Fashion Intel & Analysis

On July 16, during USFIA's Virtual Washington Trade Symposium, we hosted a discussion with several officials from U.S. Customs and Border Protection (CBP). Forced labor was among the many issues discussed and remains an important concern for many in the fashion industry. Today, CBP shared some additional guidance with USFIA.  Linked below are five CBP fact sheets that also include information about additional resources. If you have any questions please contact us at This email address is being protected from spambots. You need JavaScript enabled to view it.. 

 
 The Department of Homeland Security (DHS) announced they recently hosted the inaugural meeting of the U.S. China Working Group. The working group was established to "holistically articulate, prioritize, and coordinate the Department’s response to evolving threats to the Homeland posed by the Chinese Communist Party (CCP)."  The announcement also included the following list of recent DHS actions: 
 
  • Working with industry and State, Local, Tribal, and Territorial governments to combat CCP disinformation campaigns or broader efforts to distort our country’s public discourse and undermine confidence in our democratic processes.
  • Targeting illicit Chinese manufacturers who have exploited the pandemic—which originated in China and spread through CCP malfeasance—by producing and disseminating fraudulent or prohibited COVID-19 PPE and medical supplies to the United States. This has resulted in the seizure of over 1,000,000 FDA-prohibited COVID-19 test-kits and 750,000 counterfeit masks.
  • Leveraging the President’s May 29th Proclamation to deny entry to high-risk “graduate students” (F and J visas) whose purpose is stealing our intellectual property to advance Beijing’s economic and national security interests.
  • Reinforcing global norms (human rights, free and fair trade) by withholding from market goods forcibly produced by the more than 1 million Uyghurs (and other Muslim minorities in the Xinjiang Province) CCP has interned in concentration camps.
  • Leveraging technology and innovation to target and interdict illicit fentanyl (and other synthetic substances originating in China) before it reaches our communities and claims more American lives.
  • Working with others in the U.S. government and in industry to protect our information and communications technology infrastructure from CCP malign activities (IPR theft, data collection, etc.)
  • Leveraging foreign investment oversight, including the Committee on Foreign Investment in the United States and the interagency body formerly known as Team Telecom, to curb CCP’s attempts to exploit our free-market by exerting influence through corporate channels to undermine our economic competitiveness.

As you may have already seen in the media, today a group of 198 civil society organizations and trade unions launched the Coalition to End Forced Labour in the Uyghur Region. The coalition calls on brands and retailers to sign a detailed pledge committing to exit the Xinjiang Uyghur Autonomous Region (XUAR) at every level of the supply chain.  

USFIA joined with other industry groups to issue a statement on the issue of forced labor and emphasizes the industry’s commitment to keep forced labor out of our supply chains. “Our member companies have long maintained policies and compliance programs that seek to prevent, identify, and mitigate instances of forced labor. As an industry representing thousands of brands and retailers, ensuring that forced labor does not exist in our supply chains is a key priority.”
 
You can read recent coverage from The New York Times, Reuters, and the Guardian.  FYI that 38 brands and retailers are specifically listed in the press release.  

Yesterday, the House Ways and Means Trade Subcommittee held a hearing on Trade, Manufacturing, And Critical Supply Chains: Lessons From Covid-19. One of the important issues discussed during the hearing was the shortages in PPE and medical equipment during the COVID-19 pandemic. There were 5 witnesses who spoke about this issue as well as the failings of U.S. supply chains that this crisis exposed. Committee members also specifically asked about China and inquired about ways to reduce U.S. dependence on Chinese supply chains especially for medical supplies and PPE. Representative Murphy (D - FL) urged members of Congress not to "retreat" from global trade saying “So, it sounds to me like the anecdote to this crisis isn’t necessarily retreating from global trade. But it’s actually more global trade -- just smarter, more diversified global trade.” The witnesses were Dr. Erica Fuchs, Professor of Engineering and Public Policy, Carnegie Mellon University; Dr. Prashant Yadav, Senior Fellow, Center for Global Development; Ms. Roxanne Brown, International Vice President at Large, United Steelworkers; Ms. Kim Glas, President and CEO, National Council of Textile Organizations; and Dr. Thomas Duesterberg, Senior Fellow, Hudson Institute.

