RETAILERS TURNING UP THE HEAT ON GATT RULE-OF-ORIGIN SHIFT

Byline: Joyce Barrett

WASHINGTON--Retailers heightened their attack Tuesday against a proposed change in the rule of origin for apparel that has been included in the House version of GATT Uruguay Round implementing legislation.
In a letter to White House chief of staff Leon Panetta, National Retail Federation president Tracy Mullin complained that the administration has showed favoritism toward the domestic textile industry and has declined to meet with retailers on the controversial proposal.
Shortly after receiving the letter, however, U.S. Trade Representative Mickey Kantor agreed to a conference telephone call with retail chief executive officers this week. A time has not been set.
"The nation's retailers believe that the administration should be supportive of legislation that is necessary and appropriate to implement the Uruguay Round agreement, but not to the politically motivated requests of the domestic textile and apparel industry, which only seeks to disrupt trade," Mullin wrote. "I urge you to review the administration's positions on this matter."
Mullin continued: "We are particularly disappointed with the administration's decision to support this proposal because we have worked with the administration on a number of important international trade matters over the past two years--from the passage of NAFTA to delinking trade and human rights issues in China to building support for the Uruguay Round agreement."
The proposed change would shift country of origin for quota purposes to where a garment is assembled from where the fabric is cut. Retailers and importers say this change would upset sourcing patterns and hike costs on a significant portion of their apparel imports.
The letter is a last-minute effort by retailers to sway the administration before it meets today with members of the House Ways and Means Committee on the GATT implementing bill. The committee could decide today whether it is ready to meet with the Senate Finance Committee to resolve differences in the House and Senate implementing bills.
The House panel included the rule-of-origin change in its bill, while the Senate committee rejected it. The matter must be resolved before a final congressional recommendation on GATT implementing legislation is forwarded to the White House.
In another development, the administration acquiesced to demands by Ways and Means Committee Republicans that a proposal to reduce by half an inventory tax deduction popular with retailers be scrapped in the House plan. The proposal was part of the funding program to make up for the tariff revenues that will be lost under GATT's free trade regime.
A retail source said the administration had asked retailers to withdraw their opposition to the rule-of-origin change since they had their way on the inventory tax. The request, as it turns out, was in vain. But as one administration source said, "The inventory tax was a big, huge tax item. It makes sense to ask the retailers to give on the rule of origin."
At the same time, a total elimination of the inventory tax break remains in the Senate plan. The proposal axes a deduction for goods priced below market cost before the goods are actually sold by the retailer.
Congressional textile industry defenders aren't letting up in their demands that the rule change be included in the final plan. In an Aug. 9 letter to Sam Gibbons (D., Fla.), chairman of the House Ways and Means Committee, House textile caucus chairman John Spratt (D., S.C.) urged that the change be preserved.
"The assembly rule of origin amendment...will offset some of the adverse impact of the Uruguay Round on the textile and apparel industry," Spratt wrote.
Meanwhile, an administration compromise with House Republicans on a plan to extend fast-track negotiating authority in the GATT bill has come under attack from Senate Democrats.
In an Aug. 15 letter to President Clinton, Max Baucus (D., Mont.), chairman of the Senate Trade Subcommittee, and John Kerry (D., Mass.) warned that the administration "cannot retreat from its commitment to address relevant environmental issues in trade negotiations."
In meetings last week with House Republicans, the administration agreed not to require that environmental and labor standards be part of future trade negotiations.
--Fairchild News Service

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