Fashion Intel & Analysis

In this TDM:

House Approves Haiti Bill By Voice Vote

The House of Representatives this morning approved HR 5160, the Haiti Economic Lift Program.  Acting under a suspension of the rules, the bill to provide enhanced access to the U.S. market for apparel made in Haiti, was approved by voice vote. 

The Senate is expected to act quickly as well.

CPSC Approves Publication of Proposed Rules on Component Testing, Testing and Labeling Certification; Drawstrings Notice Also Approved

The Consumer Product Safety Commission (CPSC) today approved for publication in the Federal Register and comment two proposed rules, one on testing of component parts and the other on testing and labeling to product certification, as well as the proposed designation of drawstrings as a "substantial product hazard."

The CPSC's 5-0 vote for the two testing rules means the rules will soon be subject to a 75-day comment period. Both rules were written in order to implement the Consumer Product Safety Improvement Act (CPSIA).  The approved proposals differ slightly from the versions originally considered by the CPSC earlier this year.

The revised proposed rule on testing of component parts allows finished products manufacturers to rely upon the safety certification tests of component manufacturers or distributors.  It was enthusiastically supported by the two Republican commissioners, Anne Northup and Nancy Nord.  Nord said the rule has the potential to lower testing costs and drive testing upstream to component makers, which could free smaller manufacturers from testing costs.

However, Commissioner Robert Adler said he may be interested in tightening the rule further, later in the rulemaking process, to ensure that finished products manufacturers have explicit responsibility to exercise due care to ensure the integrity of the component safety certifications they are relying upon. He said that while he does not want to make manufacturers "miserable," the rule might require clarification to ensure that they have some responsibility to know whether the component tests are reliable, including whether the laboratory relied upon by the components  supplier is CPSC certified. For now, he said he was inviting comments on the issue of "due care."

The rule approved today on testing and labeling to certification was an amended rule that commissioners received yesterday, and has not yet been made public. CPSC Chairwoman Inez Tenenbaum said this rule would exempt low-volume manufacturers from testing, and requires manufacturers of children's products to test their products through a third-party at least once per year if they have no "reasonable testing program" in place within the company. If they have a reasonable testing program in place, product testing only needs to be conducted every other year.

Commissioner Nord said she would vote for the rule, but "not enthusiastically," citing "grave concerns" about the costs these testing requirements would place on companies. She also criticized the CPSC's decision to define what a reasonable testing program is within the rule. The rule requires that reasonable testing programs be able to identify the product, conduct tests to ensure the product can pass required tests, incorporate a production testing plan, have a remedial action plan whenever a product fails a test, and document results.

Nord also said she does not support CPSC's decision to require companies to use third-party tests when they do not have a reasonable testing program in place, and said there is no justification for this requirement in the law. However, she said it is important to get the rule out for comment, and thus voted for it.

Adler said he is also not enthusiastic about the rule -- because he is worried it may not be tough enough. Northup and Tenenbaum said they were comfortable with the rule.

The notice proposing designating drawstrings as a substantial product hazard also will be published for public comment shortly.

Prepared by Brenda A. Jacobs and Pete Kasperowicz, Sidley Austin LLP

In this TDM:

China Tops Offenders on Special 301 Report Priority List

The USTR released their Annual Special 301 Report on Friday, listing countries where U.S. companies face the biggest challenges to intellectual property rights. China topped the “priority watch list” once again, with American textile and apparel companies having difficulty protecting their brands.  .

According to the report, there are not enough deterrents or penalties in place in China to discourage or punish trademark and copyright violations. Last year, CBP seized about $140 million worth of fake apparel, footwear and accessories, and China accounted for 79 percent of counterfeit or pirated goods seized.

Other countries on the priority watch list include Russia, Algeria, Argentina, Canada, Chile, India, Indonesia, Pakistan, Thailand and Venezuela.  In the report, only the Philippines (other than China) also was cited for counterfeit clothing and footwear.

Customs Completes Phase One of Central American Assessment and Training Program

On April 21, CBP announced the completion of the first phase of a border security assessment and training program with the seven Central American countries: Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama.

