WASHINGTON — Congress sent a broad funding bill to President Obama on Thursday, locking into place steep budget cuts this year that will mean a reduction to a wide swath of programs, including the wool trust fund and payments to U.S. wool manufacturers, and could impair ongoing trade negotiations and enforcement of trade cases, and slow down cargo moving through the nation’s ports.
The Senate on Wednesday, followed by the House on Thursday, passed a budget to keep federal agencies running through the fiscal 2013 budget year that ends Sept. 30. Obama is expected to sign the legislation into law.
The budget measure includes the $85 billion in across-the-board spending cuts, known as the sequester, that took effect earlier this month after Congress and the White House failed to reach agreement on long-term spending cuts and deficit reduction. The cuts will slice into the budgets of key agencies that negotiate and enforce trade deals, process billions of dollars of imports and inspect cargo for counterfeits, product safety and security.
“It is impacting everyone across the board, from U.S. manufacturers who count on the [wool trust fund] payments to remain competitive, to U.S. brands and retailers facing delays of their shipments at the ports and will lose sales because of that, to the 4 million workers whose jobs depend on those manufacturers and those sales to U.S. consumers,” said Nate Herman, vice president of international trade at the American Apparel & Footwear Association.
The cuts will hit the Wool Trust Fund, operated by U.S. Customs & Border Protection. It will be reduced by $1 million to $14 million this year under the sequester. The fund, based on tariff collection on wool apparel imports, makes payments to U.S. wool fabric and yarn producers, as well as sheep growers, to encourage more production of wool fabrics.
Customs will see its budget cut by $512 million to $10.2 billion. Department of Homeland Security Secretary Janet Napolitano has warned that the cuts could lead to a slowdown of up to five days in processing cargo container ships at the ports. The fashion industry imported $100.9 billion of apparel and textiles in 2012 and faces significant exposure to port slowdowns.
The U.S. Trade Representative’s office, which is responsible for negotiating free-trade agreements and enforcing rules in existing trade treaties, will see $3.6 million slashed from its $51.3 million budget this year, according to trade officials. Demetrios Marantis, acting USTR, testified at a Senate Finance Committee hearing this week that the cuts will significantly impact the agency’s operations.
“Already, we face the possibility that the sequester alone will hamper our ability to conduct trade negotiations and other market-opening efforts, as well as initiate new enforcement disputes,” Marantis said.
The administration is in talks for the Trans-Pacific Partnership with 10 countries, including Vietnam, the second-largest apparel supplier to the U.S. It is also set to launch trade negotiations with the European Union, as well as a separate international services agreement with 20 other nations.
The Commerce Department, which is leading Obama’s National Export Initiative goal of doubling exports by the end of 2014, is subject to a $2 billion cut to $28 billion this year under the sequester. Within that agency is the Office of Textiles & Apparel, which handles apparel and textile import issues. Commerce is also involved in decisions on antidumping and countervailing duty cases.