WASHINGTON — Executives from Levi Strauss & Co. and Mount Vernon Mills Inc. on Tuesday outlined the sharp differences between importers and manufacturers that Congress will consider in any revamp of U.S. trade preference programs that cover billions of dollars in goods.
This story first appeared in the November 18, 2009 issue of WWD. Subscribe Today.
The House Ways & Means subcommittee on trade began examining whether to overhaul five U.S. trade preference programs that covered $110 billion in trade in 2008 and provide duty free benefits to hundreds of countries from South America to sub-Saharan Africa.
With the global economic downturn hurting several developing countries, lawmakers are considering whether to change the programs, create new criteria and streamline and possibly expand them. Lawmakers must balance the impact of changes on U.S. manufacturers, as well as the current trade preference beneficiary countries.
Two bills were reintroduced this year — one to provide duty free access to all the least developed countries, including, for the first time, Bangladesh, Cambodia and Sri Lanka, and another that would eliminate duties on apparel imports from 15 least developed countries. It is unlikely either of those bills or a potential trade preference reform bill will move this year. Congress could act in 2010.
David Love, senior vice president and chief supply chain officer for Levi Strauss, which manufactures in some 50 nations, said the company needs permanent trade preference programs that do not require automatic renewal every six to twelve months, a rule of origin that does not require use of U.S. textiles, stable and strong internationally recognized labor standards.
“The rules of origin and other aspects of trade preference programs can really make or break them from a business perspective,” Love said.
Levi’s has decreased its sourcing in the Andean region from 60 million units to 2 million units because of the uncertainty of the trade preference program, he said.
“We cannot make commercial decisions based on such three- to six-month time frames [in reference to recent short-term renewals of the program by Congress], especially when orders are placed at least one year in advance,” Love said.
Cham Prasidh, senior minister of commerce for Cambodia, made a plea for unilateral preferences, saying apparel exports account for 80 percent of the country’s exports but are declining dramatically due to the economic downturn.
On the opposite side of the debate, W. David Hastings, president and chief executive officer of Mount Vernon Mills and vice chairman of the National Council of Textile Organizations, argued against giving duty free benefits to Bangladesh and Cambodia, saying it would undermine billions of dollars in U.S. textile exports to Central America, Mexico, sub-Saharan Africa and other regions because importers would shift production away from those regions, many of which are required to use U.S. textiles.
“In the U.S., hundreds of thousands of textile workers would lose their jobs and plants across the rural Southeast would close,” said Hastings, whose firm employs 2,657 workers. “As this committee considers this proposal, I appeal to you to keep in mind the workers at our Trion, Ga., facility and of textile facilities across the country. Their livelihoods literally rest in your hands.”
A group of 45 apparel and textile groups from 29 trade preference countries and free trade areas voiced opposition to the proposed extension of duty free benefits to Bangladesh and Cambodia in a letter sent Monday to the Ways & Means committee.