Trade will get a bit more attention in Washington now that the Obama administration has succeeded in its long battle for health care reform.
President Obama strode boldly into the trade arena during his State of the Union address in January, proclaiming the goal of doubling U.S. exports within five years. Such efforts do little to help sourcing executives trying to cut their costs on goods made in Asia and South America, but the shout-out to trade has been seen by the industry and policy wonks as a sign the issue might slowly come off the Beltway’s back burner.
While many in the business community criticized the passage of health care reform legislation in the House late Sunday because of additional costs associated with employer mandates, they also said the upshot could be a new path forward for free trade initiatives that had stalled.
“There was no way any other initiatives were going to move until [health care reform] went through,” said Julia Hughes, president of the U.S. Association of Importers of Textiles and Apparel. “I think now that it did go through, the Democrats are going to feel that they can accomplish more and that is the good news. It means we could have action on the trade agenda because Democrats are positive, versus if they had lost [on health care], we would have seen nothing happen.”
Trade veterans expect several trade measures to gain traction now, including a bill that would expand trade benefits for Haiti, which is recovering from a catastrophic earthquake, and potentially some or all of the three pending trade agreements with Panama, South Korea and Colombia.
The pacts have been stalled over concerns by leading congressional Democrats and labor groups over barriers to U.S. auto and beef exports in South Korea, assassinations of trade unionists and a weak rule of law in Colombia and tax havens in Panama.
Hughes said she expects Panama to have the best shot out of the three trade deals in the short term.
Meanwhile, a panel of sourcing executives and trade experts at the WWD Global Sourcing & Supply Chain Forum expressed frustration with the lack of action so far and stressed the need to stimulate trade to help companies and the broader global recovery.
Stephen Lamar, executive vice president of the American Apparel & Footwear Association, kicked off the discussion by dissecting the rhetoric.
“Trade was actually in the freezer in the garage — it wasn’t really on the stove [or the back burner] at all,” Lamar said. “With 2010, maybe it’s out of the freezer. We’re starting to see perhaps some thawing on the counter. We certainly see a lot more discussion on trade.”
A big push on trade seems out of the cards, for now. The controversial health care reform bill has been holding up other congressional action and financial services reform could be the next big issue, Lamar said.
“The legislative activity on trade is probably not going to focus, for example, on the free trade agreements, which is what we saw in the last administration,” the lobbyist said.
Instead, Lamar said lawmakers were more likely to tackle trade preference programs or a bill to help Haiti recover from the devastating earthquake.
Still, John Strasburger, vice president and managing director of VF Americas Sourcing at VF Corp., said he’s feeling more optimistic about the prospects of movement on trade issues following remarks from U.S. Trade Representative Ron Kirk at an AAFA conference this month.
“We want to have greater access to markets around the world,” said Strasburger, pointing out that much of the company’s growth hinges on VF’s ability get its brands, including The North Face, Seven For All Mankind, Vans and Wrangler, into new markets.
Vietnam is of particular interest as a sourcing location.
“All VF eyes are on Vietnam,” he said. “We see a market for a price, but not a big market. If duties were to be eliminated for Vietnam, we’d see a big shift of business from China to Vietnam.”
Jerry Cook, vice president of government and trade relations for Hanesbrands Inc., was disheartened by the administration’s stance on trade.
“We are much about doing and very little about accomplishing,” Cook said.
He was particularly dismayed by the lack of movement on free trade agreements with South Korea, Panama and Colombia that are ready to be sent to Congress. He would also like to see more emphasis on the infrastructure that facilitates trade. The Port of Los Angeles, the nation’s largest port, received none of the $1.5 billion set aside in the 2009 Recovery Act for infrastructure improvements, known as Transportation Investment Generating Economic Recovery Grants, Cook said.
“We have not invested well in our infrastructure,” he said. “We need that in trade.”
Cook was also wary of the processes and procedures the Department of Homeland Security may institute to ensure cargo security. He compared it to how the process of boarding a plane has changed, with more inspections and checkpoints ultimately doing more to prevent people from getting on the plane and slowing the process down.
“We cannot afford in this world to have a trade structure that has got such inefficiencies designed into it when we’re spending all this money to provide all this advance data,” he said.
But there might be some opportunity for brands to make their mark on the processes and rules that govern imports at the border in the pending Customs reauthorization bill.
“This is a great opportunity,” said Nicole Bivens Collinson, president of trade negotiations and legislative affairs at law firm Sandler, Travis & Rosenberg. “You can try to get your member of Congress to tell Customs, ‘This is what you need to do or how you need to do it when you’re enforcing this provision,’ or to modify the provision so it works for you.”
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