WASHINGTON — A divided Congress begins a new two-year session on Wednesday and will immediately face pressure to consider a long-term extension of trade-preference programs, while a trade deal with South Korea will also likely figure prominently in early action.
Given the new pro-trade, business-friendly Republican regime in control of the House and a weakened Democratic caucus controlling the Senate, the session could produce more gridlock than new policy. But international trade is one of the few areas where the two parties could find common ground.
There are several fashion-industry legislative initiatives hanging in the balance in the 112th Congress, ranging from pending trade pacts with South Korea, Panama and Colombia to a design copyright bill that would extend copyright protections to “unique and original” fashion designs for three years and a controversial bill targeting China’s undervalued currency.
The first order of business could be to revisit the scaled-back trade bill that Congress passed in the final hours of the lame-duck session in December, which disappointed many in the business community. The Senate and House essentially approved a stopgap measure to extend for six weeks one of two expiring trade-preference programs for two Andean countries, Colombia and Ecuador, as well as a trade-assistance program for workers laid off because of competition from imports. But lawmakers let expire the Generalized System of Preferences program that had allowed duty free benefits to 131 designated countries covering about 4,800 products.
“It’s a mixed bag,” Stephen Lamar, executive vice president at the American Apparel & Footwear Association, said of the last-minute Congressional action on trade. “There will be a noninterruption for Andean countries but a number of provisions didn’t get included, and what we need is longer-term predictability. We’re looking forward to Congress quickly taking up and passing a longer-term package when they come back.”
The 11th-hour bill also fell short of including provisions to continue funding levels for wool fabric and yarn spinners through the Wool Trust Fund, and did not renew the Cotton Trust Fund, which provides payments to U.S. shirtmakers and cotton fabric and yarn producers, and maintains a pima cotton promotion program.
Incoming House Ways & Means chairman Dave Camp will undoubtedly face pressure from industry groups to reconsider the programs and extend them for a longer period of time. Camp has also said he would like to advance the trio of pending pacts, and some experts believe those bills, particularly for South Korea, will pass in Congress this year, after both governments ironed out meddling differences late in 2010.
“It looks like all three pending trade deals will go through, but after that it is hard to see what will go through in the next two years that will be positive in terms of trade,” said Phillip Swagel, a visiting professor at the McDonough School of Business at Georgetown University. “The parties will start preparing for the presidential election in 2012, which means neither side will want to cede ground.”
Julia Hughes, president of the U.S. Association of Importers of Textiles & Apparel, said, “We are expecting more hearings, more public outreach and more activism on looking at what the big issues are in trade policy affecting the U.S. and new ideas on how to react to them. I expect the [new GOP House leadership] will have some of their own initiatives and will look at how to improve competitiveness, which means it will be a more active time for trade.”
On the other hand, Thea Lee, deputy chief of staff for the AFL-CIO, said she has some reason to believe that Camp, who hails from Michigan, will “share some of the concerns as [his predecessor Rep. Sander Levin, a Democrat from Michigan] about the job impact of trade agreements.
“I would be surprised if there are a lot of new initiatives,” said Lee. “People’s plates are full, and trade is complicated and not the most popular of initiatives in general.”
The fate of a bill targeting China’s undervalued currency is uncertain. It failed to advance past the House last year but has bipartisan, although perhaps not majority, support in both houses of Congress.
“I think Republicans have signaled that they too want to see China adopt more market-oriented exchange rates, but they haven’t necessarily agreed that legislation is the best way,” said Stephanie Lester, vice president of international trade at the Retail Industry Leaders Association. “[Whether the legislation moves] in part depends on what China does to the value of its currency this year.”
Cass Johnson, president of the National Council of Textile Organizations, which supports the legislation, said it will “go into hibernation this year.
“Camp has said he will not bring up the bill, and I think they want to concentrate on other things, unfortunately,” Johnson said. “The burden will fall more heavily on the administration if Congress isn’t going to act.”
President Obama has followed the Bush administration policy of using diplomacy to pressure China into reforming monetary policy instead of declaring the country a currency manipulator, which could lead to sanctions against imports if it fails to devalue the yuan. Many feel China, a nonmarket economy that tightly controls its currency, has an unfair trade advantage over nations that have their currency’s value determined on the open market.
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