Between April 2009 and March 2010, CBP staff worked with customs, immigration, and law enforcement agencies within the region to review procedures at land borders and internal checkpoints. They sought to identify best practices and vulnerabilities, and to develop recommendations under the auspices of the U.S. government's Central America Regional Security Initiative (CARSI).

Acting Assistant Commissioner in the Office of International Affairs, Charles Stallworth, said the program "provides CBP the opportunity to foster relationships with foreign border security enforcement officials with the goal of increasing information exchange and cooperation in transnational interdictions."

Senate Finance Subcommittee Held Hearing on U.S. Port Planning Last Week

On April 29, the Senate Finance Committee International Trade, Customs, and Global Competitiveness Subcommittee conducted the hearing; Doubling U.S. Exports: Are U.S. Sea Ports Ready for the Challenge? The Subcommittee heard testimony from nine witnesses representing the U.S. government, private industry, and port administration.

The purpose of the hearing was to consider options for improving U.S. port infrastructure to facilitate increased exports. Several of the business representatives also used the opportunity to push for the passage of the U.S. Free Trade Agreements (FTAs) with Colombia, Korea, and Panama.

All of the witnesses agreed that the U.S. should develop a coordinated national strategy to improve port and freight infrastructure, and many highlighted the need for better rail linkages outside of ports. Several witnesses quoted a World Bank study that recently ranked the U.S. 15th in the world for logistics efficiency. Officials from the Administration highlighted programs in place to fund new infrastructure projects, but several witnesses said that these projects are the wrong investments and are politically motivated.

Canada Adds Two Generic Fiber Names to Textile Labeling Rules

In a World Trade Organization (WTO) communication dated April 27, Canada announced that they have updated their textile labeling and advertising regulations to include two generic fiber names, which have already been approved in the U.S. The changes became effective on March 25, 2010. Canada's updated Textile Labelling and Advertising Regulations contain the following new elements:

  • a description of the conditions under which the name "lastol" may be used as the generic fiber name; and
  • a description of the conditions under which the names "PLA" or "polyactic acid" may be used as the fiber name.

A notice in the Canada Gazette from April 14 said that lastol is "mainly targeted for apparel applications, specifically in clothing applications where stretch is desirable." PLA is "mainly targeted for apparel applications, specifically performance apparel applications." The changes "will facilitate the labelling of the fibres in question by providing a generic name to be used on fibre content labels."

Reminder: COAC Applications Due May 15  

Customs and Border Protection is looking for applicants to join its Advisory Committee on Commercial Operations (COAC). COAC provides advice and makes recommendations to the Commissioner of CBP, Secretary of Homeland Security, and Secretary of the Treasury on all matters involving the commercial operations of CBP and related DHS functions. During this two-year term, is expected that the Committee will consider issues relating to enhanced border and cargo supply chain security, CBP modernization and automation, informed compliance and compliance assessment, account-based processing, commercial enforcement and uniformity, international efforts to harmonize customs practices and procedures, strategic planning, northern border and southern border issues, CBP agricultural inspection and import safety. This is an opportunity to have your concerns and suggestions heard by top Customs Officials, so we encourage anyone interested to apply. Click here for more details.

In this TDM

House Hearing on CPSIA Fixes Acknowledges Big Problems, But Indicates Only Small Changes Likely
By Brenda A. Jacobs and Pete Kasperowicz

The House Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection held a hearing today to discuss proposed legislation to amend the Consumer Product Safety Improvement Act (CPSIA).  Full Committee Chairman Henry Waxman (D-CA) has drafted legislation that would give the Consumer Product Safety Commission (CPSC) the flexibility to exempt some products and components from lead testing rules, exempt used children's products, and allow "small batch" manufacturers to use less costly testing methods to meet the requirements of the law.

The hearing – the first on the CPSIA since it became law in August 2008 -- was long sought by Republicans and industry representatives who want fundamental reforms to the CPSIA.  Speaking briefly at the beginning the hearing, Waxman said the law needs "targeted changes," and asserted that his proposed bill (which has yet to be formally introduced but is entitled the Consumer Product Safety Enhancement Act, or CPSEA) reflects a compromise between industry groups and consumers. He insisted that the bill's "text is not set in stone," but also emphasized that he wants any changes to it to be "narrowly crafted."  

