Fashion Intel & Analysis
On March 1st, U.S. Customs & Border Protection (CBP) will hold a 21st Century Customs Framework (21CCF) public meeting at the U.S. Department of Commerce. This meeting give the public an opportunity to comment on numerous aspects of CBP's trade mission to better position CBP to operate in the 21st century trade environment. Anyone interested in attending the meeting or participating via teleconference must register online at www.cbp.gov/trade. Registration will remain open until the venue reaches capacity.
This week, the German Federal Ministry for Economic Cooperation and Development introduced legislation on mandatory human rights due diligence for German companies and their supply chains. According to reports, the law will apply to companies with over 250 employees and more than EUR 40 million in annual turnover; textiles and leather are among the sectors specifically mentioned. More information on the draft law is available here.
We’ve received an exclusive scoop: Kim Glas, former Deputy Assistant Secretary of Textiles, Consumer Goods, and Materials at Commerce (and frequent USFIA speaker) will replace Auggie Tantillo as head of the National Council of Textile Organizations (NCTO) when he retires this year. NCTO announced the news to members today and is expected to send a press release tomorrow. We look forward to working with our friend Kim in her new role!
Related, the Trump Administration has selected Lloyd Wood, who has been the Director of Public Affairs at NCTO, as the new Deputy Assistant Secretary for Textiles, Consumer Goods, and Materials at Commerce. We look forward to working with “Woody” in his new role, and we hope he will be joining our meetings beginning this spring.
As previously reported, March 2nd is the deadline for the United States and China to come to an agreement to resolve the trade war, or the retaliatory tariffs on $200 billion in Chinese products will increase from 10 percent to 25 percent. Today, President Trump said he may delay the deadline: “If we’re close to a deal where we think we can make a real deal, I could see myself letting [the higher tariffs] slide for a little while,” he said in remarks. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steve Mnuchin are currently in China to lead the talks. We will continue to watch the negotiations and inform members of any updates.
Today, U.S. Rep. Sean Duffy (R-WI) is expected to introduce the United States Reciprocal Trade Act, which, if passed, may represent the biggest delegation of authority over trade by Congress to the President in history. White House trade adviser Peter Navarro, who has pushed much of the protectionist trade policy agenda, has reportedly lobbied House Republicans to support the bill.
Of course, the Constitution grants to Congress the power to regulate tariffs. Congress often cedes a portion of this authority to the President, giving the President authority to alter tariffs or negotiate changes in tariffs under limited circumstances—for example, as part of the Generalized System of Preferences program, in response to dumping or national security threats, or as part of free trade agreements subsequently voted on by Congress. However, these grants of authority have always been fairly limited, for certain purposes, and/or subject to close congressional oversight. Rep. Duffy’s bill would give the President virtually unrestricted power to regulate tariffs, permitting the President to increase any tariff at any time, if the President disapproves of another nation’s higher tariffs.
It will be interesting to see whether the legislation runs into opposition within the Republican caucus—not for trade policy reasons, but for separation of powers reasons. After all, much of the Republican caucus is skeptical of a “big, unfettered” executive branch and may be skeptical of a ceding of authority over trade to the President.
While it’s important to note that many Members of Congress are skeptical of both the World Trade Organization (WTO) and U.S. free trade agreements, the bill is a clear violation of the United States’ WTO and free trade agreement commitments. In these agreements, the United States agrees to a package of tariffs covering thousands of tariff lines. At the end of the day, as part of the deal, some of the United States’ tariffs are higher than trading partners’ tariffs while some are lower. Rep. Duffy’s bill would permit the President to unilaterally increase U.S. tariffs whenever they are lower than other countries’ tariffs, permitting the President to withdraw U.S. concessions (or take back low tariffs) from prior trade negotiations and keep only the tariffs they like.
When asked about the bill, Senate Finance Committee Chairman Chuck Grassley, a Republican, told reporters, “We ain't gonna give him any greater authority.” However, we’ll continue to watch this legislation for movement.
USFIA Washington Counsel David Spooner of Barnes & Thornburg contributed to this report.