Dr. Erica Fuchs, Professor of Engineering and Public Policy, Carnegie Mellon University testified on PPE shortages and other medical supply shortages. Fuchs stressed the importance of developing and manufacturing innovative and advanced products in the U.S. to create more value-added jobs. She recommended that the U.S. rebuild the manufacturing ecosystem through strategic investment in infrastructure for transit, communication, energy, and data. She also focused on the need to develop vocational training for a skilled workforce.

Kim Glas, President and CEO of the National Council of Textile Organizations (NCTO) testified about PPE shortages and the inability of U.S. based supply chains to successfully pivot to meet surging demand. Glas recommended the Administration provide a stimulus package for companies and workers along with strong domestic procurement policies to incentivize near-shore manufacturing. More specifically she recommended the Administration use the Defense Production Act for PPE to award long-term contracts to encourage capacity building. Much of Glas' testimony during the hearing emphasized attacks on China, including allegations of Uyghur forced labor in PPE production. In the NCTO statement submitted for the record, they also made a number of policy recommendations to maintain tariffs, revise the $800 de minimus level under Section 321, eliminate MTB benefits for apparel and block the expansion of GSP to include apparel and footwear. The following are recommendations from NCTO's written testimony:

At this time where the results of our national approach to international trade is in sharp relief, it is critical that Congress further examine decades of detrimental trade policy that has benefited foreign imports at the direct expense of our American manufacturers and workers and severely damaged our manufacturing capacity. This recalibration of trade policy should include the following:

Support tariffs: Tariffs serve critically important roles in balancing the unfair advantages that nonmarket economies have over domestic producers. These advantages include government subsidies, state-owned enterprises, non-reciprocal trade policies, intellectual property theft, currency manipulation, and sub-standard labor and environmental policies. Congress needs to keep tariffs in place to support U.S. businesses and workers and our FTA partners who abide by higher standards to earn duty-free access to our market. We appreciate the committee’s work in this regard. Congress must resist pressure to waive, delay or reduce duties from massive importers like Amazon and Walmart who undermine U.S. manufacturing through an insistence on sourcing goods from countries that routinely employ these sub-standard practices.

Congress should also revisit significantly consequential tariff policies like the current U.S. de minimise level of $800 that hurt the manufacturing sector. Every day, the largest retail distributors in the world use Section 321 de minimis tariff waivers to import millions of individual shipments into the U.S dutyfree. This tariff structure loophole has allowed for counterfeit and unsafe products, including PPE, to enter the United States duty-free with minimal inspection from any country in the world. Section 321 waivers are exploding, forcing U.S. manufacturers and brick and mortar retailers to compete with tarifffree imports simply because of the manner in which an imported product is transacted. Further, China is by far the largest beneficiary of our exorbitant de minimis level, which grants them duty-free treatment with none of the obligations our FTA partners have accepted for that same access.

Closely examine future FTA partners: Duty-free access to the U.S. consumer market is one of our nation’s greatest tools used to secure international reforms, and to support our democratic allies. We must take care that we do not devalue this leverage by entering into FTAs with non-market economies like China and Vietnam, unless and until they undertake the serious, permanent market and democratic reforms we expect of our international allies. The U.S. should also be hesitant to adopt new preferences programs that undermine existing, valuable partnerships in the Western Hemisphere. Reject any expansion of GSP for textiles and apparel: The U.S. textile industry and many or our free trade agreement and trade preference partners oppose efforts by brands and retailers to expand GSP for textile and apparel products. Any expansion efforts would severely undermine our trade agreements and, in addition, would incentivize the offshoring of PPE production to low wage countries. In fact, any expansion for this trade sensitive sector would be severely destructive to U.S. manufacturing. We urge Congress to continue to reject these expansion proposals that would undermine onshoring PPE.

