WASHINGTON — The House passed a 10-month extension of trade benefits for Colombia, Peru, Bolivia and Ecuador on Wednesday, a move sought by apparel importers and textile producers that benefit from the trade program.
This story first appeared in the February 28, 2008 issue of WWD. Subscribe Today.
The bill was approved by voice vote under special rules that limit debate and require a two-thirds majority.
The preference program, which gives duty-free status to apparel that is made in the four Andean countries and exported to the U.S., could still lapse if the Senate does not act quickly to allow President Bush to sign it before it expires on Friday. That has many apparel importers and textile mills nervous about the loss of duty-free benefits and the potential drop in orders from the region.
U.S. apparel importers shipped $1.23 billion worth of apparel made in the Andean region to the U.S. in 2007. Apparel imports from the region fell 14.3 percent on a volume basis in 2007, primarily because of the uncertainty associated with short-term extensions of the program.
Domestic textile producers also benefit from the initiative because the rules require that U.S. importers largely use American-made fibers, fabrics and yarns in the apparel they make in the four Andean countries. But textile firms have been hurt by the decrease in apparel imports from the region. They exported $190 million in yarns and fabrics to the region last year, down from $207 million in 2006, according to the National Council of Textile Organizations.
Although business groups had pressed for a longer extension, most apparel and textile companies supported the short-term extension to avoid a lapse in the benefits.
“Everyone would have preferred a longer extension, but 10 months is probably enough to give companies the comfort they need,” said Julia Hughes, senior vice president of international trade at the U.S. Association of Importers of Textiles & Apparel. “A lot of production that comes out of the region is cotton knits and we are right at the place where companies are starting to get deliveries for late spring and summer production, which is why it is pretty important to get this completed quickly.”
Cass Johnson, president of NCTO, said “There is already a business risk with these short-term extensions, which causes importers to shy away from placing more orders in the region and U.S. textile producers to lose business.”
The Bush administration and many business groups have pressured Congress to make the Andean trade benefits permanent through bilateral free trade agreements. Bush recently signed into law a free trade deal with Peru, but a free trade pact with Colombia, which the administration wants, has been stymied by assassinations of union activists in Colombia.