RETAILERS URGE CONGRESS TO PASS CHINA, AFRICA BILLS

Byline: Joyce Barrett

WASHINGTON — Retailers made their pitch in House and Senate hearings Wednesday for preserving China’s trade status and establishing free trade with qualifying Sub-Saharan African states on textiles and apparel.
On both issues, retailing is aligned with the administration and echoed fears that to retreat on trade policy would hurt American consumers by restricting products and raising prices.
On China’s most-favored-nation status, Clark A. Johnson, president and chief executive officer of Pier 1 Imports Inc., warned against a hostile policy toward China that would deny MFN, as some in Congress want. It’s estimated that China trade supports more than 2.5 million U.S. jobs, Johnson told the House Trade Subcommittee. “Failure to renew MFN status and the ensuing fall in supply and rise in prices would force layoffs of workers by many companies,” he said.
This week, 37 retail executives and three industry representatives, who serve on the board of the National Retail Federation, sent a letter to House and Senate leadership urging that China’s MFN be preserved.
President Clinton notified Congress on June 3 that he plans to renew MFN, which gives imports from China the low tariffs granted more than 100 U.S. trading partners. Opposition to Clinton’s China policy on Capitol Hill has been energized by Congressional concerns over the administration’s decision to export satellite technology to China. This month, Rep. Gerald Solomon (R., N.Y.) introduced a bill that would deny MFN to China next year, and his measure likely will come before the House by the end of July.
Clinton does not need Congressional approval to extend MFN, but Congress can vote to deny it, even though annual attempts at denial made since the Tiananmen Square massacres in 1989 have been unsuccessful. Congressional Republican leaders back an MFN extension, and House Speaker Newt Gingrich (R., Ga.), in addition to signing a letter to Clinton promising support for MFN, has spoken privately to his Republican colleagues urging them to separate China’s trade status from any concerns about the satellite exports so that its trade status is not jeopardized.
The domestic textile industry opposes MFN on the grounds that the Chinese transship illegally through other countries. Susan Esserman, general counsel of the U.S. Trade Representative, however, told the House panel that recent evidence indicates transshipping is declining and that last year the U.S. detected less than $2 million in illegal transshipments “out of total Chinese textile exports of nearly $6 billion.”
On the other side of Capitol Hill, in a Senate Finance Committee hearing, retailers confronted the textile industry on a bill to extend duty-free and quota-free treatment to textile and apparel exports from qualifying Sub-Saharan African states. Karen Fedorko, executive vice president and general manager of Mast Industries Inc., a sourcing arm of The Limited, said retailers backed the bipartisan measure that passed the House March 11. If duties and quotas are lifted on qualifying African states, she said, new orders would be promptly placed with African suppliers by retailers.
The domestic textile industry, on the other hand, led by the American Textile Manufacturers Institute, is trying to kill the bill after failing to amend it in the House. J. Patrick Danahy, ATMI president and ceo of Cone Mills Corp., testified before the panel that if quotas and duties were lifted for Sub-Saharan African states, the poorest and least developed countries in the world, transshipping by Asians would increase. He also charged that Asian manufacturers would bring skilled workers to Africa to work in their factories. “Hundreds of thousands of U.S. jobs will be threatened if this bill passes,” Danahy said.
Sen. John Breaux (D., La.), who repeatedly complained about 1,880 recent job cuts by Fruit of the Loom in his state, said he wanted to amend the bill by limiting trade liberalization to apparel made of U.S. textiles.
For her part, Fedorko cautioned that 807 programs should be not required for African trade. Under 807, widely used in the Caribbean, apparel imports sewn there with fabrics cut in the U.S. are charged only value-added tariffs. The Mast executive said that shipping apparel pieces across the Atlantic to Africa would add 70 days and 88 cents per thousand pounds to each shipment over what it costs to move goods between the U.S. and the Caribbean. Doing that, she said, would “gut the objective of building stronger commercial ties between companies like mine and garment producers in Africa.”
Secretary of State Madeleine Albright, Commerce Secretary William Daley and Treasury Deputy Secretary Lawrence Summers also testified in favor of the Africa bill. Albright said the textile industry’s fears of trade with Africa were exaggerated.
“Let’s keep things in proportion,” she said, noting that a recent International Trade Commission report showed that the bill would affect about 700 U.S. jobs and that even if quotas and tariffs are eliminated, total African imports would still comprise less than 1 percent of U.S. textile and apparel imports.
Albright also said she would back any effort to advance the Africa bill with a pending measure that would give Caribbean countries the same trade benefits given Mexico under the North American Free Trade Agreement.

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