Fashion Intel & Analysis

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

USTR Kirk Pressed on Afghanistan, Pakistan ROZ

U.S. Trade Representative Ron Kirk was urged in today’s Senate Finance Committee hearing to secure a reconstruction opportunity zone (ROZ) with Afghanistan and Pakistan. In a hearing on the 2010 trade agenda, two senators asked about the status of this effort.

Senator John Kerry (D-MA) argued in the hearing that the U.S. should try to enhance trade with Afghanistan and Pakistan in the textile and apparel industry, and rejected arguments that imports from these countries would lead to a flood that hurts U.S. companies. Senator Maria Cantwell (D-WA) agreed, and asked Kirk if the Administration still plans to pursue an (ROZ) with these countries. Kirk said this still is a priority, but said he could not give a timetable for when it might happen and said USTR continues to seek a resolution to the dispute within Congress about whether labor standards should be attached to this trade preference.

Also today, Senator Bill Nelson (D-FL) asked Kirk how USTR proposes to help Haiti’s garment industry in the wake of the devastating earthquake there earlier this year, and suggested a bill he has introduced (S. 2978) that would allow Haiti to use third-party textiles in clothing that could be sent to the U.S. duty free.

Kirk replied that USTR does not have an opinion on this legislation yet, but Nelson said that answer is “not sufficient.” To that, Kirk said USTR wants to consider trade policy changes for Haiti in a “thoughtful” way, in part to ensure that other countries, in particular China, do not take advantage of these changes by flooding the U.S. market via Haiti. But Kirk did not elaborate further on this point.

Kirk also fielded several questions about broader China trade issues, such as intellectual property rights and government procurement, to which he replied that USTR continues to work with China on these issues. He was also asked about the chances of approving pending free trade agreements with Panama, Colombia and Korea, although he offered little more than summary comments about how the current political environment, particularly among Democrats, will make these agreements difficult to move.

CPSC to Hold Vote on Civil Penalty Factors Next Week

The Consumer Product Safety Commission (CPSC) is scheduled to vote next week on a final rule that outlines how it will interpret factors that will be weighed when considering civil penalties for violations of product safety laws. At the public meeting that the Commission held this morning, they were briefed by the CPSC staff on changes from the interim final rule to the final rule.

The meeting revealed an obvious split between Republican and Democratic commissioners on ways the rule might be adjusted. Commissioner Nancy Nord, the only Republican present today, suggested that the language be softened in favor of companies. For example, she noted broadly that the rule only penalizes companies and does not encourage better safety practices. More specifically, she suggested that the rule be changed so that “credible” evidence is needed to support claims that a product caused an illness. Staff and Democratic commissioners balked at this and said it is understood that only credible evidence would be considered. Nord also worried that because the rule asks the CPSC to decide whether companies have “effective” product safety procedures in place, the CPSC might decide that any company that produces a defective product by definition does not have “effective” procedures in place. She suggested that the rule should have the Commission look for “reasonably effective” procedures, but this again was rejected by Democratic commissioners.

Senate Finance to Hold Hearing on U.S. Preference Programs Next Week

The Senate Finance Committee has announced a March 9 hearing on U.S. unilateral preference programs, which will examine possible options for reforming these programs. The Committee has said it would hold such a hearing before considering whether and how to reform the Generalized System of Preferences and the Andean Trade Promotion and Drug Eradication Act. Both of these programs were extended last year until the end of 2010, but Committee Ranking Member Charles Grassley (R-IA) in particular has been demanding reform of these programs.

Specifically, Grassley supports faster graduation requirements for GSP, and several members of Congress have indicated an interest in possibly scaling back preferences for Ecuador and Peru under the ATPDEA.

© Copyright 2010 USA-ITA, All rights reserved.

In this TDM:

  • Administration's 2010 Trade Agenda Focuses on Enforcement
  • CPSC Will Consider Final Civil Penalty Rule in Open Meeting Wednesday

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

    Administration's 2010 Trade Agenda Focuses on Enforcement

    The Office of the U.S. Trade Representative today released a trade agenda for 2010 that suggests the Obama Administration will focus heavily on trade enforcement as a way of shoring up U.S. jobs. While the agenda says the Administration supports further trade liberalization, it puts the onus on advanced developing countries like China and India to make better offers in the World Trade Organization, and similarly says Panama, Colombia and Korea need to make more commitments before the free trade agreements with those countries can be finalized.

    The report is due annually to Congress and includes both a forward looking agenda and a look back at what the Administration did during the prior year.

    Enforcement can be expected to play a major part in 2010, during which the USTR says it will strengthen monitoring and enforcement of trade commitments and will bring new WTO dispute settlement cases as necessary. The agenda says support for the multilateral system "can occur through better enforcement of existing rights," and says WTO dispute resolution is a "vital avenue" for member countries. The report also says enforcement is one way the Administration will try to achieve its goal of doubling U.S. exports over the next five years, which was announced as the Administration's National Export Strategy in February. According to the report, the Administration has created an export promotion cabinet that will advocate for U.S. exports.

