Fashion Intel & Analysis

            USA-ITA filed comments today with the U.S. Trade Representative’s office on two of the three pending free trade agreements, the U.S.-Colombia Trade Promotion Agreement and the Korea-U.S. Free Trade Agreement.  USTR had requested public comment on whether there has been progress in Colombia on protection of worker rights and on whether the Korea agreement, often referred to as KORUS, promotes the negotiating objectives set out in the Bipartisan Trade Promotion Act and the May 10, 2007 Congressional-Executive Agreement on Trade Policy (the so-called “May 10 Agreement”).

 

            In its comments, the association expressed its support for both free trade agreements and cited how the agreements meet each U.S. objectives as well as how the agreements could have included terms that would have encouraged even more business.  For a copy of USA-ITA’s comments, contact USA-ITA.

The Obama Administration on late Friday announced its decision to provide relief to the United Steelworkers in response to their petition for a safeguard measure against increased imports of consumer car and truck tires made in China.  The safeguard comes in the form of tariffs that are lower than what the U.S. International Trade Commission had recommended, but are nonetheless substantial – starting at 35 percent rather than 55 percent -- and will be in place for the full three year period that the Commission has proposed. 

 

China has responded swiftly, although indirectly, with announcements of the initiation of antidumping investigations against U.S. products entering the Chinese market, sending a strong signal that it will not tolerate a spate of new safeguard measures by the U.S. and also sending a not-so-subtle message that measures against allegedly unfair trade practices are appropriate while strikes against fairly traded goods are not.  Instead, China is essentially saying, the safeguard measure constitutes the very protectionism that President Obama, as a signatory to a recent G-20 joint statement, had promised not to practice.  The China product specific safeguard is based simply on increased imports, not allegations of unfair trade.

         

            There had been some hope that President Obama would look for a solution that did not involve border measures, but no creativity was on display with this decision.  Instead, the administration simply attempted to find a possible middle ground through tariffs that are lower than the ITC’s recommendation.

 

This decision now stands as an apparent wide open invitation to labor unions to file new China safeguard (Section 421) petitions, regardless of the positions of their employers.  In particular, the decision may give the U.S. textile industry further hope that it could convince Workers United, which represents some apparel workers, to file a petition that might win action from this administration.  But, China’s apparent retaliation, in the form of investigations of U.S. origin auto parts and poultry – two products that have already been the subject of WTO proceedings, with China forced to lower its tariffs on auto parts after the U.S. prevailed before the WTO and China now pressing forward with a WTO challenge to U.S. import restrictions on Chinese-processed chicken – is likely intended to try to make the tires case the high-water mark for administration approval of Section 421 remedies rather than the opening of the floodgate.

 

 

 

Nevertheless, other U.S. industries are also likely to be encouraged by the President’s decision, so there could be a number of petitions filed in the near future, although the exact timing may depend on when industries believe they would have the greatest political leverage over the administration.  That could mean that petitions are timed so that the President’s decision is due when Congress is likely to face votes on issues of key importance to the administration, or before the November 2010 congressional elections.  It is worth recalling that even though the Bush Administration rejected relief in the four China safeguard petitions it considered, it did play the protection card when the politics dictated it.  For example, that administration it imposed a global steel safeguard in 2002, in advance of the congressional mid-term elections, and in 2008, another election year and a period when it had hoped to move forward with pending free trade agreements, it imposed a safeguard on socks made with U.S. yarn under DR-CAFTA.

 

There is now a one year window for new section 421 petitions to result in full three year periods of relief, because the product specific safeguard expires on December 10, 2013. 

 

Notably, the sparsely worded administration announcement and proclamation on tires, indicating only that the President accepted the ITC’s determination that there was “market disruption” caused by increased imports and that the decision was based upon "the law and the facts in this case," gives little clue how the administration will distinguish subsequent requests, assuming it decides it wants to do that.  Certainly there are a number of ways in which apparel could be distinguished from consumer tires, particularly since apparel has already been the subject of the special three year textile safeguard, and before that, the 40-plus year quota program. 

 

In the days before the Friday night decision, there were press reports that the U.S. Trade Representative’s office came to believe that some remedy must be doled out in order to keep labor unions in the administration’s corner, in particular to ensure there is support for trade-related legislation that might be considered in the future.  More immediately, the administration may have been concerned about ensuring the support of labor for its health insurance reform legislation (especially since there is no apparent timing for the administration to move any trade legislation).   The President also was under pressure to make good on his campaign promises to labor that he would “enforce” U.S. trade laws.

 

 

 

            The Department of Labor today published a list of 122 products from 58 countries that the Bureau of International Labor Affairs (ILAB) believes are produced by forced labor, child labor or both “in violation of international standards.” The generation of the list is required by the Trafficking Victims Protection Reauthorization Act of 2005.

 

            The list describes 12 products from China, including cotton, footwear, garments, textiles, toys, Christmas decorations, artificial flowers, electronics, nails and fireworks. It lists 19 products from India, including silk fabric, footwear, and leather goods. A total of 58 countries are listed, and of the 122 products; 60 agricultural goods are listed, and 38 manufactured goods are listed. Cotton was cited in 15 countries, garments were cited in six countries, and footwear was cited in five countries.

