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Fashion Intel & Analysis

Fashion Intel & Analysis

Commerce Releases Steel and Aluminum 232 Reports; State Department Plans to Discuss Used Clothing Ban at EAC Meeting in Uganda; Luxury Knitwear Retailer Settles False Claim Act Allegations

In This Memo:

  • Commerce Releases Steel & Aluminum 232 Reports
  • State Department Plans to Discuss Used Clothing Ban at EAC Meeting in Uganda
  • Luxury Knitwear Retailer Settles False Claim Act Allegations Concerning Improper Avoidance of Customs Duties

Commerce Releases Steel & Aluminum 232 Reports

Today, U.S. Secretary of Commerce Wilbur Ross released reports on Commerce’s investigations into the impact on national security of imports of steel and aluminum. Commerce found that the quantities and circumstances of these imports “threaten to impair the national security,” as defined by Section 232 of the Trade Expansion Act of 1962. President Trump has several actions he can take, or no action, based on the analysis and recommendations provided in the reports; he is required to make a decision on steel by April 11th and aluminum by April 19th. More information on the key findings and recommendations is available on the Commerce website.

State Department Plans to Discuss Used Clothing Ban at EAC Meeting in Uganda

This week during a press briefing, Acting Director for Economic and Regional Affairs at the U.S. Department of State Harry Sullivan provided an update on next steps with regards to the ban on used clothing by Rwanda, Tanzania, and Uganda. The following is from the official State Department transcript of the press call.

QUESTION: Mr. Sullivan, I wondered if you can give an update on what’s happening regarding the out-of-cycle review under AGOA for Rwanda, Tanzania, and Uganda, regarding their phased-in bans on used clothing exports from the United States. Constance Hamilton, at USTR - U.S. Trade Representative - said in August that she expected there’d be a resolution, a decision, by year’s end. As far as I know that hasn’t happened. There’s a proposal that these countries should be punished under AGOA for violating AGOA’s terms by instituting this ban. So, can you say what’s happening with that, please?

SULLIVAN: Yes. Next week [at the East African Community Heads of State Summit in Kampala, Uganda] the leaders of Rwanda, Tanzania, and Uganda are going to meet on this issue, so I wish I was privy to what they might decide. They might not have come to consensus yet, I’m really not sure, but we are asking those three countries to do two things. One is to decrease their tariffs to their pre-2016 levels, and the second thing we’re asking is to commit that aside from health or sanitary reasons, not to phase out the export of used clothing.

So, we’ve communicated that, we believe very effectively, to all levels of the three governments. The trade ministers met last Friday; I don’t have a read-out on what their discussions were. The leaders will meet next week, and I believe the result of that meeting will determine how we proceed…

QUESTION: I have one question, which is Trump’s administration’s slogan has been “America First,” and this also includes trade and other things. Rwanda, Tanzania, and Uganda are saying that it’s important for them to boost their textile industries as well as shoe industries, and that’s why they’re putting a ban on the imported clothing from the U.S. and U.K. and Canada. This has raised concerns with the U.S., as you know, and I’m thinking, don’t you think this is a conflict of interest? Thank you.

SULLIVAN: Thank you very much for that question. While we understand the East African Community’s desire to build a domestic textile sector, we firmly believe that the EAC’s ban on imports of used clothing will not help achieve that. First, it’s job-destroying. The proposed ban will hurt an estimated 300 thousand men and women that work in the used clothing business all across the East African Community, and it will also negatively impact at least 40 thousand U.S. jobs in the used clothing sector in the United States.

Secondly, it limits consumer choice. So basically, what the leaders of the EAC are proposing is to say to consumers of used clothing, who are really the poorest consumers of East Africa, what they’re saying is we are going to take this choice away from you and you will not have access to this market anymore. So, I really question whether the consumers of used clothing will be able to afford the new apparel being made in the EAC market. So rather than banning imported used clothing, we believe the most effective domestic growth strategy for the local fashion and apparel industry would be to build its brands and markets for the growing middle class, which prefers to buy new apparel in shopping malls and other places anyway.

So, you noted “America First.” I don’t know that it really has too much application here, but the administration does believe - and trade enforcement is an administration priority - but within the AGOA legislation itself, it says that in order to continue to receive benefits under the AGOA program, countries must meet AGOA eligibility criteria, which include eliminating barriers to U.S. trade and investment. Thank you.

Luxury Knitwear Retailer Settles False Claim Act Allegations Concerning Improper Avoidance of Customs Duties

This week, the U.S. Department of Justice announced that a British luxury knitwear retailer and the company’s CEO have settled to resolve False Claims Act allegations that they avoided U.S. Customs duties on merchandise shipped from the United Kingdom to U.S. customers. The company, Pure Collection Ltd., settled for $908,1000 on charges of breaking up single shipments worth more than the de minimis ($200, and later $800), to avoid the applicable duties. More information is available on the DOJ website.

