Those fashion executives hoping for some free trade reassurance from Washington might not want to hold their breath.
This story first appeared in the March 18, 2008 issue of WWD. Subscribe Today.
“The last few years, the mood on the Hill and on Main Street has changed dramatically,” said David Spooner, assistant secretary for import administration at the U.S. Commerce Department.
The protectionist attitude inside the Beltway will intensify, said Spooner, who administers the antidumping and countervailing duty laws allowing for higher tariffs on goods if they are found to be imported under certain unfair trade practices.
“Whoever gets elected [president], I’m sure that when they get to the White House they would moderate to a certain extent,” he said. “But rhetoric matters and I fear that various candidates have positioned themselves so that no matter who’s elected, you couldn’t come into office and immediately push for various things.”
The North American Free Trade Agreement has been taking a lot of heat in the campaign from Democratic presidential candidates Sens. Barack Obama of Illinois and Hillary Clinton of New York, but Spooner said the trade deal already is being updated and is not a major factor in the trade deficit.
“We’re not going to renegotiate NAFTA, but it’s the firm view of the administration that we can improve NAFTA or at least improve commercial relationships with Canada and Mexico by looking at inefficiencies at the border,” he said.
Spooner also had reassuring words for that larger portion of brands with supply chains that bypass Mexico and go straight to Asia. China and Vietnam are much more important for these companies.
He told producers that the remaining quotas on Chinese imports, which cover 34 types of goods such as cotton trousers and sweaters, will go away.
“There is no chance that the quotas will be extended,” he said.
The administration, however, also has toughened its stance against China, opening the door last year to countervailing duty cases against the country. Countervailing duties make it more expensive to import goods from countries deemed to be giving their producers inappropriate subsides.
An antidumping or countervailing duty case to protect U.S. apparel or textile producers is a real threat, he said.
“If I were in your shoes, that would worry me a bit,” he said. “Even if the tariffs end up being low at the end of the investigation, it just provides an element of uncertainty, which probably makes it very difficult for folks who source from China.”
As for the administration’s promise to Sens. Lindsey Graham (R., S.C.) and Elizabeth Dole (R., N.C.) to monitor imports from Vietnam for dumping and self-initiate a case if the facts warrant it, Spooner said that would end with the administration.
“Come hell or high water, the Vietnamese monitoring program is going away at the end of this year, at the end of the administration,” he said. “I hope not to do a dumping case, frankly, but we do have a commitment to two senators. The mood on the Hill is, as we all know, tremendously challenging with trade. We have to live up to our commitment.”
The fear of the industry, however, is that the next administration might think that the monitoring program is worthwhile and keep it going or expand it to other countries, perhaps China.