WASHINGTON — Congress sent a trade bill to President Bush on Friday that will renew duty free apparel benefits and could prevent major disruptions in $2.5 billion worth of imports for retailers and apparel importers with production in Africa and the Andean region.
This story first appeared in the October 6, 2008 issue of WWD. Subscribe Today.
“Everyone recognized that we should not let these programs languish and the final result is an affirmation of our commitment to our developing-country trading partners and the important role that rules-based trade can play in fostering development,” said House Ways & Means Chairman Charles Rangel (D., N.Y.).
The multifaceted bill could benefit companies making denim apparel in sub-Saharan Africa, a region that has been losing orders because of a punitive provision in a U.S. trade preference program. The bill eliminates the stipulation in the African Growth & Opportunity Act that requires U.S. apparel importers to use a minimum of 30 million square meter equivalents of African-produced fabric annually to qualify for a benefit allowing them to also use denim fabric from other countries, such as China, and import to the U.S. duty free.
Importers had started cutting back jeans orders in many African countries because of concern they would lose their third-country fabric provision after the U.S. International Trade Commission determined there was a 9 million SME shortfall in the amount of African-produced denim fabric they used last year.
“We are pleased they are eliminating the [African fabric requirement],” said Julia Hughes, senior vice president of the U.S. Association of Importers of Textiles & Apparel. “That is huge for having continuity in business planning for sourcing executives, and I think it will help companies look and find a positive way to shift business back to Africa.”
The legislation also establishes a pilot program in the Dominican Republic to encourage manufacturing of cotton bottoms by U.S. firms by allowing more third-country fabric usage in exchange for using a designated amount of U.S. fabric.
Importers were relieved that lawmakers extended duty free benefits to Peru, Colombia, Bolivia and Ecuador, all part of a U.S. trade preference program that was set to expire. The bill would give a one-year extension of benefits to Colombia and Peru and a six-month extension to Bolivia and Ecuador, with the possibility of another six-month extension if the White House determines the two countries meet the program’s criteria. Bolivia has been singled out recently for failing to live up to its obligations in the counter-narcotics effort with the U.S. and Ecuador has been accused of raising barriers to U.S. investment.
“These programs were urgently needed,” said Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association.
In addition, the bill extends for a year the Generalized System of Preferences, a trade program that promotes economic growth in developing countries and gives duty free entry to 4,650 products, including jewelry, from 131 countries and territories. It does not include apparel imports.