May is World Trade Month, and it certainly was a busy one for those of us in Washington, D.C., who care about U.S.-China trade relations and the need to reduce barriers to trade. Keep reading for more about our advocacy and media efforts to talk about the importance of this trade relationship for U.S. jobs and our work to keep textiles and apparel off the list of products subject to new tariffs.
For anyone interested in trade, you already know that during this week, the Office of the U.S. Trade Representative (USTR) held a three-day hearing on the proposal to add new products to a list of products from China subject to tariffs under Section 301 of the Trade Act of 1974. USFIA President Julia K. Hughes testified on Day #2 of the hearing, explaining how trade supports jobs across the global value chain—and how new tariffs would constitute a huge, regressive tax increase on American families. POLITICO PRO covered the debate between the fashion and retail industry and the domestic textile producers, and explained just how many American jobs (1 in 4!) in our industry are supported by imports from China.
The day after we testified, Sourcing Journal published an op-ed by Hughes explaining how new tariffs on China won’t bode well for “skirting” a trade war. (We love a good fashion pun!)
In case you missed any of the comments, the links are below.
- USFIA Testimony
- USFIA Op-Ed in Sourcing Journal
- USFIA Post-Hearing Rebuttal Comments
- U.S. Global Value Chain Coalition Post-Hearing Comments
- Multi-Industry Association Post-Hearing Comments
Hughes also participated in a timely event hosted by the Washington International Trade Association (WITA) featuring U.S. Rep. Rick Larsen (D-WA), who serves as co-chair of the U.S.-China Working Group, and association presidents from the American Chemistry Council, Information Technology Industry Council, Alliance for American Manufacturing, U.S. Grains Council, and of course, USFIA.
Larsen expressed his opposition to the Section 232 tariffs, saying that U.S. trade policy right now is an approach “straight out of the 80s—the 1880s!” He said the United States must be “forward-thinking in setting the rules of trade,” because “we have a lot to lose if we don’t.” He also said we need to get back in the Trans-Pacific Partnership (TPP) because we are losing our competitive advantage to TPP-11 and China. Following his remarks, the other panelists discussed trade and tariffs, and generally agreed that we need to find ways to deal with the China IP challenges, though there was some disagreement on whether tariffs work or not. (You know where we stand!)
While the 301 tariffs seem to be delayed, for the moment, don’t expect this issue to go away any time soon—and definitely don’t expect to see a drastic change in U.S. trade policy or the rhetoric from the Trump Administration about imports and tariffs. We encourage all members to join us in Washington in July to hear from policymakers first-hand and express your concerns with personalized meetings on Capitol Hill. Click here for details and registration.
USFIA Sourcing Supporter PROCOLOMBIA invites you to two exciting sourcing events: Colombia Full-Package Innovation Showroom in New York City in June, and COLOMBIAMODA in Medellin in July. Explore the duty-free, flexible, vertically integrated opportunities available under the U.S.-Colombia Free Trade Agreement!
Colombia Full-Package Innovation Showroom – June 14-15, 2018
Join PROCOLOMBIA in New York City to meet vertically integrated vendors from Colombia. This showroom will feature the latest product developments by some of the country’s top manufacturers of knits and wovens, performance/athletic wear, denim, uniforms, casual wear, intimates, swimwear, formalwear, and more! The event will include a breakfast panel featuring top industry leaders on June 14th, followed by two days of one-to-one meetings and the showroom of Colombian vendors and mills.
COLOMBIAMODA – July 24-26, 2018
You’re invited to COLOMBIAMODA, one of the largest business platforms in Latin America, which integrates business, knowledge, and the latest fashion trends in the same place.
Take advantage of the textiles, apparel and sourcing week where major world class buyers meet the main Colombian and Latin-American Vendors in many categories including casual wear, denim, beachwear, lingerie and underwear, shapewear, childrenswear, activewear, outdoor clothing, and much more in targeted pavilions covering all categories, textiles/fabrics (with special focus on technical textiles) as well as footwear and leather goods.
Approved and confirmed buyers can get complimentary airfare (covered 50 percent or 100 percent on a first-come, first-served basis) as well as flexible hotel rates, customized agendas, and personalized meetings.
Board Member Company Levi Strauss & Co. has an innovative way to make jeans greener. When you wanted worn, vintage-look jeans, you used to use pumice stones and about 15 different kinds of chemicals. This process took manufacturers 20-30 minutes by hand per pair of jeans. Today, however, Levi’s is utilizing digital image files and fabric-zapping lasers to whiskers, worn spots, crackle textures, and other features commonly found on trendy distressed jeans. Even better, Levi’s is doing this with fewer hazardous finishing chemicals, working towards its goal of eliminating discharge of hazardous chemicals by 2020, and an expansion of its water recycling program. This process is not only greener, but also significantly faster. How fast? Try 90 seconds! Click here to watch how the process works.