Republicans used their opening remarks to note that the 63 page CPSIA has led to thousands of pages of regulations that are confusing and stifling to small companies, and argued that Waxman's proposed bill does not go far enough to ease this burden. Rep. Joe Barton (R-TX), the ranking member on the full committee, said he supports Waxman’s proposal because it "moves the ball forward," but said he is still worried that further improvements are needed to ensure that the law does not overreach. Chairman Emeritus John Dingell (D-MI) used his opening statement to place all the blame for the CPSIA's problems on the Senate.  He asserted that the Senate is where all the "unintended consequences" arose, conceding that there are unnecessarily onerous burdens on business with little appreciable positive impact on health and safety.

Dingell asked the seven member panel of witnesses a series of questions about Section 2 of the proposed bill and possible report language. That section would allow the CPSC to exempt a product or component from lead testing rules if three conditions were met: 1) it is not "practicable" to produce the product or component without lead, 2) the item is not likely to be mouthed or ingested, and 3) an exemption will have no "material adverse effect" on public health. Several witnesses asked that the terms "practicable" and no "material adverse effect" be strictly defined either in the bill or in report language accompanying the bill – but none appeared to directly challenge what is essentially a functionality requirement for the lead content exemption.

The panel of witnesses was composed of six representatives of business, including from the apparel industry, the handmade toy and sellers of used goods.  Steve Levy, speaking as part of the apparel industry, argued for a broad exemption to lead testing for clothing, since tests have shown there is no risk of lead absorption through clothing, and also asked that language be included that ensures the federal law pre-empts any state law that tries to address product safety.  Levy also pressed for an exemption for rhinestones.  He also suggested that for apparel, an RN label should be deemed to satisfy the tracking label requirement. 

Rachel Weintraub of the Consumer Federation of America was a last minute addition to the witness list.  Not surprisingly, Weintraub was diametrically opposed to the other witnesses. Weintraub said her group does not oppose the Waxman bill but would oppose any attempt to weaken it. Weintraub rejected the ideas of 1) giving the CPSC more authority to conduct risk assessments to exempt products  (saying the CPSC had this authority before and never used it), 2) lowering the age for defining children's products, or 3) restricting the requirement for tracking labels to durable goods, even rejecting a suggestion by one Member to eliminate the tracking requirement for items valued at less than $5.

Some members of the Committee expressed dismay that the CPSC was not asked to testify, because it would have been an opportunity for them to explain why they asked for the changes they did in their January 15 report to Congressional appropriators.

79 Congressmen Sign Letter Supporting FAAAA Amendment

Rep. Jerry Nadler’s (D-NY) letter to colleagues supporting the FAAAA Amendment was sent out yesterday to House Transportation and Infrastructure Committee (T&I) leadership.   Seventy-nine Democrats signed the letter, which advocates changing federal law to allow localities and ports to enact and enforce tougher clean truck programs. Click here to view the letter.

Environmental groups, labor unions, and community groups have thrown their support behind the effort. The letter was sent just before a May 5th hearing of the House T&I Committee to explore the Los Angeles program.

A trial is currently under way in U.S. District Court in Los Angeles concerning a suit filed by the American Trucking Associations (ATA). ATA is challenging the constitutionality of a portion of the port of Los Angeles clean truck program that would ban independent owner-operators from drayage services in favor of companies that sign concession agreements and hire drivers who are employees.

USA-ITA is working with the Clean and Sustainable Transportation Coalition which plans to send an industry letter in opposition to the FAAAA amendment.

Consumer Product Safety Commission Chairwoman Inez Tenenbaum told legislators last week that she supports draft legislation to amend the Consumer Product Safety Improvement Act of 2008 (CPSIA). Her support for the law is likely to embolden Democrats to keep the bill in its current form rather than make further substantial amendments favored by importers and many Republican members of Congress.

Tenenbaum made clear her support for the Waxman bill in an April 29 letter to Waxman and other members of the House Energy and Commerce Committee. Her letter was delivered on the same day that the Consumer Protection Subcommittee held a hearing on the bill, which has yet to be formally introduced.

