Fashion Intel & Analysis

We’ve received an exclusive scoop: Kim Glas, former Deputy Assistant Secretary of Textiles, Consumer Goods, and Materials at Commerce (and frequent USFIA speaker) will replace Auggie Tantillo as head of the National Council of Textile Organizations (NCTO) when he retires this year. NCTO announced the news to members today and is expected to send a press release tomorrow. We look forward to working with our friend Kim in her new role!

Related, the Trump Administration has selected Lloyd Wood, who has been the Director of Public Affairs at NCTO, as the new Deputy Assistant Secretary for Textiles, Consumer Goods, and Materials at Commerce. We look forward to working with “Woody” in his new role, and we hope he will be joining our meetings beginning this spring.

Today, U.S. Rep. Sean Duffy (R-WI) is expected to introduce the United States Reciprocal Trade Act, which, if passed, may represent the biggest delegation of authority over trade by Congress to the President in history. White House trade adviser Peter Navarro, who has pushed much of the protectionist trade policy agenda, has reportedly lobbied House Republicans to support the bill.

Of course, the Constitution grants to Congress the power to regulate tariffs. Congress often cedes a portion of this authority to the President, giving the President authority to alter tariffs or negotiate changes in tariffs under limited circumstances—for example, as part of the Generalized System of Preferences program, in response to dumping or national security threats, or as part of free trade agreements subsequently voted on by Congress. However, these grants of authority have always been fairly limited, for certain purposes, and/or subject to close congressional oversight. Rep. Duffy’s bill would give the President virtually unrestricted power to regulate tariffs, permitting the President to increase any tariff at any time, if the President disapproves of another nation’s higher tariffs.

It will be interesting to see whether the legislation runs into opposition within the Republican caucus—not for trade policy reasons, but for separation of powers reasons. After all, much of the Republican caucus is skeptical of a “big, unfettered” executive branch and may be skeptical of a ceding of authority over trade to the President.

While it’s important to note that many Members of Congress are skeptical of both the World Trade Organization (WTO) and U.S. free trade agreements, the bill is a clear violation of the United States’ WTO and free trade agreement commitments. In these agreements, the United States agrees to a package of tariffs covering thousands of tariff lines. At the end of the day, as part of the deal, some of the United States’ tariffs are higher than trading partners’ tariffs while some are lower. Rep. Duffy’s bill would permit the President to unilaterally increase U.S. tariffs whenever they are lower than other countries’ tariffs, permitting the President to withdraw U.S. concessions (or take back low tariffs) from prior trade negotiations and keep only the tariffs they like.

When asked about the bill, Senate Finance Committee Chairman Chuck Grassley, a Republican, told reporters, “We ain't gonna give him any greater authority.” However, we’ll continue to watch this legislation for movement.

USFIA Washington Counsel David Spooner of Barnes & Thornburg contributed to this report.

The Office of the U.S. Trade Representative (USTR) released the objectives for the U.S.-European Union trade negotiations. “The United States seeks to support higher-paying jobs in the United States and to grow the U.S. economy by improving U.S. opportunities for trade and investment with the EU,” says the document, which was released while EU Trade Commissioner Cecilia Malmström was visiting Washington, DC. “U.S. exporters in key sectors have been challenged by multiple tariff and non-tariff barriers for decades, leading to chronic U.S. trade imbalances with the EU. For example, the trade deficit in goods with the EU was $151.4 billion in 2017,” the document continues.

Regarding apparel, the objective is to “secure duty-free access for U.S. textile and apparel products and seek to improve competitive opportunities for exports of U.S. textile and apparel products while taking into account U.S. import sensitivities.” The objectives also specifically note textiles in the rules of origin objectives: “Establish origin procedures that streamline the certification and verification of rules of origin and that promote strong enforcement, including with respect to textiles” (emphasis added).

The full document is available here.

As a reminder, USTR has run out of funds and all but “excepted personnel” are furloughed; the agency continues to conduct trade negotiations and enforcement operations.

In a letter to U.S. Senator Tim Kaine (D-VA), U.S. Trade Representative Robert Lighthizer provided an update on the Section 301 tariff exclusion process as well as how the tariffs will be applied to merchandise entering the United States through a foreign trade zone (FTZ). He writes, “USTR continues to address exclusion requests for the $34 billion and $16 billion tariff actions. In December, USTR granted nearly 1,000 requests to exclude certain products from the $34 billion tariff action.” He adds USTR has not established an exclusion process for the $200 billion tranche “at this time,” though it may be initiated if the tariffs increase to 25 percent after the March 2nd deadline for the United States and China to complete negotiations. With regards to products imported from China through FTZs, “the longstanding rules and practices governing such entities continue to apply…At this time, we have not found a basis for exempting U.S. importers who use FTZs from the additional duties, when those duties apply to all other U.S. importers.” The letter is available here.

As of January 1, 2019, according to a new California law, any customer of a port drayage carrier will be liable for unpaid wages, unreimbursed expenses, damages, and penalties due to the carrier’s commercial truck drivers if the carrier is found on a new list published by the State of California Department of Industrial Relations. A “customer” is identified as “a business entity, regardless of its form, that engages or uses a port drayage motor carrier to perform port drayage services on the customer’s behalf, whether the customer directly engages or uses a port drayage motor carrier or indirectly engages or uses a port drayage motor carrier through the use of an agent, including, but not limited to, a freight forwarder, motor transportation broker, ocean carrier, or other motor carrier.” The list is available here. USFIA Customs Counsel McGuireWoods has more information on the new law and how to protect yourself from liability.