House Passes GSP Renewal; Trump Meets with Bipartisan Lawmakers to Discuss Trade

In This Memo:

  • House Passes GSP Renewal
  • Trump Meets with Bipartisan Lawmakers to Discuss Trade

House Passes GSP Renewal

On February 13th, the U.S. House of Representatives passed H.R. 4979, the bipartisan legislation to renew the Generalized System of Preferences program for three years. House Ways & Means Committee Chairman Kevin Brady (R-TX) said in a statement, “Last year, the GSP program saved American job creators more than $865 million in tariffs…Less money spent on tariffs means more money that our job creators can use to hire new workers, grow paychecks, and invest in our communities. I urge the Senate to pass this bill as soon as possible and join the House in renewing this pro-growth, pro-family trade program for the American people.” More information is available on the Ways & Means Committee website. We will continue to watch for Senate action on the legislation.

Trump Meets with Bipartisan Lawmakers to Discuss Trade

On February 13th, President Trump met with a bipartisan group of lawmakers to discuss the trade policy agenda, with a special focus on steel and aluminum dumping cases as well as trade imbalances with Asia. According to reports, he is considering imposing tariffs or quotas. After the meeting, House Ways & Means Committee Chairman Kevin Brady (R-TX) said in a statement that the meeting was “constructive,” but added, “As he considers his next step in the steel and aluminum investigations, we must build on the benefits we are seeing throughout our economy because of his leadership on tax and regulatory reform – and avoid any action that could reverse that trend and harm American companies, workers, and consumers.” Reuters has more about the meeting.   

House Introduces Bipartisan Legislation to Renew GSP

This afternoon, the House Ways & Means Committee introduced bipartisan legislation to renew the expired Generalized System of Preferences (GSP) program for three years.

“The benefits of GSP are clear for U.S. manufacturers and consumers. It’s so important that we move quickly to enact this extension to support the tens of thousands of U.S. jobs that depend on the program. Last year, GSP allowed Texas companies to save more than $76 million in tariffs – which are essentially taxes. This is more than all but two other states. U.S. companies of all sizes, particularly small and medium-sized companies, rely on GSP to maintain their edge over global competitors. The time is now to renew the program and remove uncertainty for U.S. companies so they can better use GSP to reduce costs, compete globally, and create jobs here at home,” Committee Chairman Kevin Brady (R-TX) said in a statement.

Hill sources say the bill may pass the House under suspension of the rules as early as next Tuesday. House rules are only suspended for non-controversial measures, because the procedure requires 2/3 of the House to vote “yes” in order for the legislation to be approved (suspension of the rules also limits debate time to 40 minutes and forbids any amendments). Though it is very good news that legislation to renew GSP may pass the House within a week, the measure’s fate would be less certain in the Senate. The Senate leadership does not have a mechanism, such as suspension of the rules, to move legislation without amendment, and the Senate leadership has long found it difficult to move trade legislation–even non-controversial trade legislation while warding off controversial tax, trade, and health care amendments. USFIA will keep members posted on this effort.

Thanks to USFIA Washington Counsel David Spooner for contributing to this report.

CBP Releases ACE Drawback Guidance; USDA Announces Cotton Board Appointments, Including Several USFIA Members; KPMG to Host Webinar on Post-TFTEA Trade Enforcement

In This Memo:

  • CBP Releases ACE Drawback Guidance
  • USDA Announces Cotton Board Appointments, Including Several USFIA Members
  • KPMG to Host Webinar on Post-TFTEA Trade Enforcement

CBP Releases ACE Drawback Guidance

On February 24th, U.S. Customs & Border Protection (CBP) will deploy an electronic data interface for filing drawback claims within the Automated Commercial Environment (ACE). The trade will be able to file drawback claims authorized under section 906 of the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), even though the applicable regulations have not been implemented. CBP is currently working to release a Notice of Proposed Rulemaking (NPRM) via the Federal Register. The NPRM proposes the regulations to implement TFTEA-Drawback. After public review and comment, CBP will issue a Final Rule that sets forth the regulations to implement 19 U.S.C. § 1313, as the law was amended by TFTEA. In the meantime, CBP has released interim ACE Drawback Guidance, effective February 24th until the Final Rule is in effect. The guidance is available on the CBP website.

