WASHINGTON — Lawmakers introduced a comprehensive tax and jobs bill in the House and Senate on Thursday that would reinstate duty breaks for U.S. cotton shirt, yarn and fabric producers that had expired and continue funding levels for wool fabric and yarn spinners.
This story first appeared in the May 21, 2010 issue of WWD. Subscribe Today.
Senate Finance Committee chairman Max Baucus (D., Mont.) and House Ways and Means chairman Sander Levin (D., Mich.) introduced a wide-ranging bill in both chambers that has as its centerpiece a provision that would extend unemployment benefits for those who have been out of work for a long time through the end of the year and extend for a year several popular business tax cuts that expired last year.
The bill has implications for textile and apparel makers that benefit from duty breaks in two separate government-funded programs known as the Cotton Trust Fund and Wool Trust Fund.
As part of a miscellaneous tariff bill enacted in 2006, which expired at the end of last year, Congress enacted the Cotton Trust Fund for U.S. cotton shirt manufacturers “to respond to a commercial disadvantage” caused by an “inverted tariff” that occurs when the duty on a finished product such as a suit is lower than the duty on the inputs used to make the finished product.
The fund provides payments to U.S. shirt makers and cotton fabric and yarn producers and also created a pima cotton promotion program. It is funded through the revenue collected from tariffs on cotton textile imports, primarily yarn and fabric. With the expiration of the fund and the bill authorizing it, U.S. companies were forced to pay higher duties and the pima cotton promotion program was put on hold.
The legislation introduced Thursday would reauthorize the program and fund it until Dec. 31, 2013. It is estimated to cost $53 million over three years and help maintain an estimated 800 apparel and textile jobs.
“We did get a refund from the fund and we have used it to reinvest in our plants,” said Werner Bieri, president and chief executive officer of Buhler Quality Yarns Corp., a yarn spinner in Jefferson, Ga.
Bieri, who said his firm received about $4 million over two years from the fund, said, “It definitely helped us stay competitive.”
A spokesman for the American Apparel & Footwear Association said it supports the bill “because of its importance to all domestic cotton, fiber, yarn, fabric and apparel manufacturers, especially to those producers who supply uniforms to the U.S. military.”
The legislation also made a technical fix to the Wool Trust Fund, which makes payments to U.S. wool fabric and yarn producers, as well as sheep growers, to encourage more production of wool fabrics. The bill expands the number of import categories on which the U.S. can place tariffs, in order to help fund payments to U.S. wool suit makers and other recipients of the program.
President Obama recently called for the Wool Trust Fund to be eliminated in his fiscal year 2011 budget proposal. Congress has yet to vote on a new budget, which still leaves the program in limbo, despite the fix to continue funding that lawmakers made in this legislation.
“The wool language is a technical fix that doesn’t increase any outlays on the part of the U.S. government,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “It is designed to ensure that a program that is helping save 120,000 jobs in the U.S. that are directly tied to the wool fiber, fabric and apparel production chain remain in place.”