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House Approves Trade Bill

Legislation would benefit firms making denim in sub-Saharan Africa.

WASHINGTON — The House passed a broad trade bill Tuesday night that would 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.

This story first appeared in the July 31, 2008 issue of WWD.  Subscribe Today.

The multipronged bill could also help domestic textile producers boost their cotton fabric exports to the Dominican Republic. Additionally, it gives more flexibility in the use of third-country fabrics to U.S. apparel manufacturers that produce certain cotton bottoms in the Dominican Republic.

The Senate could take up the bill this week before Congress adjourns for a month-long recess.

“This bipartisan bill helps reaffirm our commitment to trading partners and strengthen our existing trade preference programs,” said House Ways & Means Chairman Charles Rangel (D., N.Y.). “These provisions will help create incentives for the purchase of U.S. goods, supporting businesses and workers here at home while also providing valuable benefits to workers and companies abroad.”

The bill would eliminate a 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 in their apparel or lose a benefit allowing them to also use denim fabric from other countries, such as China, and import to the U.S. duty free.

Importers, concerned they would lose the third-country fabric provision because the U.S. International Trade Commission determined in July they had only used 21.1 million SMEs of African denim fabric in fiscal year 2007, started cutting back jeans orders in many African countries this year, according to Paul Ryberg, president of the African Coalition for Trade, a nonprofit association of African fabric and apparel producers and trade groups.

Ryberg said denim apparel imports from the region fell 20 percent in the first five months of the year. For the year ended May 31, apparel imports from the region totaled $1.2 billion, or 332 million SME, down 9.3 percent from the previous year.

“There has been a dramatic drop-off in U.S. jeans orders since the ITC issued its determination this month,” Ryberg said. “It became obvious that eliminating the provision was the only option at this point. Even African denim producers agreed because they started losing all of their business.”

Julia Hughes, senior vice president of the U.S. Association of Importers of Textiles & Apparel, said, “If the Senate acts, I think we could very well see some of the companies who had held back placing business think again about putting orders back into Africa.”

Another aspect of the legislation 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. The U.S. and the Dominican Republic are partners in the Central American Free Trade Agreement.

The bill also extends through December 2009 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.