Tenenbaum's letter said the Waxman bill "offers a pathway toward providing the CPSC with additional flexibility, while still honoring the original intention of the CPSIA." Specifically, she said she supports language in the bill that would allow the CPSC to exempt products or components with lead when it is not practicable or feasible to remove the lead, allow thrift stores to sell used goods without meeting CPSIA requirements for lead, and apply a possible 100 parts-per-million lead standard prospectively, not retrospectively. The draft would also allow the CPSC to consider alternative testing methods for small manufacturers and establish a small business outreach office within CPSC.

Republican Commissioners Nancy Nord and Anne Northup submitted their own letters to the House that said the Waxman bill would not offer producers and importers nearly enough flexibility. Regarding lead exemptions, both said the CPSC should only assess whether there is any threat to public safety, and that it is needless (and possibly very complicated) to assess whether it is "practicable" to remove lead from a product or component. Northup argued that relying on a functional purpose test would turn the CPSC into a product approval agency, a mistake, she said, because CPSC would waste resources approving products with very limited risks to consumers.

The two Republicans also argued that the law should be amended to give the CPSC authority to determine which products should be regulated for children of certain ages, allow the CPSC to apply phthalate rules prospectively only, offer cost-saving alternative testing methods to all companies instead of just small companies, and at least expand the definition of small companies that can use alternative testing methods.

Download a copy of the letters:
Tenenbaum's letter
Nord's letter
Northup's letter

Prepared by Brenda A. Jacobs and Pete Kasperowicz, Sidley Austin LLP

Ways and Means Committee Chairman Sander M. Levin (D-MI) and Senate Finance Committee Chairman Max Baucus (D-MT), along with Ways and Means Ranking Member Dave Camp (R-MI), Finance Ranking Member Chuck Grassley (R-IA), and Rep. Charles B. Rangel (D-NY) introduced legislation today to help speed Haiti’s economic recovery following the devastating January earthquake.  The Haiti Economic Lift Program (HELP) Act, introduced in both the House and Senate today, expands duty-free access to the U.S. market for additional Haitian textile and apparel exports and extends existing trade preference programs for Haiti through 2020.

The HELP Act supports the USTR's Plus One for Haiti program by making it more cost effective for U.S. companies to import Haitian textiles and apparel. 

Key provisions in the bill include:

  • Extension of CBTPA and HOPE September 30, 2020
  • Expansion of the Wholly Assembled List to  provide duty-free treatment for additional textile and apparel products that are wholly assembled or knit-to-shape in Haiti regardless of the origin of the inputs.
  • Increases the TPLs from 70 million SMEs to 200 million SMEs. The increase will be triggered in any given year if 52 million SMEs of Haitian apparel enter the United States under the existing knit or woven TPL. Once the increase is triggered, certain knit apparel products entering duty-free under the knit TPL will be subject to an 85 million SME sublimit, and certain woven apparel products entering duty-free under the woven TPL will be subject to a 70 million SME sublimit.
  • Safeguards against transshipment by requiring CBP to verify that apparel articles imported under the TPLs are not being unlawfully transshipped into the United States. The bill also authorizes the President to reduce the TPLs to account for unlawful apparel transshipment.
  • Liberalizes the Earned Import Allowance Rule by permitting the duty-free importation of one SME of apparel wholly assembled or knit-to-shape in Haiti regardless of the origin of the inputs for every two SMEs of qualifying fabric purchased from the United States.
  • Extends until December 20, 2015, the rule that provides duty-free treatment for apparel wholly assembled or knit-to-shape in Haiti with at least 50 percent value from Haiti, the United States, a U.S. free trade agreement partner or preference program beneficiary, or a combination thereof. The bill similarly extends until December 20, 2017, duty-free treatment for Haitian apparel with at least 55 percent of value from qualifying countries, and until December 20, 2018, duty-free treatment for Haitian apparel with at least 60 percent of value from qualifying countries.
  • Authorizes funds for CBP to help Haiti meet its immediate customs infrastructure needs, and to maintain a U.S. customs team in Haiti.