports of textiles and apparel products. The Department anticipates that the new system will be in place by the first week in April 2005, at which time preliminary data on textile and apparel imports for the first quarter of the year should be available, which would be approximately 5 weeks earlier than usual. In response to these actions, China announced that, effective March 1, it has imposed an automatic licensing scheme to monitor Chinese exports of apparel and textiles in order to provide timely warnings for any potential export surges. The Chinese apparel industry, in conjunction with the government, has discussed implementing further measures to prevent any potential export surges, such as establishing minimum pricing for sensitive products. These measures come on top of the new taxes the Chinese government already imposed on most apparel exports on January 1. In a related note, a recent analysis of European Union (EU) apparel imports since quotas were removed January 1 found that, while prices on most EU apparel imports from China declined (on average by 21 percent), EU imports from a large number of countries remained significantly cheaper than China in a wide range of products.
AAFA sent a letter March 1 to Acting US Trade Representative Peter Allgeier urging the US government to consult with its counterparts in the European Union (EU) to convey US concern over new EU measures against imports of Chinese footwear. Effective February 1, the EU imposed a mandatory "surveillance" program to track EU imports of certain Chinese footwear. With the recent elimination of EU quotas on Chinese footwear on January 1, the purpose of the program is to provide virtual real-time import data on European imports of certain Chinese footwear in order to detect any potential surges in imports. Many believe that the sole purpose of the EU’s new “surveillance” scheme is to provide detailed real-time data to the EU footwear industry so that they can initiate either a safeguard case or an anti-dumping case against China at the earliest opportunity. According to the letter, "We strongly believe that the imposition of new safeguards or other restrictive measures on EU imports of Chinese footwear will not only hurt European consumers, but will also negatively impact sales of U.S. footwear brands in Europe and the many U.S. workers that rely on those sales."
Due to a last-minute dispute over the percentage of European apparel imports that should be allowed in from China and India at the March 16 meeting of the European Commission, the European Union (EU) will delay the implementation of revisions to its Generalized System of Preferences (GSP) program. The EU has hoped to implement the changes by April 1, but those changes will now be delayed until summer 2005 at the earliest. The GSP changes were originally slated for implementation on January 1, 2006 but were accelerated in order to help the tsunami-ravaged countries. Once implemented, the program will allow duty-free or reduced duty access for EU imports of all apparel and footwear from the tsunami-ravaged Indian Ocean region as well as from virtually all other developing countries under more flexible rules of origin. The dispute centered on the exact percentage of total European imports in certain categories each country would be allowed and still be eligible for the duty-free/reduced duty access. While the Commission recommended a 15 percent level, certain EU member states wanted to lower the level to 10 percent to "protect" their domestic apparel industries. Either percentage would already exclude China from GSP benefits since China's share of total EU apparel imports already exceeds 15 percent. A 10 percent level, however, would also likely exclude European apparel imports from India from the program.
The World Trade Organization (WTO) announced March 3 that it had rejected the United States' appeal of the WTO's ruling, based on a case brought by Brazil, that found that subsidies provided to US farmers under the US cotton program violate international trade rules by exceeding international limits for subsides and, in turn, artificially depressing world cotton prices. The United States has until July 1 to comply with the ruling. If it does not comply, Brazil can then petition the WTO to impose trade sanctions against the United States. The US response to the announcement was muted and provided no indication as to US next steps.
In a move universally praised both here and around the world, President George W. Bush on March 17 nominated Congressman Rob Portman (R-OH) to be the next US Trade Representative. If approved by the Senate, Portman will replace Robert Zoellick, who left the position earlier this year to become Deputy Secretary of State. Portman, who was an international trade lawyer before entering Congress in 1993, is a close friend of Bush and is well respected on both sides of the political aisle. AAFA applauded Bush's nomination of Portman in a March 17 press release.