USDA Announces Cotton Board Appointments, Including Several USFIA Members

On February 12th, U.S. Secretary of Agriculture Sonny Perdue announced the appointment of 13 members, 13 alternate members and one advisor to serve on the Cotton Board. They will serve three-year terms ending Dec. 31, 2020. The list includes several USFIA members including:

  • USFIA Board Member Dean Draughn of Under Armour
  • Emily Gigot of SanMar Corporation
  • Former USFIA Board Member Debi Gregg of Quiksilver
  • Akiko Inui of PVH Corp.
  • Michael Kobori of Levi Strauss & Co.
  • Rajiv Malik of Kohl’s

The full announcement is available on the USDA website. Congratulations to our members, and we thank you for representing the industry on the Cotton Board.

KPMG to Host Webinar on Post-TFTEA Trade Enforcement

USFIA Associate Member KPMG will host a webinar today at 2 PM EST (11 AM PST), A New Era of Trade Enforcement: An Update on Post-TFTEA Trade Enforcement Trends. They will share industry specific enforcement examples and illustrations to help bring clarity to the current trade enforcement environment and direction. Click here for details and registration.

Reminder: USFIA Apparel Classification Workshop on February 22

It’s not too late to register for USFIA’s Apparel Classification Workshop: Meet the National Import Specialists on Thursday, February 22nd in New York City. You will have the opportunity to gain a better understanding of CBP’s classification process and ask questions—and samples are welcome! Click here for details and registration.

Trump Announces New Safeguard Tariffs; TPP Members Reach Agreement on Major Trade Pact; 1.8 Million Workers Would Immediately Lose Jobs If NAFTA Terminated

In This Memo:

  • Trump Announces New Safeguard Tariffs
  • USTR Releases Reports on China & Russia WTO Compliance
  • TPP Members Reach Agreement on Major Trade Pact
  • NC Members of Congress Send Letter to Ross on Colombia’s Reference Price System
  • Study: 1.8 Million Workers Would Immediately Lose Jobs If NAFTA Terminated

Trump Announces New Safeguard Tariffs

On January 22nd, the U.S. Trade Representative (USTR) announced President Trump’s approval of new safeguard tariffs on imported large residential washing machines and imported solar cells and modules on the grounds that they are “a substantial cause of serious injury to domestic manufacturers.” These are the first Section 201 global safeguard cases since 2001, and reflect what may be a more aggressive protectionist stance by the Trump Administration.  The decisions are controversial within the business sector and pit domestic manufacturers who filed the cases against manufacturers using imported components.  And of course the higher tariffs will raise prices for consumers.  More information on the tariff-rate quotas is available on the USTR website.

USTR Releases Reports on China & Russia WTO Compliance

The Office of the U.S. Trade Representative (USTR) has released the annual reports on China’s and Russia’s World Trade Organization (WTO) compliance, as required by Congress. Of particular concern, the report says “it  seems  clear  that  the  United  States  erred  in  supporting  China’s  entry  into  the  WTO on  terms  that  have  proven  to  be  ineffective  in  securing   China’s   embrace   of   an   open,   market-oriented trade regime.” Once again, this rhetoric suggests that there will be more trade cases against China. The full report is available on the USTR website.

TPP Members Reach Agreement on Major Trade Pact

The Trans-Pacific Partnership (TPP) is moving forward—without the United States. According to reports, the remaining 11 TPP countries have reached a deal, which apparently is on track to be signed on March 8th in Chile. The agreement now is called the CPTPP, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. While there are few details available, there is some information  in the Wall Street Journal.

NC Members of Congress Send Letter to Ross on Colombia’s Reference Price System

Earlier this month, several Members of Congress from North Carolina sent a letter to Commerce Secretary Wilbur Ross expressing concern about Colombia’s “reference price” system, which they call a “significant barrier to the entry of value-added textile products made from U.S.-grown cotton and U.S.-spun yarn.” According to the letter, Colombia subjects each apparel shipment to a “reference price” to determine the value upon which duties and value-added tax are assessed, regardless of the true value of the merchandise. They claim that since 2013, the Colombian government has applied values much higher than the true value, leading to ancillary costs, delays, and post-entry audits. They express concerns about a new proposal to modify the system, which they say would “effectively block the entry of products such as t-shirts and socks made from U.S.-grown cotton and U.S.-spun yarns.” The letter is available here.

Study: 1.8 Million Workers Would Immediately Lose Jobs If NAFTA Terminated

A new study by the Business Roundtable and Trade Partnership Worldwide LLC examines the impact of withdrawing from the North American Free Trade Agreement (NAFTA), including the national and state-by-state impact on jobs and exports. According to the findings, if NAFTA is terminated, U.S. real output would fall .6 percent below levels that would prevail if NAFTA were in effect in each year of the first 1-5 years after termination. In addition, 1.8 million workers would immediately lose their jobs in the first year with full termination. The full study is available on the Business Roundtable website.

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