Fashion Intel & Analysis
Today, the United States Fashion Industry Association (USFIA) joined industry organizations in the United States, Canada, and Mexico in sending a letter to the North American Free Trade Agreement (NAFTA) trade negotiators to reiterate support for Tariff Preference Levels (TPLs) and express concern over “onerous chapter notes” regarding pocketing, elastics strips, or sewing thread in the rule of origin. The letter is available here.
White House Trade Adviser Says “We Lost the Trade War Long Ago”
About two weeks ago, Treasury Secretary Steven Mnuchin said the Trump Administration was “putting the trade war on hold” during the negotiations with China. Of course, this week, the White House surprised everyone with an announcement of a 25 percent tariff on $50 billion of goods imported from China containing “industrially significant technology,” as we reported. Today, White House trade adviser Peter Navarro said Mnuchin’s use of the phrase “trade war” was “an unfortunate soundbite,” and that “what we’re having with China is a trade dispute, plain and simple. They engage in a whole range of unfair trade practices.” He continued that “the president has said we lost the trade war long ago. President Obama, Bush, Clinton lost this when we got into bad trade deals like NAFTA. And when China got into the World Trade Organization in 2001, which President Clinton pushed, that’s been just devastating.” POLITICO has more on the back-and-forth between Trump Administration officials.
Today, May 29th, the Trump Administration surprised everyone with the release of an announcement of a 25 percent tariff on $50 billion of goods imported from China containing industrially significant technology, including those related to the “Made in China 2025” program. The final list of covered imports will be announced by June 15, 2018, and tariffs will be imposed on those imports shortly thereafter. In addition to the tariffs, the Administration announced investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology, as well as continued pursuit of litigation at the World Trade Organization (WTO) for violations of IP rights. The announcement is available on the White House website. We don’t know any additional details at this time, but will continue to provide information as we have it.
CBP Trade Symposium Registration Opens Today
The U.S. Customs & Border Protection (CBP) 2018 Trade Symposium will take place August 14-15 in Atlanta, Georgia. Registration will open today, Tuesday, May 29, at 12:00 PM ET. This event usually sells out quickly, so we encourage you to register as soon as possible!
This year’s event will include discussions on trade transformation (including Section 232, FTAs, and the WTO), e-commerce, trade enforcement results, emerging technology, regulatory audit basics and services, in-bond, and partner government agencies, as well as one-on-one Center for Excellence & Expertise (CEE) discussions.
Visit https://www.cbp.gov/trade/stakeholder-engagement/trade-symposium for details and registration.
On May 22nd, the United States Fashion Industry Association (USFIA) filed post-hearing rebuttal comments in support of omitting fashion and apparel products from the proposed list of products subject to increased duties under Section 301 of the Trade Act of 1974. Our comments provide more information on industry sourcing trends and how sourcing in China and Asia supports jobs in the United States. The comments are available here.
We also joined comments signed by 52 associations representing U.S. manufacturers, farmers and agribusinesses, retailers, technology companies, importers, exporters, and other supply chain stakeholders expressing concerns about the use of tariffs to address China’s unfair trading practices. The comments are available here.
The U.S. Global Value Chain Coalition (USGVC) also filed comments, available here.
Finally, more than 50 fashion brands and retailers, including many USFIA members, filed comments, as well, available here.
CBP Issues Withhold Release Order on Cotton from Turkmenistan
We’ve been informed by contacts at U.S. Immigration & Customs Enforcement (ICE) Forced Labor Programs that U.S. Customs & Border Protection (CBP) issued a new Withhold Release Order last Friday relating to cotton from Turkmenistan. According to the CBP website, the order covers “all Turkmenistan cotton or products produced in whole or in part with Turkmenistan cotton.” In April 2016, Alternative Turkmenistan News (ATN) and International Labor Rights Forum (ILRF), partners in the Cotton Campaign, filed a formal complaint with CBP against the importation of cotton goods from Turkmenistan. We do not yet have any additional details on the order or goods that have been detained, but will provide updates as we have them.