US apparel imports (actual data) increased 6.7 percent in the twelve-month period ending January 31, 2005 compared with the twelve-month period ending January 2004 to 20.1 billion SME worth $65.1 billion while U.S. footwear imports (actual data) also rose significantly during the same period, growing 6.9 percent to 2.1 billion pairs worth $16.3 billion. While US apparel imports from Central America and the Dominican Republic grew slightly (4.5 percent) for the twelve-month period ending January 2005, its overall share of US apparel imports continued to decline, falling from 19.5 percent to 19.1 percent. Partly reflecting the fact that Chinese New Year occurred in January 2004 whereas it occurred in February this year, and the fact that the filling of a number of quotas in 2003 further restrained US imports in January 2004, US imports from China grew significantly in January, pushing US apparel imports from China up 32.2 percent for the twelve-month period ending January 2005. Thanks in part to the removal of quota restraints on January 1, 2005, US apparel imports from numerous other countries also grew significantly during the period, including #4 Bangladesh (+6.4 percent), #6 Vietnam (+8.6 percent), #9 Indonesia (+13.8 percent), #10 Cambodia (+21.6 percent), #11 India (+18.0 percent), #14 Thailand (+8.5 percent), #15 Pakistan (+18.4 percent) and #23 Jordan (+67.9 percent). While US footwear imports from the Dominican Republic continued to fall (-7.3 percent) during the twelve-month period ending January 31, 2005, US footwear imports from a number of other countries grew significantly, including #1 China (+9.5 percent), #3 Vietnam (+46.0 percent), #10 India (+10.9 percent), #13 Canada (+24.9 percent) and #16 Romania (+31.9 percent).
The Indian government proposed a cut in its maximum tariffs on imported apparel and footwear from 20 percent to 15 percent and a cut in the duties imposed on imported machinery used in the production of apparel and footwear from 15-20 percent to 5-10 percent. The proposals were included in the Indian government's proposed 2005-2006 budget. The Indian Congress usually approves most budget proposals, but it is unclear when the reduced duties would be implemented.
The Trade Subcommittee of the US House of Representatives Ways & Means Committee requests submissions from interested members of Congress (on behalf of their constituents) for provisions to include in Congress' next Miscellaneous Trade Bill. The purpose of the bill is to provide duty-relief for US companies who need access to certain imported inputs or finished products (because those products are not otherwise available in the United States) as well as to make technical fixes to previous trade-related legislation. Each of the bill's provisions must be non-controversial and, for the most part, must not cost the US government more than $500,000 in lost revenue, i.e. tariffs, per item. Submissions are due by April 28. If you are interested or would like more information, please contact AAFA's Nate Herman at 703.797.9062.
The European Union (EU) announced March 9, that it has removed the last remaining restrictions on EU imports of apparel from Ukraine. Although the EU had already removed quotas on EU imports of Ukrainian apparel in 2001, the agreement ends import and export licensing requirements for all textiles and clothing products. The new EU/Ukraine agreement also lowers duties on EU exports to and imports from Ukraine, which will not exceed 4 percent for yarns, 8 percent for fabrics and 12 percent for clothing.
India and MERCOSUR – a trading bloc in Latin America consisting of Argentina, Brazil, Paraguay and Uruguay, with Bolivia and Chile as its associate members – signed a free trade agreement on March 18. The agreement only provides duty-free or reduced-duty access for approximately 450 products. It is unclear whether footwear and/or apparel receive benefits under the agreement.
The US International Trade Commission (ITC) requests comments on the economic impact of the Andean Trade Promotion & Drug Eradication Act (ATPDEA) for its annual report on the program. ATPDEA provides duty-free access for US imports of apparel (under certain restrictions) and virtually all footwear from the Andean region (Bolivia, Colombia, Ecuador and Peru). ATPDEA, a US unilateral trade preference program, expires December 31, 2006. Comments are due June 10.
The U.S. State Department has issued new travel advisories/warnings for Guyana, Haiti, Liberia and Zimbabwe. Access all advisories on State's Web site.
INTERNATIONAL TOY INDUSTRY AGREES TO SINGLE CODE OF CONDUCT & MONITORING PROGRAM The International Council of Toy Industries (ICTI), the international association representing virtually every major toy company worldwide, recently announced the implementation of its new Caring, Aware, Responsible and Ethical (CARE) Program, the toy industry's first-ever, industry-wide comprehensive corporate social responsibility program. CARE comprises a code of conduct and a monitoring program to ensure implementation of the code of conduct in factories producing toys worldwide.
The US Department of Labor (Labor) announced March 24 that is has established the National Advisory Committee for Labor Provisions of US Free Trade Agreements to provide advice on crafting the labor provision of future free trade agreements as well as the implementation of the labor provisions in current FTAs. The committee will be comprised of 12 members, four representing the labor community, four representing the business community, and four representing the public. Persons seeking additional information should contact Labor's Bureau of International Labor Affairs (ILAB) at 202.693.4900.
