WASHINGTON — Congress returns this week under the control of Democrats for the first time in 12 years and its new agenda is expected to reshape the fashion industry's business and sourcing strategies.
The Democrats' new goals for trade policy will drive some of the action on Capitol Hill early on and industry executives are closely watching which philosophy will prevail: free trade, which places an emphasis on lowering barriers for imports and increasing market access for U.S. exports, or fair trade, which focuses on protecting workers' rights overseas while preserving U.S. jobs.
The key issues the new Congress is expected to tackle in the next session, which begins Thursday, include:
The growing trade deficit with China and its alleged currency manipulation. Apparel and textile imports contributed to the broader trade deficit in goods with China in October, which widened by 6.1 percent to $24.4 billion compared with the preceding month. Observers expect the new Congress to propose a much tougher stance toward the Asian giant.
The future of free trade agreements and of the president's Trade Promotion Authority.
How to jump-start global trade talks, which have stalled.
Stricter rules to protect workers' rights, both in the U.S. and overseas.
Overall, the consensus on both sides of the debate is that a new skepticism toward trade has taken hold in both parties in Congress. Organized labor's agenda also is expected to gain prominence and experts said legislative action on new laws governing workers and unions is possible.
House Speaker-elect Nancy Pelosi (D., Calif.) already has laid out her broad agenda for the first 100 hours of the session — and her initial salvo set off alarm bells within the industry. Pelosi has promised that the House will pass legislation raising the federal minimum wage, requiring 100 percent screening of all cargo containers at foreign ports, rolling back subsidies to big oil and reforming health care and Social Security. The screening proposal raised an immediate outcry from apparel importers, who said the plan could cause major disruption to shipments.
It is more difficult to gauge the agenda in the Senate, where Democratic leaders have been more circumspect about their legislative priorities in the 110th Congress."It will be a big year for trade regardless of other issues, such as the war in Iraq," said Tim Kane, director of the Center for International Trade & Economics at the Heritage Foundation, a conservative think tank.
However, the chances of Congress "actually erecting new trade barriers is unlikely," he said, adding, "A slowdown in trade deals is more likely, since that was already happening with Republicans who were getting nervous about trade."
Kane said there are conflicting forces on international commerce within the Democratic caucus in the House and Senate, which makes it difficult to predict which voices will prevail.
He said experts will be closely watching newly elected Democrats who are coming into office on a wave of antitrade sentiment and how leaders balance their voices with more pro-trade constituents, such as the Congressional Black Caucus, which has been supportive of trade benefits for sub-Saharan Africa.
Although Pelosi has not unveiled a trade agenda to date, many experts expect several issues to gain traction, including the widening deficit with China and bills targeting its currency manipulation and subsidies; the president's expiring trade promotion authority; the global round of trade talks, and a push to strengthen labor and environmental laws in free trade agreements, which could affect the pending Peru and Colombia free trade deals. For the 12 months ended Oct. 31, Peru shipped 103.8 million square meter equivalents of apparel and textiles to the U.S., valued at $842.5 million, and Colombia's imports tallied 142.7 million SME, worth $560.3 million.
"We are definitely going to see a China trade bill this year and it's going to be bad," predicted Erik Autor, vice president and international trade counsel at the National Retail Federation. "Members [of Congress] are chomping at the bit…to do a China bill. It's just a question of whether cooler heads can prevail. I think they will be under a lot more pressure to whack China. We are keeping a wary eye on the whole situation."
Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said he believes there is already momentum on China, though "how the Democrats choose to deal with this issue is up in the air.""First of all, you've got people like [Sens.] Sherrod Brown [D., Ohio] and Jim Webb [D., Va.], who are coming into powerful positions in the Senate and who are vowing to be more aggressive on these issues, and China is at the front of the line for them," Tantillo said.
Signaling the possible fight ahead, Rep. Sander Levin (D., Mich.), who will chair the House Ways & Means trade subcommittee, has already said he plans to submit an unfair trade practices case against China's currency manipulation and reintroduce legislation to apply countervailing duties to non-market economies.
In addition, Sen. Max Baucus, incoming chairman of the Senate Finance Committee, has indicated he is looking for "new tools" to address China's currency policies, other than the Department of the Treasury's semiannual report that has passed on labeling China a currency manipulator.
The president's TPA, which requires Congress to vote up or down on trade agreements without the ability to amend them, expires at the end of June and also will generate a heated debate. The prospects of Congress renewing the authority, without any substantive changes to it — such as addressing stronger enforcement mechanism for labor standards — are slim, according to experts.
The global round of trade talks, which has faltered for some time now, will be affected if TPA is not renewed.
"It's hard to say what the prospects for trade promotion authority are, but it will be a long shot," said Cass Johnson, president of the National Council of Textile Organization. "The election made it more difficult for the administration to get an agreement on TPA through, rather than less difficult. It has given the administration less maneuvering room."
Gary Hufbauer, senior fellow at Peterson's Institute for International Economics, said he wouldn't be surprised to see the White House package the Peru and Colombia FTAs with an extension of TPA.
On the labor front, two Democrats chairing key labor policy committees, Sen. Edward Kennedy (D., Mass.) and Rep. George Miller (D., Calif.), will be closely watched by the industry and organized labor.
Kennedy and Miller already have said they will push for passage of a bill they introduced that would instruct the National Labor Relations Board to develop a procedure under which a union can be recognized if a majority of employees sign authorization cards choosing the union as their bargaining representative — known as a "card check" system. The bill also would strengthen remedies for employer coercion when employees try to organize by imposing civil fines up to $20,000 per violation."The bill would go some distance toward leveling the playing field in terms of freedom of association," said Tom Snyder, national political director for UNITE HERE.
"In actual practice, workers are not able to associate in their place of employment. If they try to form a union, they are fired, demoted or harassed," alleged Snyder.
Snyder also expects Congress to pass comprehensive immigration reform legislation providing a guest worker program for millions of illegal immigrants and a path to citizenship.
The union official, without wanting to sound "Pollyannaish," contended the overall environment on Capitol Hill will be "more hospitable to union issues and middle-class family issues."
"That does not mean these things will sail through very simply or without lots of struggle and negotiation," he said. "But underneath, the anxiety about free trade agreements is the anxiety being felt by the middle class and working class, so I think any issues that can raise their standard of living…will find a good hearing among those who campaigned for fair trade."
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye