Byline: Jim Ostroff

WASHINGTON--The American Textile Manufacturers Institute has petitioned the U.S. to negotiate with Mexico and Canada to tighten restrictions on North American Free Trade Agreement benefits for bras.
As might be expected, the ATMI proposal raised howls of protest from many bra manufacturers, who claimed the change would push up their costs and those for consumers.
The textile industry request, sent in writing last week to Rita Hayes, chairman of the Committee for the Implementation of Textile Agreement, seeks to fundamentally change NAFTA's rule of origin for bras. Currently, there are no duties or quotas on bras assembled from components in the NAFTA nations. Charles Bremer, ATMI's international trade director, petitioned this be changed so that the bras also would have to be made of yarn and fabric sourced within the region--the so-called "yarn-forward rule." This would apply to the cups and wings only.
Most apparel traded within NAFTA must meet the yarn-forward requirement for free trade benefits, but bras were exempted in enabling legislation passed by the three countries, since bras often have dozens of components. NAFTA stipulated the single transformation rule--requiring only assembly for bras--could be reexamined any time after April 10 of this year.
"Importers of brassieres assembled in Mexico and reimported under NAFTA tariff preference have not paid any duty on these imports since Jan. 1, 1994," Bremer wrote. "During the past 15 months that amounts to...56 million brassieres that duty has not been paid on. This represents a serious amount of money saved, certainly far more than it would cost to comply with the yarn-forward rule of origin.
"Having been granted this significant economic benefit, the very least importers can do is invest a small portion of it in compliance," he added. Bremer noted that based on a tour of Maidenform cutting facilities in Florida, "proper documentation [for yarn-forward], particularly when a large variety of different fabrics is used, is a burden and entails additional costs. However, it can definitely be done."
Reacting to the letter, Larry Stone, Bestform's senior vice president, said Bremer "is wrong to assume that NAFTA duty elimination is going to fatten our profits. Our retail customers are smarter than he thinks. They know our costs and push for price relief every day."
Steven Masket, Maidenform's executive vice president and general counsel, said, "To our knowledge, the single-transformation rule for bras has had no adverse impact on any textile manufacturer, and we believe it should be maintained."
Norman Katz, president, I. Appel Corp., which sells bras under the Formfit Intimates brand, said--like the other two executives--his firm's bras generally use nearly all U.S. fabrics, but he strongly opposes yarn-forward. "I don't think ATMI realizes how many individual parts are required to make a bra and even at the very low end, with 18 pieces, record keeping under yarn-forward would be an impossible task."
Katz added the ATMI plan fails to account for the fact "there are times we cannot obtain [bra] fabrics in the U.S. and must import them to stay in production."
Other executives, who requested anonymity, contended a yarn-forward rule for bras would wind up even hurting ATMI members, claiming they often import goods such as spandex yarns.
"Let's just say it's not coincidental that ATMI pulls out this bra proposal now, a week before the U.S. has to decide whether to impose quotas on four CBI nations making underwear for export here," said one executive, whose firm makes bras and underwear. "You can't prove it, but it smells from intimidation," he said.. "Textile people seem to be saying we should drop our opposition to underwear quotas and maybe this bra proposal will go away."
Bremer adamantly denied this. "Under NAFTA everyone knew this was coming up for review," he said. He added that ATMI's concern is that "once you get NAFTA parity [in the Caribbean], with the single-transformation rule, Asians will put plants in the Caribbean countries and not use one inch of U.S. fabrics and export bras to the U.S. duty-free. This is outrageous."--Fairchild News Service

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