The US Department of Labor announced March 15 that it will provide $17 million to organizations to develop and implement programs for combating exploitive child labor in the following countries: Mozambique, Angola, Sierra Leone, Liberia, Ecuador, Bolivia and Guyana. Specific solicitations for cooperative agreement applications are to be published in the Federal Register. All funds will be obligated on or before September 30, 2005.
CUSTOMS IMPOSES NEW MANDATORY SECURITY REQUIREMENTS FOR C-TPAT PARTICIPANTS WITH LITTLE NOTICE On Good Friday (March 25), the US Department of Homeland Security's Bureau of Customs and Border Protection (Customs) announced that, effective immediately, all Customs - Trade Partnership Against Terrorism (C-TPAT) participants must meet new C-TPAT minimum security requirements. All new C-TPAT participants must comply with the new minimum security criteria before joining C-TPAT. All current C-TPAT participants must meet the new minimum security criteria in three phases with all criteria implemented by September 26, 2005.
The European Union (EU) on February 24 approved new customs regulations intended to improve supply chain security. The new rules, expected to be implemented by mid-2006, will require advanced manifests, filed electronically, for all goods entering European ports. The new rules are very similar to the rules implemented over the last two years by the US Department of Homeland Security's Bureau of Customs & Border Protection (Customs) for goods entering US ports. Once implemented, the new rules will require manifests to be submitted 24 hours prior to entry for ocean-bound shipments and 4 hours prior to entry for all other shipments.
Almost 1 1/2 years after the agreement's implementation, Customs issued interim regulations, effective March 7, governing US imports under the US/Chile Free Trade Agreement, including apparel and footwear. Comments on the interim regulations are due June 6.
Advisory Note on Customs Rulings - Readers are cautioned against relying on a ruling issued to another importer. If Customs decides to change its position with regard to a ruling, only the party to whom the ruling was issued is insulated from financial loss. Also, a ruling may depend on very specific physical specifications of a product. Even the slightest deviation from those specifications may throw into question the applicability of the ruling. Rulings are useful tools, but must be handled with care. To see all Customs rulings for the past two months, please go to the US Department of Homeland Security's Bureau of Customs and Border Protection Customs Rulings Online Search System (CROSS).
CITA REJECTS CBTPA PETITION/CITA/ITC REQUEST COMMENTS ON NEW PETITIONS CITA announced March 7 that it had rejected a short supply petition regarding certain anti-microbial elastomeric filament yarn finding that the subject yarn can be supplied by the domestic industry in commercial quantities in a timely manner under the Caribbean Basin Trade Partnership Act (CBTPA) the African Growth and Opportunity Act (AGOA) and the Andean Trade Promotion & Drug Eradication Act (ATPDEA). In a related note, CITA and the US International Trade Commission (ITC) request comments on three new CBTPA short supply petitions alleging that certain 100 percent cotton, double faced irregular sateen weave, flannel fabrics, of yarn-dyed, single yarns, certain 100 percent cotton, 4-thread twill weave and herringbone twill weave, flannel fabrics, of yarn-dyed, ring spun and plied yarns, and certain 100 percent cotton, 4-thread twill weave, flannel fabrics, of yarn-dyed, combed and ring spun single yarns, cannot be supplied by the domestic industry in commercial quantities in a timely manner under CBTPA. If any of the petitions are approved, apparel made in the Caribbean Basin region using any of the approved third-country subject fabric can enter the United States duty-free under CBTPA. Comments are due to CITA by March 30 and to the ITC by March 28.
In demonstrating yet again how the constraints of the current trade preference program for the region, the Caribbean Basin Trade Partnership Act (CBTPA), continue to limit the region's competitiveness, the US interagency Committee for the Implementation of Textile Agreements (CITA) rejected yet another CBTPA short supply request on March 7, this one involving certain anti-microbial elastomeric filament yarn. The CBTPA short supply process was originally intended to provide needed flexibility in CBTPA rules for duty-free access for apparel made in Central America and the Caribbean of US yarn and fabric when certain yarns and fabrics were no longer commercially available in a timely manner in the United States. Based on its restrictive r |
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