Fashion Intel & Analysis

Today, ITC announced the release of the public version of their report, Advice Concerning Possible Modifications to the U.S. Generalized System of Preferences, 2010 Special Review, Certain Sleeping Bags. The original report was sent to USTR on April 8, and while the public version repeats the arguments from both sides, the ITC recommendation has been redacted. To review the report, click here:

In this TDM:

Antidumping, Countervailing Duties To Be Imposed on Plastic Retail Bags From Indonesia, Taiwan and Vietnam
(Prepared by Brenda A. Jacobs, Sidley Austin LLP)

The U. S. International Trade Commission (USITC) yesterday ruled that the U.S. industry producing polyethylene retail carrier bags (PRCB) -- commonly referred to as t-shirt sacks, merchandise bags, grocery bags, or checkout bags -- is threatened with material injury by reason of PRCB imports from Vietnam that the U.S. Department of Commerce (Commerce) determined are subsidized and from Indonesia, Taiwan, and Vietnam that Commerce determined are sold in the United States at less than fair value (dumped). Five of the commissioners found threat of material injury (but not current material injury); one commissioner voted that there was no threat of material injury or current material injury.

As a result of the USITC's affirmative determinations, Commerce will issue a countervailing duty (CVD) order on imports of these products from Vietnam and antidumping (AD) duty orders on imports of these products from Indonesia, Taiwan, and Vietnam.

This is the first time that products of Vietnam, which the United States considers to be a non-market economy, are subject to a countervailing duty order. The CVD on Vietnamese origin products will vary from 5.28 percent for most suppliers to 52.56 percent; one investigated Vietnamese supplier will not be subject to a CVD because Commerce found only a de minimis level of subsidization.

The AD duties range considerably as well. For Indonesia, the rates range from 69.64 percent (for most suppliers) to 85.17 percent; for Taiwan, the rates go from 36.54 percent to 95.81 percent; for Vietnam, the rates range from 52.30 percent to 76.11 percent. There is already an antidumping order in place against PRCBs made in China and Thailand.

Commerce Undersecretary Says No Decision on Monitoring of Apparel Imports

Despite repeated calls by U.S. textile industry groups, the Obama Administration has made no moves to date to reinstate the Bush Administration program to monitor Vietnam apparel imports, or to create new monitoring of Chinese apparel imports. In a recent press conference, Commerce Department Under Secretary for International Trade Frank Sanchez is quoted as saying, "I’m looking at that and how we can best establish the overall goal of having a level playing field."

The Senate Banking Economic Policy Subcommittee Chair Sherrod Brown will be holding a hearing on currency issues next Wednesday, April 21. The hearing is expected to focus on the concerns about China's currency.

The announcement follows on the remarks by Senator Lindsey Graham at today's National Council of Textile Organizations (NCTO) meeting. Graham said that he is committed to moving the Schumer-Graham bill on China currency — no matter what actions China may take in the next few months.

In this TDM:

COAC Scheduled for May 11 in Philadelphia

CBP has announced the next meeting of the Advisory Committee on Commercial Operations of Customs and Border Protection (COAC). Scheduled for Tuesday, May 11th in Philadelphia, this is the fifth meeting during the 11th term of the COAC. A tentative agenda includes the Importer Security Filing requirements (10+2), air cargo security, and import safety. All attendees must register by May 6th. Please contact USA-ITA for more information.

Sánchez Addresses NCTO on Fair Trade

Yesterday, House Ways and Means Trade Subcommittee member Linda Sánchez spoke to the National Council of Textile Organizations (NCTO) at their annual meeting in Washington, DC. Sánchez advocated more trade enforcement. She wants to see the addition of environmental standards and a strengthening of labor standards in trade agreements; as well as increased flexibility and authority for the USTR to suspend benefits for individual industries or producers that violate standards, rather than entire countries. In addition, Sánchez called on Treasury Secretary Geithner to take action on the Chinese currency problem.

No Garment Factories Remain on Northern Mariana Islands

On April 8, the U.S. Government Accountability Office (GAO) released a report entitled American Samoa and Commonwealth of the Northern Mariana Islands: Wages, Employment, Employer Actions, Earnings, and Worker Views Since Minimum Wage Increases Began. In the report, the GAO described the decline of the apparel industry in the Northern Mariana Islands.

GAO says there are no longer any garment factories on the islands. The report details that the apparel industry began a rapid decline when the Agreement on Textiles and Clothing (ATC) expired in January 2005. Combined with the WTO’s quota phase-out agreement, the increased competition from other countries contributed to the industry’s demise.

Interpretation of Chinese Regulations Is Top Concern for U.S. Firms in China

On April 2, the U.S. Chamber of Commerce in China (AmCham China) released the report, 2010 China Business Climate Survey. The report states that "most American companies report continued profitability in 2009." However, revenue declined for 31 percent of U.S. businesses compared to 2008. AmCham China reports that the number one business challenge in 2009 was the interpretation of regulations in China, followed by constraints on management-level human resources. The third-ranked issue is securing licenses, while protectionism ranks fourth. Click here to review the report.

Sidley Austin Report: Hundreds of Temporary Import Duty Suspensions Are On Hold Indefinitely

A partisan Congressional battle over the use of earmarks means that many U.S. companies are currently paying duties on products that had been duty-free before this year – and many other companies are missing out on getting temporary relief from duties that they had hoped would start this year. Earmarks are usually provisions in legislation that direct that funds be used for a particular project (usually in the home district or state of the Member of Congress who proposes it), but a decision by Republicans in the House of Representatives to adopt “a unilateral moratorium on all earmarks, including tax and tariff related earmarks” has stopped action on duty suspension bills that would have been included in a Miscellaneous Tariff Bill. Sidley Austin has prepared a report on this subject: Click here to view the report.

(Prepared by John Pellegrini, McGuireWoods LLP)

The International Trade Commission ("ITC") has announced that it will conduct an investigation under 19 U.S.C. § 3005 concerning the administration of Note 4(b), Chapter 64, Harmonized Tariff Schedule of the United States ("HTS"). The investigation was requested by the Treasury Department which requested that the ITC recommend to the President the addition of a new US Note covering footwear with outer soles of rubber and/or plastic which a layer of textile material has been added. 19 U.S.C. § 3006 allows the President to proclaim changes in the HTS in limited circumstances. Legislation is not required.

The proposed note would provide: "For purposes of determining the constituent material of the outer sole pursuant to Note 4(b) to this chapter, no account shall be taken of textile materials which do not possess the characteristics usually required for normal use of an outer sole, including durability and strength." If adopted, this note would eliminate the use of the fabric outsoles for purposes of qualifying for classification in heading 6405. However, Treasury also requests that there be a number of new provisions in heading 6402 and 6404 that would generally provide for the current heading 6405 duty rates (12.5% and 7.5%) for footwear that includes a layer described by the proposed. The following provisions would be subdivided to include a provision with this requirement and which would carry the lower duty rate. These are 6402.99.60, 6402.99.70, 6404.11.40, 6404.11.50, 6401.11.60, 6401.11.70, 6401.11.80, 6404.19.35, 6404.19.40, 6404.19.50, 6404.19.60, 6404.19.70 and 6404.19.80. With one exception, this schedule of subheading seems to include all those of interest. We would add subheading 6402.99.40.

There are no provisions for protective footwear and higher-priced athletic footwear. It is unlikely that a change covering these provisions could be adopted because of opposition by the domestic industry.

Comments on the proposal must be submitted by May 14, 2010. The ITC will post a proposed recommendation on May 28, 2010 and will accept comments on until June 25, 2010. The ITC expects to submit a recommendation to the President by July 12, 2010.