WASHINGTON — President Bush has still not signed off on granting apparel duty breaks to three of the four Andean countries currently eligible, even though they were to take effect on Oct. 1 as part of a comprehensive trade bill passed this year.
Apparel importers, who wrote a letter this week to U.S. Trade Representative Robert Zoellick, said they are concerned the President has not signed a proclamation granting expanded benefits to Colombia, Peru and Bolivia, which have all met the criteria to be beneficiaries. Ecuador has not yet met the criteria.
“People placed orders [in the Andean countries] when Bush spoke out [a month ago] and said the three countries met the criteria because people thought it would be quickly implemented,” said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel. “The question everyone is asking is ‘will they get reimbursed for the duties they have paid on the apparel they have shipped into the U.S.?’”
Apparel imports from the eligible Andean countries can enter the U.S. duty free if U.S. or regional textiles are used, according to the comprehensive trade bill, which also includes provisions dropping apparel duties for the Caribbean Basin and sub-Saharan Africa. However, shipments are limited from the Andean countries, starting at 2 percent growth over existing trade, and increasing to 5 percent in 2006 when the breaks must be renewed. The region now ships less than 1 percent of all U.S. imported apparel.
In the letter, four trade and lobbying groups said U.S. companies made commitments and placed orders in the Andean countries, particularly in Colombia and Peru.
“Without the duty-free benefits available under [the bill], these U.S. companies face significant losses,” said the USA-ITA, the National Retail Federation, International Mass Retail Association and National Foreign Trade Council. They noted U.S. firms have already faced “extraordinary obstacles” due to the 10-day West Coast port shutdown.
The groups also claimed in the letter that administration officials have said there is no expectation that the benefits will be retroactive to Oct. 1, which is the beginning of the new fiscal year renewing quotas. The associations said average tariffs of 17 percent on apparel imports from the Andean region will “affect the profitability of doing business in the Andean region.”
“There was a real sense of urgency to get this in place,” said Erik Autor, vice president and international trade counsel at the NRF. “This was a big opportunity for the Andean countries to get in on holiday sourcing orders, but they’ve missed out on that.”
The President also has not signed a proclamation on expanded apparel trade benefits for Caribbean and sub-Saharan African countries, which has created uncertainty, according to Stephen Lamar, senior vice president at the American Apparel & Footwear Association.
The same trade bill increases existing duty-free apparel benefits for the Caribbean and Central America, covering T-shirts and knit shirts made of regional fabric using U.S. yarn, which are also subject to limits. For sub-Saharan Africa, current duty-free provisions for garments made of regional fabric were also enhanced. The bill also allows knit-to-shape garments produced in sub-Saharan Africa and merino wool sweaters to enter the U.S. duty free, a clarification of a 2000 trade bill.
“We need to see instructions from Customs,” said Lamar. “Companies are still operating under old instructions, which is not conducive to [increasing trade in these areas].”
He added that U.S. companies are reluctant to invest more and take advantage of the new benefits until a proclamation is made and Customs provides guidelines.
A National Security Council spokesman offered no explanation for the holdup, but reiterated the administration’s support for the trade legislation.