By  on September 27, 2007

WASHINGTON — Major U.S. retailers and manufacturers including Wal-Mart Stores Inc., Liz Claiborne Inc., Gap Inc. and J.C. Penney Co. Inc. are stepping up pressure on Congress to change legislation that could impose punitive duties on Chinese imports and lead to stricter product safety rules.

The U.S. businesses, which annually produce billions of dollars worth of apparel in China, are part of a coalition of 159 companies and trade associations that urged lawmakers in a letter sent Wednesday to abandon the legislative proposals targeting China's undervalued currency and defective and contaminated imports.

"Imposing unfair barriers to trade in the name of currency valuation or product safety is not a solution to the underlying concerns," the coalition said in the letter, which was also signed by Nike Inc., Deb Shops Inc., Reebok International Ltd., Target Corp. and AnnTaylor Stores Corp.

The group warned that enacting the proposals would hurt U.S. companies doing business in China and might spark retaliatory action against U.S. exports.

Democrats in Congress, who argue the undervalued currency gives Chinese exports an unfair advantage against the U.S., are moving forward on legislation that would penalize Chinese imports if that nation does not let its currency appreciate. Two Senate committees recently passed competing proposals. One bill would offset currency undervaluation for goods dumped in the U.S. at below cost and both measures would require World Trade Organization consultations with a country that is found to be manipulating its currency, which could lead to sanctions.

On a parallel track, lawmakers are advancing legislation to increase funding for the Consumer Product Safety Commission and strengthen product safety regulations and standards in wake of Chinese food and product recalls.

Apparel importers are concerned that the Congressional debate could lead to stricter product safety regulations and requirements for all apparel, more scrutiny of cargo containers at ports and the imposition of user fees on companies that import products from China. The exposure is significant for importers that brought in $31.3 billion worth of clothing and textiles from China for the year ended July 31.

"While there are a lot of problems to address in the U.S.-China economic relationship, Congress should not be passing legislation that sends a message to China that would damage U.S. interests," Frank Kelly, vice president for international trade compliance at Liz Claiborne, said in an interview. "That's what we're saying in this letter."

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