    Highlighting "accomplishments," the USTR-drafted report focuses extensively on China, noting that the U.S. imposed a safeguard on Chinese tires, saw a WTO victory in an IPR/distribution case, and brought a case against Chinese raw materials export restraints.

    This year, USTR expects to "report and act on new measures instituted [by foreign governments] in 2009," because new market barriers are springing up in areas such as consumer protection and food safety. Notably, USTR says it will examine human rights commitments more closely, and will seek a "regular, high-level dialogue" with China, India, Mexico, Canada and the European Union to elevate trade and labor discussions.

    The agenda also says USTR will try to make the U.S.-China Joint Commission on Commerce and Trade "more effective" by focusing on current market issues, and indirectly noted China’s indigenous innovation policy (which favors local innovation over foreign innovation) as one likely topic for discussion. USTR also wants to focus on innovation policy in India, along with services and agricultural market access and investment. USTR wants to set up a framework for discussing trade formally with Brazil, and says it is awaiting signals that Russia is serious about joining the WTO.

    The agenda insists the Administration wants to conclude Doha, but says advanced developing nations like China, India and Brazil need to do more, and that the question is whether these countries "will accept responsibility" commensurate with their growing economic influence. USTR gives the Obama Administration credit for trying to save the talks by starting bilateral negotiations and considering sectoral agreements in certain areas.

    The lengthy document does little more than summarize the state of play related to the Administration’s plan to participate in the Trans-Pacific Partnership trade agreement (TPP), and, with respect to the three outstanding FTAs with Panama, Colombia and Korea, the report states only that if the remaining issues can be dealt with, the Administration would seek congressional approval. But the agenda stopped far short of saying these agreements would be advanced.

    In other areas, the agenda called for increased regulatory cooperation with Mexico and Canada related to NAFTA, and said officials are still trying to conclude an overhaul of the model bilateral investment treaty (BIT) so BIT negotiations can resume with China, India, Vietnam and Mauritius.

    CPSC Will Consider Final Civil Penalty Rule in Open Meeting Wednesday

    The Consumer Product Safety Commission (CPSC) on Wednesday is expected to vote on a final rule identifying how the agency will interpret the factors to be considered when seeking civil penalties for violations of the laws it administers.

    Under the law, the factors the Commission is required to consider in determining the amount of a civil penalty to seek include: the nature, circumstances, extent and gravity of the violation, including the nature of the product defect or of the substance, the severity of the risk of injury, the occurrence or absence of injury, the number of defective products distributed or the amount of substance distributed, the appropriateness of the penalty in relation to the size of the business of the person charged, including how to mitigate undue adverse economic impacts on small businesses, and such other factors as appropriate.

    The interpretation of these factors takes on increased significance in light of the higher civil penalties established under the Consumer Product Safety Improvement Act. The maximum penalties per violation increased from $8,000 to $100,000, and up to $15 million for any series of product safety violations.

    An interim final rule has been in place since September 2009. The new proposed final does differ in some places from the interim final rule, in response to public comments that the CPSC received. For example, the CPSC revised the final rule to acknowledge that not all violations will involve a "product defect." Where "product defect" or "defective product" does not apply, the other statutory factors will be considered.

    © Copyright 2010 USA-ITA, All rights reserved.

In this TDM:

USA-ITA Files Comments Opposing Withdrawal of GSP For Sleeping Bags

Following Commerce Findings of Dumping and Subsidies, Textile Related Trade Remedy Investigations Returning to the USITC

In this TDM:

USA-ITA Joins With Businesses, NGOs, and Trade Associations to Release White Paper Recommending Comprehensive Approach to U.S. Africa Policy

Obama Says U.S. Must Do More to Promote Business Interests Abroad

Democratic Leadership Institute Releases Trade Fact That Highlights How U.S. Tariffs Hurt Poor and Middle Class Families

Schumer and Graham Press Administration to Make China Currency Countervailable Subsidy
On February 16, 2010, during the MAGIC trade show in Las Vegas, U.S. Trade Representative (USTR) Ron Kirk unveiled a new program to help facilitate growth in Haiti's apparel sector. Under the initiative -- called the Plus One for Haiti program -- concerned companies pledge to work toward sourcing one percent of their apparel from factories in Haiti. Kirk says the Obama Administration is working with Haiti to develop a special logo so that consumers can identify these apparel products made in Haiti.

The Plus One for Haiti program helps apparel consumers participate in Haiti's economic recovery. The program also showcases the companies that are involved in the effort. Following is a quote from Ambassador Kirk:

"To continue to grow Haitian apparel exports and help Haiti’s economy for the long term, additional investment in and sourcing from Haiti is critical. And that is where the Plus One for Haiti program can make a difference. One percent may seem small – but it means new jobs and new opportunities for the Haitian people who so desperately need forward-looking solutions in the wake of January’s devastating earthquake. And critically, a coordinated effort that promises increased sourcing will encourage investors to get Haitian factories up and running again."
USA-ITA attended the press conference with Ambassador Kirk.  For more about the initiative, please click here.