By  on December 8, 2006

WASHINGTON — House and Senate negotiators crafted compromise trade legislation Thursday, ending an impasse between two key committee chairmen and reconciling differences in their separate bills.

They planned to put the legislation to a vote despite strong opposition from textile-state lawmakers on trade preferences for Haiti and bipartisan concerns over granting Vietnam elevated trade status.

The House was set to vote on the omnibus bill Thursday night. The measure would provide more certainty to importers making apparel in sub-Saharan Africa, the Andean region, Vietnam and Haiti. Critics, however, said it would threaten to displace millions of dollars in U.S. fabric and yarn exports.

The compromise would grant permanent normal trade relations to Vietnam. It also would extend benefits for expiring trade preference programs for the sub-Saharan African countries, the Andean countries of Peru, Colombia, Ecuador and Bolivia, and the generalized system of preferences program. In addition, the legislation would create new and expanded benefits and rules of origin for apparel production in Haiti and suspend and reduce duty on hundreds of imported products that were covered in a miscellaneous tariff bill.

“This is a strong bipartisan compromise package that meets our trade needs and worldwide humanitarian and economic obligations,” Rep. Bill Thomas (R., Calif.), chairman of the House Ways and Means Committee, said in a statement. “It extends a number of important expiring trade incentives for developing countries.’’

If the bill clears the House, it would go to the Senate, where hurdles remain because of opposition to trade provisions for Vietnam and Haiti.

Sen. Elizabeth Dole (R., N.C.) disagreed with provisions that would expand duty free benefits to apparel imports from Haiti. Sen. Lindsey Graham (R., S.C.) has stated objections to the Haiti provisions, textile industry sources said.

Sens. Dianne Feinstein (D., Calif.) and Gordon Smith (R., Ore.) have made their votes on the provisions for Vietnam contingent on clarifications of a commitment the Bush administration made to Dole and Graham to monitor Vietnamese imports and possibly undertake antidumping cases.

Senate Majority Leader Bill Frist (R., Tenn.) could try to overcome possible holds on the trade bill by filing a motion for cloture, which would end debate if the motion were supported by at least 60 members. The Senate could vote on the bill this week.The key provisions in the bill include:

  • New rules of origin for apparel: 50 percent of the value of finished products must be from the U.S., Haiti or any country with which the U.S. has free trade agreements or preference programs in the first three years, growing to 60 percent in the fifth year. It also allows a “single transformation” rule of origin for bras, which means components can be sourced from anywhere as long as they are assembled in Haiti, and provides for a foreign fabric and yarn allowance for woven apparel of 50 million square meters equivalent in the first two years, which is reduced to 33.5 million SMEs in the third year.

  • Extending the current third-country fabric provision allowing companies in designated sub-Saharan African countries to use any foreign fabric and yarns in apparel until 2012, with a 3.5 percent cap.

  • Extending for six months duty free benefits in a trade preference program that expires at the end of the year for Peru, Colombia, Ecuador and Bolivia, and adding another six months for each country that has completed free trade agreements with the U.S.

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