WASHINGTON — Federal officials have warned that the steep automatic cuts that hit government agency budgets at midnight Friday could choke goods moving through the nation’s ports, impair ongoing trade negotiations on an Asia-Pacific trade deal and impede the launch of a U.S.-European Union trade accord.
While industry trade groups are concerned about the warnings, most are taking a wait-and-see approach to the actual impact on trade. The failure of the Obama administration and Congress to break through the budget impasse after a White House meeting on Friday triggered $85 billion in across-the-board spending cuts through the end of the current budget year, which runs through Sept. 30.
The cuts will slice into the budgets of key agencies that process billions of dollars of imports, negotiate and enforce trade deals and inspect cargo for counterfeits, product safety and security.
“[The U.S. Trade Representative’s office] is currently conducting or preparing to launch three major trade negotiations,” said Carol Guthrie, assistant U.S. trade representative for public and media affairs at USTR, which is responsible for negotiating free trade agreements and enforcing the rules in existing trade treaties. “Sequester cuts could significantly hamper these and other efforts to support American jobs by opening global markets, including through reduced staffing and reduced capability to engage with trading partners when needed to achieve job-supporting trade goals.”
In addition, USTR may no longer have the funding to initiate new legal disputes, resulting in reduced enforcement of trade agreements, Guthrie 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. In its annual report to Congress on Friday, USTR said it hoped to conclude the negotiations this year with the TPP countries.
Department of Homeland Security Secretary Janet Napolitano said the billions of dollars in budget cuts could lead to a slowdown 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 slowdowns at ports.
“At our seaports, delays in container examinations would increase to up to five days, resulting in increased cost to the trade community and reduced availability of consumer goods and raw materials,” said Napolitano, adding that $2.3 trillion in trade comes through the ports every year.
Napolitano said border trade with Canada and Mexico, the first and third largest trading partners with the U.S., respectively, will also be impaired. She said, “One of the chief complaints I receive whenever I travel to either border is it takes too long to move the trucks across; it takes too long for people in passenger vehicles to get through. And all I can tell you is that with sequestration, that situation is not going to improve, it’s going to go backward.”
The Obama administration and Congress negotiated a debt-ceiling deal in 2011 that established a supercommittee tasked with reducing the deficit by $1.5 trillion over 10 years. In the event of the committee’s failure to find the deficit reductions, the law stipulated that $1.2 trillion in automatic spending cuts, dubbed the “sequester,” would be spread over nine years, which kicked in on Friday.
“There is a lot of uncertainty around this and a lot of anxiety,” said Stephen Lamar, executive vice president at the American Apparel & Footwear Association, adding that it is premature to speculate on what will happen as the cuts take effect. “We are eager to see USTR and Customs and other agencies fulfill their missions, whether it is facilitating trade or opening foreign markets. Those are government services that we hope and expect will continue, and I think there is a belief by the Obama administration that those are essential government services, too.”
Lamar said while agencies have relied more on Webinars and teleconferences in the past couple of years, it is no substitute for face-to-face meetings, particularly during trade negotiations.
“The TPP covers four continents and involves a lot more travel,” he said. “The needs are more pressing so when you are faced with these kinds of budget cuts, it creates more concerns.”
Julia Hughes, president of the U.S. Association of Importers of Textiles and Apparel, said, “I think most companies are nervous about what the impact will be, but they are not in a panic mode that the sequester is going to have an immediate impact on their business operations…But given the game of chicken that we have seen several times now in D.C., I think most in the industry still feel relatively confident there will be some kind of a deal that will prevent a serious impact.”
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast