Fashion Intel & Analysis

On December 16, 2009 Congressmen Joseph Crowley (D-NY) and Kevin Brady (R-TX) introduced H.R. 4316, the Affordable Footwear Act. The legislation would eliminate the tariffs on most low-cost and children’s footwear.
Representatives from the Senate Finance Committee and the Office of the U.S. Trade Representative are working on a compromise solution so that the Alabama Senators, Richard Shelby (R-AL) and Jeff Sessions (R-AL), will release a “hold” on Senate consideration of the extension for the Andean and GSP duty-free programs. Shelby said he would block passage unless action is taken to remove the GSP eligibility for sleeping bags made in Bangladesh. Alabama-based Exxel Outdoors, Inc. claims that these sleeping bags made in Bangladesh should not receive GSP treatment, and that their competitors moved production from China to Bangladesh because of the GSP duty-free access.

In addition to Shelby’s hold, Senator Olympia Snowe (R-ME) wants action on her proposal to create a new Assistant U.S. Trade Representative position for small business before she will vote for the extension. However so far Snowe does not have a “hold” on the bill.

We could know by late tomorrow whether the stay of enforcement of the new lead content standard is going to be continued after February 10, 2010, and for just how long. Two proposals are now being considered by the Consumer Product Safety Commission (CPSC). The Commission agreed this morning to conduct a “ballot vote” tomorrow on a proposal to lift the current stay of enforcement for lead content testing under the Consumer Product Safety Improvement Act (CPSIA) either 1) in August 2010, while providing some flexibility for products if the capacity to test for lead content is not adequate, or 2) the date that is six months after the CPSC issues rules addressing testing frequency, sampling methods and other required rules.

Tomorrow’s planned vote, which will be done by written ballot from each commissioner rather than in an open session, is effectively an ad hoc compromise reached by Democratic and Republican commissioners during the course of an open meeting today. At that meeting, Democratic commissioners, led by Chairwoman Inez Tenenbaum, initially appeared ready to accept a staff proposal to lift the stay on enforcement of the lead content testing requirement by August 2010. But this proposal led to counter-proposals from the two Republican commissioners – Anne Northup and Nancy Nord.

Northup argued that the CPSC should not be setting firm dates for lifting the stay of enforcement in light of its inability to finalize its “15 month” rules – so called because were required by mid-November (15 months after enactment of the CPSIA). In addition, the CPSC still needs to set out guidance on which products qualify as children’s products that will require third-party testing.

Northup described her proposal as a way to set a date certain, but one that occurs only after all necessary rules are in place. Tenenbaum agreed that the stay cannot be lifted until these other rules are in place, in particular the rule for testing component parts. However, she said she still prefers a final date certain, and said it is anticipated that all the required rules should be in place by August.

The CPSC also agreed to split off the delayed stay of enforcement of lead content testing from a larger proposal that identifies safety rules and products for which the stay will definitely be lifted after February 10, 2010. The CPSC voted that it will lift the stay of enforcement then for items like dive sticks and bicycle helmets, as well as furniture and paint in cans.

USA-ITA is among a coalition of companies and associations that sent a letter to the CPSC this week urging continuation of the stay of enforcement. A copy of that letter is on the USA-ITA website.

The House of Representatives adjourned without taking action to extend the hundreds of duty suspension bills that are scheduled to expire on December 31, 2009. However, the House Ways and Means Trade Subcommittee leadership did introduce the Miscellaneous Tariff Bill of 2009. In a statement from Trade Subcommittee Chairman Sander Levin (D-MI) and Ranking Member Kevin Brady (R-TX), they say that they will work with the Senate to pass the legislation as soon as possible in 2010. The bill extends duty-free treatment or reduced duties for three years, until December 31, 2012. More than six hundred products are included in the bill.

The National Textile Association has posted a note on its website stating that NTA and NCTO have filed letters with the Senate Finance Committee identifying their objections to two dozen proposed miscellaneous tariff bills involving textile and apparel products. These include bills that would provide retroactive duty free treatment to products under DR-CAFTA and prospective duty reductions to certain knit to shape sweaters.

They argue that the items covered by those bills compete with products made in the United States or are not eligible for the FTA benefits. Other bills NTA objects to cover certain women's sports bras and tank tops made with fabrics NTA says its members make. The sweater bills were challenged on the grounds that they are made of yarns of a type made in the U.S. and duty reductions would “exert downward price pressure on competing products made in the U.S.”

The House and Senate will only include in their MTB packages those bills that are non-controversial (as well as reducing U.S. revenues by no more than $500,000 and being “administrable”).