By  on April 14, 2005

WASHINGTON — Sen. Chuck Grassley (R., Iowa), chairman of the Senate Finance Committee, said Wednesday there appears to be “some” movement in support of the Central American Free Trade Agreement among senators with textile constituencies.

“I did talk to a couple of senators last week that indicated to me they thought there was some turnaround on textiles,” Grassley told a small group of reporters waiting for the tram to the Hill after the first formal hearing on CAFTA, which faces an uphill battle in Congress. “Obviously sugar and textiles are still on the table, with maybe a little less concern about textiles than before.”

However, the real battleground is in the House and opposition among textile-state lawmakers remains strong. There are blocs of House Republicans, including Textile Caucus members, joining a swath of Democrats who have said they will vote against CAFTA because they feel its duty-free benefits could cause further job erosion in U.S. manufacturing.

President Bush has not yet sent CAFTA to Congress for consideration. The administration has made overtures in recent months to textile executives to garner support for the controversial pact. At the same time, the administration has just self-initiated a review of surging Chinese apparel and textile imports to consider whether to impose temporary safeguard quotas on $624.5 million worth of shipments. Trade experts have suggested the move was intended to persuade GOP textile-state lawmakers to back CAFTA.

Meanwhile, senators seized on their first formal opportunity to grill a top administration official Wednesday at the Senate Finance Committee’s CAFTA hearing, where textiles and apparel figured prominently.

Grassley asked acting U.S. Trade Representative Peter Allgeier how important it is for the U.S. textile industry that the CAFTA region remain competitive against China, noting that 71 percent of the apparel in the area imported to the U.S. is made from U.S. yarn and fabrics.

“CAFTA is essential for the continued competitiveness of our textile industry, fabric and yarns,” said Allgeier. “That is because…quotas have been removed and we are already seeing enormous shipments from China and other providers.”

He maintained that tariff preferences will be the only competitive advantage for Central American and Dominican Republic producers in a quota-free world.Sen. Jim Bunning (R., Ky.) raised questions about transshipments and whether CAFTA would open the door to transshipped fabric and yarns from China. Allgeier said the rules of origin contained in CAFTA are specific “about monitoring and enforcement, and preventing transshipments…and we expect them to operate effectively.”

“It’s not their interest to have transshipments because then the benefits of this agreement will certainly be questioned by the U.S.,” he said.

Bunning cited an International Trade Commission report, which stated CAFTA could encourage the use of third-country yarn and fabric, particularly from China, in the assembly of apparel in the region, instead of U.S. materials.

“They [five Central American countries and the Dominican Republic] want to be part of a partnership with the U.S.,” Allgeier said. “It’s a critical element in their ability to compete and our ability to compete using fabric and yarn from the U.S.”

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