By  on November 8, 2007

WASHINGTON — The House was expected to pass a free trade agreement with Peru Wednesday night that would make duty-free benefits permanent for apparel importers and open Peru's market to U.S. exports.

House Democratic leaders pushed for the vote despite opposition within their own caucus and from some organized labor and industry groups. The deal must also be approved by the Senate.

Rep. Charles Rangel, (D., N.Y.), chairman of the House Ways & Means Committee, has stressed the importance of the Peru accord, saying it represents a new model with stronger labor and environmental provisions. Rangel, House Speaker Nancy Pelosi (D., Calif.) and top House Republicans reached an agreement with the Bush administration in May to strengthen workers' rights and environmental standards in the Peru deal, as well as in pending trade pacts with Colombia, South Korea and Panama.

However, freshmen Democrats elected on platforms to minimize the impact of international trade on companies and workers in their districts have led a counterattack. They are among a group of 20 Democrats who comprise the House Trade Working Group, which has insisted that all trade deals be put on hold until certain conditions are met.

Their demands include: waiting for a new president to establish trade policy, passing legislation dealing with countries such as China that are accused of manipulating their currency and hurting U.S. companies by subsidizing exports, and overhauling the Trade Adjustment Assistance program that gives federal aid to workers who lose their jobs because of foreign competition. President Bush has vowed to veto the trade adjustment measure in Congress, saying the eligibility requirements are too broad.

Apparel importers, who bought $868.3 million worth of apparel and textiles from Peru for the year ended Aug. 31, already receive a duty-free advantage when making apparel in Peru, Ecuador, Bolivia and Colombia under a U.S. trade program that Congress must vote to periodically renew. The free trade agreement would make the benefits permanent and provide certainty to companies manufacturing apparel in Peru.

"In terms of the scale of things, they're not one of the highest-ranked suppliers but they are a very important supplier for our members when it comes to cotton knits, sweaters and alpacas," said Julia Hughes, senior vice president of the U.S. Association of Importers of Textiles & Apparel. "We're disappointed with a lot of the provisions in Peru because they are very restrictive...but it makes the benefits permanent and that reliability in the supply chain is essential."The textile industry is divided on Peru, which represents a small market for U.S. producers that exported $24 million worth of fabrics and yarns to the country in the last 12 months.

"In terms of trade agreements, the Peru agreement is the gold standard for the textile industry," said Cass Johnson, president of the National Council of Textile Organizations.

Johnson said the benefits include an elimination of the 12 percent tariff charged on U.S. textile exports and a strict rule of origin requiring the use of U.S. or Peruvian yarns. The trade deal does not contain any exceptions that would allow companies to use Chinese fabrics or yarns.

On the other side of the debate, Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said in a statement, "Congress spending the entire year focusing on an unpopular Peru FTA instead of passing a strong anticurrency-manipulation bill is an enormous disappointment to U.S. manufacturers desperate for relief from China's predatory trade practices."

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