By: Mara Lee, International Trade Today
NEW YORK -- At the U.S. Fashion Industry Association trade conference, the group's Washington counsel said that he believes there's a high likelihood that the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill will be passed before Congress goes home in December. USFIA President Julia Hughes added that because some of the members who are retiring are pro-trade, and they recognize that sentiment is waning in Congress, "that's gonna be an impetus to do something during the lame duck. Whether they're successful or not, that's not clear yet."
Former U.S. Trade Representative Rob Portman, a Republican senator from Ohio, is retiring, and he has said he wants a "grand bargain" on trade during the lame duck. Former House Ways and Means Committee Chairman Rep. Kevin Brady, R-Texas, now the top Republican on the committee, also has said he hopes GSP and MTB can get done at the end of the year. He's also retiring from Congress.
Hughes and USFIA Washington Counsel David Spooner were speaking at the conference on Nov. 10, when the balance of power in Congress was not yet clear, but it was clear there would be no Republican "wave" defeating dozens of Democrats in the House. Spooner accurately predicted the Democrats would retain the majority in the Senate. He said the election results were "particularly a disaster for Trumplicans."
Other than GSP and MTB, Spooner expects most of the action on trade issues of interest to apparel importers to be in the executive branch.
One example -- the four-year review of Section 301 tariffs in the Office of the U.S. Trade Representative. In the judiciary branch, importers have tried to challenge the legitimacy of lists 3 and 4A of the Section 301 tariffs on Chinese imports in a lawsuit at the Court of International Trade. Spooner said that if he had to bet on that case, he'd bet it would not be successful.
The administration has been eager to consult with industry about how to improve the short supply provisions in the Central America Free Trade Agreement (CAFTA), Spooner said. He said he doesn't think Congress will rewrite the trade agreement's implementing legislation to loosen the rule of origin for apparel to encourage more use of CAFTA.
In the Q and A, an audience member asked if Nicaragua could be expelled from CAFTA. Spooner said this is a topic lots of apparel lobbyists are talking about, but there's nothing in CAFTA or the law implementing it that permits expelling a member. "I don't see legally how it can be done, but that doesn't mean the United States won't do it," he said. He added: "If I had to bet, I would bet it will not be done, but that's just an educated guess."
Hughes said that such an expulsion "would be a disaster for all of the CAFTA countries." It would go beyond the issue that clothes sewn in Honduras could have Nicaraguan inputs. If any country could be kicked out, it would put a damper on foreign investment in all CAFTA countries, she said.
On the other hand, the U.S. has a fair bit of latitude to expel countries from preference programs, such as the African Growth and Opportunity Act, and did so for Ethiopia because of human rights abuses during a civil conflict in that country.
Spooner noted there was a ceasefire just 10 days earlier. "To be frank, I wish I had more intel about what USTR might do" in terms of restoring Ethiopia's AGOA eligibility, he said.
Customs policy was also a topic during the panel. Arthur Bodek, a partner at Grunfeld Desiderio, said that he's spending about half his time on forced labor cases. He said "when we have some candid conversations with CBP officials, it's clear we're all struggling."
He said CBP didn't think through how much documentation they're asking for when they want to go back to the raw material of an imported good to figure out if it has Xinjiang inputs. He said the information is so voluminous that you cannot email it as an attachment, and if you tried to break it into pieces so that each attachment would come under the data limit, it would take you 12 hours. So CBP is setting up a temporary link for lawyers to upload to, he said.
Moreover, he said that for some importers, a container could have 20 different types of garments, all with different supply chains, and maybe half of them have no nexus to China at all. He thinks CBP should acknowledge that, and just ask for the documents for the garments that are suspected to contain Xinjiang cotton. He also said it would make sense for CBP to focus on the cotton stage, rather than the cut and sew stage, if the factory isn't where forced labor is suspected. If the fabric is the concern, why would you need all the workers' names at the garment factory, he asked rhetorically.
Bodek said many big box stores are requiring importers to do DNA testing on cotton and cotton-blend garments. But he said there are detentions of many items that are not on the priority list under the Uyghur Forced Labor Prevention Act, such as footwear.
He said most detained shipments were exported, and no detained shipments have been able to prove they have a Xinjiang input but no forced labor. He said a small number have been released because importers satisfied CBP that there was no connection to Xinjiang, and "many, many more are still pending."
"So many of the detentions are for goods not even made in China," he said, because CBP is concerned about the inputs to the goods.