Join the Cotton Board
In the News
This month, The Federalist Society, a prominent conservative and libertarian legal non-profit think tank in Washington, D.C., produced a short documentary, Fashion & Free Trade: Questions About Globalism, Tariffs, & Trade, featuring USFIA President Julia Hughes and USFIA Washington Counsel David Spooner, as well as NCTO’s Auggie Tantillo. The documentary has been widely shared and well received among pro-trade influencers in Washington, D.C. You can watch the documentary here.
In Case You Missed It…
May 16: USFIA testified at USTR’s Section 301 hearing in Washington, D.C. Click here to read our testimony.
May 17: USFIA President Julia Hughes spoke at the Washington International Trade Association (WITA) event on U.S.-China trade relations, featuring Rep. Rick Larsen (D-WA) and association presidents.
May 24: USFIA and the UN Global Compact hosted a roundtable in New York City on the UN’s Sustainable Development Goals. Almost 20 brands and retailers heard about the SDGs and the projects that directly affect the fashion industry. The Water Stewardship Apparel Initiative and a project called Setting Science Based Targets are especially interesting. Stay tuned for more information from the UNGC, and let us know if you want a copy of the presentation.
May 24: USFIA and Akin Gump hosted a webinar, Update on NAFTA.
Calendar of Events
May 31 (London): BSI and C4ADS will host an event, Identifying and Mitigating the Risk of Forced Labor & Exploitation of North Korean Nationals in Your Supply Chain.
June 26-28 (Brussels): The Better Cotton Initiative (BCI) will host the Global Cotton Conference.
November 7 (New York, NY): SAVE THE DATE for USFIA’s annual conference—and stay tuned for an exciting announcement about the event!
November 8 (New York, NY): The USFIA Board of Directors will meet.
The legal premise of innocent until proven guilty gets turned on its head with the passage of the “Countering America’s Adversaries Through Sanctions Act” known as CAATSA. At a government meeting last week, representatives from the Departments of Homeland Security, State, Labor, and Treasury participated in a panel discussion of addressing North Korean forced labor in the supply chain.
A kickoff of the two hour meeting by Assistant Secretary (Homeland Security) Michael Dougherty and Deputy Assistant Secretary (State) Scott Busby set the stage for highlighting the seriousness of this enforcement focus that is starting to descend on the import community. The government officials were joined by Greg Scarlatolu, Executive Director, Committee for Human Rights in North Korea, and Bob Mitchell, Vice President, Responsible Business Alliance.
The panel focused specifically on CAATSA Section 321(B) which provides for sanctions on goods produced by North Korean forced labor. It was stressed that these sanctions are part of the Administration’s larger strategy regarding the denuclearization of North Korea.
The State Department indicated in the last call for information on forced North Korean labor from U.S. embassies around the world, 39 countries reported the use of such labor. In the latest call for information, the number of countries reporting the use of forced Korean labor has risen to 59. China exceeds the number of laborers followed by Russia, and various Southeast Asian nations along with those in Latin America. While North Korean forced labor has been used in the countries of the Middle East and Africa it appears that here it is part of a construction labor force.
Key industries where North Korean forced labor is used include textiles and footwear, mining, seafood, logging, and pharmaceuticals.
The panel stressed the need for comprehensive due diligence by and on behalf of U.S. companies involved in importing goods. Careful consideration of, and reasonable care with respect to, the different risks presented in your supply chain should always be taken into account when importing into the United States. Failure to do so will result in seizures, penalties, and possible criminal prosecution.
The presumed prohibition of merchandise mined, produced, or manufactured with North Korean nationals or citizens may be overcome by “clear and convincing evidence.” Clear and convincing evidence is a higher standard of proof than a preponderance of the evidence. Determining that the importer has met this standard will be under the authority of U.S Customs and Border Protection. Importers will have to show clear evidence that the goods were not produced with convict labor, forced labor, or indentured labor.
You are encouraged to read the newly published FAQ document which can be found posted on the Department of Homeland Security’s website. One area to note is section 8 of the document entitled: “What steps should my company take to ensure North Korean workers are not in our supply chain?” While many questions were raised regarding the due diligence aspect, the government was adamant that when it comes to due diligence there is no such thing as one size fits all. In addition, they stressed that use of prior disclosure may mitigate the penalty, but does not exonerate one from having committed a violation.
I highly recommend intense training on this issue and that someone in the corporate legal department and someone in the import compliance department join forces to ensure that strong corporate measures are in place to address this hot burner issue.
Please contact Vandegrift if you have received a CF28 on this issue or been contacted by directly by CBP regarding North Korea forced labor.
This article was reprinted with permission from Janet Labuda, Vice President of Global Compliance at Vandegrift.