Renew the Caribbean Basin Trade Partnership Act: Since its inception in 2000, CBTPA has become an important element of the effort to develop and facilitate trade within the Caribbean Basin region, most notably with Haiti. Overall, CBTPA is structured in a fashion that reasonably balances the interest of U.S. textile manufacturers with those of textile and apparel manufacturers in the region. NCTO supports a seamless extension of CBTPA beyond its current expiration date of September 30, 2020 without any changes to its textile and apparel provisions. NCTO’s support of CBTPA renewal is a function of our overall backing of trade policies that strengthen the Western Hemisphere production chain.

Reform the Miscellaneous Tariff Bill: American textile manufacturers strongly support the MTB. Traditionally this bipartisan bill has been instrumental in making U.S. manufacturers more competitive against foreign imports by cutting our costs on vital manufacturing inputs and components not made domestically. However, as currently structured, the MTB has become a tariff giveaway for foreign-made finished goods that go directly to retail, with zero U.S. manufacturing, processing, or other value-add of any kind. In both iterations of the MTB since 2016, nearly half of all petitions for duty-free preferences were for goods that where fully finished products, wholly manufactured abroad. And for textiles, apparel, footwear and travel goods collectively, more than 75% of petitions were for end items. This approach to trade policy undermines domestic manufacturing and American workers, disincentivizes investment in U.S. production, and rewards those who would offshore whole production chains rather than invest in making goods here or with one of our FTA partners.

Enforce Our Trade Laws: The full force of our country’s investigative and enforcement capabilities must be unleashed to eradicate illegal and unfair trading practices. This would include steps to severely punish dumping and subsidy activities, and to block the importation of counterfeit goods and those made with slave labor and child labor.

In a notice posted on their website, the Office of the United States Trade Representative (USTR) announced 64 new product exclusions that appear on List 4 of the China 301 tariffs. Included in the list are several apparel and home goods products. The product exclusions will apply retroactively from September 1, 2019 and will extend to September 1, 2020.

6108.91.0030, Women's knit robes in chief weight of cotton, with hook and loop tab closure

6111.20.6070, Babies' gowns of cotton knitted interlock fabric, each with sleeves, neck opening
and elasticized bottom opening 

6111.20.6070, Babies' sleep sacks, knitted, of cotton, each with neck opening and two-way
zipper 

6111.20.6070, Babies' sleep sacks of cotton interlock knitted fabric, sleeveless, each with neck
opening and two-way zipper 

6111.20.6070, Babies' swaddle sacks of cotton knitted interlock fabric, each with sleeves and
mitten cuffs 

6111.30.5015, Babies' blanket sleepers of polyester knitted fleece, sleeveless, each with two-way zipper 

6207.91.1000, Men's and boys' cotton terry bathrobes with muslin trim, each beltless but
featuring a hook-and-loop tab 

6208.91.1010, Women's cotton terry bathrobes with muslin trim, each beltless but featuring a
hook-and-loop tab 

6208.91.1020,  Girls' cotton terry bathrobes with muslin trim, each beltless but featuring a hook-and-loop tab 

6208.92.0020, Girls' fleece bathrobes, each beltless but featuring a hook-and-loop tab 

6301.30.0010, Blankets (other than electric blankets) of cotton, woven, each measuring at least 116 cm but not more than 118 cm on an edge 

6301.30.0020, Blankets (other than electric blankets) of cotton, other than woven, each
measuring at least 116 cm but not more than 118 cm on an edge

6302.31.9020, Crib sheets of muslin cotton, fitted with elastic 

6302.31.9040, Protective covers of cotton for pillows, not knitted or crocheted, of cotton, not
napped or printed, each with full encasement construction and zipper opening

6304.92.0000, Oven mitts, not knitted or crocheted, of cotton, each incorporating a hanging loop, measuring at least 16 cm but not more than 19 cm in width by at least 29 cm but
not more than 32 cm in length 

6506.10.6045, Athletic, recreational and sporting headgear (other than of reinforced or laminated plastics), each with an inner protective suspension system and a sun visor, each
weighing not more than 500 g and designed for off-road use with bicycles

6506.10.6075, Folding helmets of injected plastic parts, each measuring not more than 85 mm in thickness when folded, weighing not more than 525 g 

8302.42.3065, Fittings of galvanized steel, including but not limited to support frames, wings,
legs, connector and sign supports, all of which are parts of retail display fixtures