 

            The report said Labor has given more than $720 million in funding to combat child and forced labor practices overseas, and indicated its hope that awareness of these practices motivates governments and other stakeholders “to end these unacceptable practices.” The list of goods cited by ILAB begins in the second page of the report, which can be found at: http://www.dol.gov/ilab/programs/ocft/PDF/2009TVPRA.pdf.

 

            ILAB is also proposing an update to the list of products made by forced or indentured child labor, pursuant to a 1999 executive order. That list will be available Friday, and will cite 29 products from 21 countries.

            The new chairwoman of the Consumer Product Safety Commission (CPSC), Inez Moore Tenenbaum, told a House panel today that it is “premature” to say whether the Consumer Product Safety Improvement Act of 2008 (CPSIA) should be amended in Congress in ways that would give the commission the flexibility to exempt certain products from safety testing requirements. However, Tenenbaum agreed that amendments “may” be required, and said the CPSC would know shortly if problems industry has with testing requirements can be worked around in the context of the current law, or whether amendments will be needed.

 

            In today’s hearing at the House Energy and Commerce Committee’s subcommittee on Commerce, Trade and Consumer Protection, Tenenbaum pledged to work with industry and Congress on these issues as they develop.

 

            The CPSIA has been criticized by Republicans and small businesses for its rigid requirement that the CPSC require testing for all children’s products that contain lead and other hazardous materials, without looking at the actual risks posed by these materials. Tenenbaum was asked repeatedly about this issue today, but the most productive line of questioning came from Rep. John Dingell (D-MI), who used to chair the full committee.

 

            Dingell asked Tenenbaum whether she supports targeted amendments to the CPSIA, to which she replied that it is “premature” to answer this because CPSC is making progress with many industry groups that have complained about excessive testing requirements. She said the commission is solving many of these issues in talks with industry, and said the CPSC would know in “some time” whether any problems cannot be solved. In those cases, she said, amendments “may be required,” but she did not offer specifics.

 

            Examples raised in her conversation with Dingell included cotton shirts that may not need to be tested if it can be shown that the shirt buttons contain an acceptable level of lead, and ATVs and bicycles that might be able to be altered to ensure lead is inaccessible.

 

           

 

Tenenbaum also told Dingell that she believes the CPSC is understaffed, and said she would be free to talk about CPSC’s FY 2010 budget request after September 14. In her testimony, Tenenbaum said she wants the CPSC to update its information technology system, increase outreach to consumers, and update agreements with border officials to improve border enforcement.

 

            The opening of the hearing was marked by a clear division between Republicans and Democrats over whether CPSIA needs to be amended. Ranking Subcommittee Member George Radanovich (R-CA) said the tough CPSIA requirements are making it too costly for small businesses to test all products, which is hurting them at a time when the overall economy is fragile, a point mirrored by Rep. Joe Barton (R-TX), ranking member of the full committee. But Subcommittee Chairman Bobby Rush (D-IL) and full committee chairman Henry Waxman (D-CA) both defended the law; Waxman in particular said it would be a mistake to retreat from the law’s tough provisions just because product recalls have fallen from their peak in 2007.

 

The new chairwoman of the Consumer Product Safety Commission (CPSC), Inez Moore Tenenbaum, is scheduled to testify on Thursday before the House Energy and Commerce Committee’s subcommittee on Commerce, Trade and Consumer Protection. The oversight hearing is expected to discuss “current issues and a vision for the future.”

The hearing comes nearly 13 months after the Consumer Product Safety Improvement Act of 2008 was signed into law, and it marks the first hearing by this committee on the CPSIA since it was enacted. Tenenbaum will be the only witness at the hearing, a fact that prompted Republicans of the Committee to complain, in a letter to the Committee’s chairman, Rep. Henry Waxman (D-CA), that the discussion will not represent the businesses most affected by implementation of the new law.

Nevertheless, the hearing could offer a glimpse into both this key Committee’s thinking and whether the now-full complement of five commissioners would support legislative fixes to the CPSIA. So far, there are no signs that Democrats on the Committee are interested in amending the law to address some of the problems already identified by the CPSC, such as the absence of any legal authority for the CPSC to weigh the risk of lead absorption in determining whether to bar the use of crystal beads as decoration on children’s clothing.

The new chairwoman of the Consumer Product Safety Commission (CPSC), Inez Moore Tenenbaum, is scheduled to testify on Thursday before the House Energy and Commerce Committee’s subcommittee on Commerce, Trade and Consumer Protection. The oversight hearing is expected to discuss “current issues and a vision for the future.”

 

            The hearing comes nearly 13 months after the Consumer Product Safety Improvement Act of 2008 was signed into law, and it marks the first hearing by this committee on the CPSIA since it was enacted.  Tenenbaum will be the only witness at the hearing, a fact that prompted Republicans of the Committee to complain, in a letter to the Committee’s chairman, Rep. Henry Waxman (D-CA), that the discussion will not represent the businesses most affected by implementation of the new law.

 

            Nevertheless, the hearing could offer a glimpse into both this key Committee’s thinking and whether the now-full complement of five commissioners would support legislative fixes to the CPSIA.  So far, there are no signs that Democrats on the Committee are interested in amending the law to address some of the problems already identified by the CPSC, such as the absence of any legal authority for the CPSC to weigh the risk of lead absorption in determining whether to bar the use of crystal beads as decoration on children’s clothing.