We encourage you to attend the USFIA Washington Trade Symposium in July for more updates on CBP’s forced labor enforcement.
BetterWork Finds “Important Progress” in Jordan’s Apparel Sector
BetterWork, a program of the International Labour Organization (ILO) the International Finance Cooperation (IFC), has released the Jordan Annual Report 2018: An Industry and Compliance Review, which presents findings and observations from 74 factory assessments completed in 2017. These factories represent about 93 percent of BetterWork participating factories and employ over 62,000 workers. The data reports compliance with labor standards and working conditions based on the eight Better Work clusters. Generally, the report found “important progress” in Jordan’s apparel sector, although significant work remains to be done. The report is available on the BetterWork website.
As reported yesterday, U.S. Customs & Border Protection (CBP) issued a withhold release, or detention, order covering all Turkmenistan cotton and products produced in whole or in part with Turkmenistan cotton. The order is dated May 18, 2018.
The order is in response to an April 2016 petition filed by the Cotton Campaign. The petition names two importers, Ikea (cotton bed linens) and Gamby Global, Inc. (fabric). It is not clear how far beyond the two named importers the detentions will extend, but the order appears to cover the use of Turkmenistan cotton in any products.
“CBP’s decision is an important step towards ending one the most egregious cases of state-orchestrated forced labor left in the world,” said Eric Gottwald, Legal & Policy Director of International Labor Rights Forum, in a statement released by the Cotton Campaign. “Now CBP must put the ban into practice by identifying and stopping specific shipments of goods made with Turkmen cotton,” he added.
“Annually, the Turkmen government forces tens of thousands of public sector employees, including teachers, nurses, and doctors, to pick cotton, pay a bribe or hire a replacement worker, all under threat of punishment, including loss of wages and termination of employment,” said Ruslan Myatiev, editor and founder of Alternative Turkmenistan News in the same statement. “In the 2017 cotton harvest, in addition to forced mobilization of adults, the government of Turkmenistan forced children 10-15 years old to pick cotton in violation of international and domestic laws,” he added. More information on Turkmenistan’s cotton sector is available on the Cotton Campaign website.
If your merchandise is detained: 1) you may export the detained shipments or 2) you may contend that the goods were not made with forced labor. You may obtain release of detained shipments by submitting a certificate of origin and a detailed statement demonstrating that the subject merchandise was not produced with forced labor, e.g., a supply chain audit report. You have three months to make the submission.
CBP will evaluate the evidence on a case-by-case basis. CBP will release the goods if the evidence is deemed satisfactory. Otherwise, CBP will exclude, but not seize, the merchandise.
USFIA Customs Counsel John Pellegrini of McGuireWoods LLP contributed to this report.
By David Spooner, USFIA Washington Counsel, Barnes & Thornburg LLP
As many USFIA members know, the United States and China issued a brief statement Friday evening declaring that China would “meaningfully increase” its purchases of U.S. agriculture and energy exports. On Fox News yesterday, Treasury Secretary Steve Mnuchin said that, as a consequence of this joint statement, the Section 301 tariffs are “on hold.” U.S. Trade Representative Bob Lighthizer, though, quickly issued a statement to reporters, declaring that the 301 tariffs remain an “important tool.” This Wall Street Journal story seems to be the best summary of the state of play.
While it is a good bet that the tariffs will be somewhat delayed, it is unclear how long they will be delayed and/or unclear whether they will ever go into effect. Frankly, we do not think senior Administration officials have decided on the timing and use of the Section 301 tariffs–and internal Administration rivalries are playing out in public view. This uncertainty is only increased by the reaction to Friday’s joint statement: Many trade hawks and longtime China hands are saying that China’s commitments in Friday’s joint statement are “nothing new” and that China has regularly promised to increase purchases of U.S. goods at the close of U.S.-China meetings and trade missions in recent years.
We will continue to follow the situation closely. The likely delay is, at least, good news.