WASHINGTON — Provisions to give Caribbean Basin nations free-trade parity with Mexico are included in the White House’s annual budget proposal. The administration also asked for $118.7 million to fight illegal sweatshop activity in fiscal 1997, which begins Oct. 1.
The annual budget request, which totals $1.64 trillion, a 4 percent increase over fiscal 1996, was sent to Congress Tuesday.
Despite broad support for CBI parity by textile and apparel manufacturers, retailers and importers, the plan — as outlined in the budget proposal — left parity backers with more questions than praise.
The proposal says the administration supports “expanded trade benefits mainly on textiles and apparel to [CBI] countries who meet new eligibility criteria needed to prepare for a future free trade agreement with the U.S.”
Textile and apparel interests have lobbied hard for CBI parity, arguing that Caribbean garment assembly operations are at a disadvantage with Mexico under the North American Free Trade Agreement. U.S. apparel firms have invested heavily in Caribbean nations.
Michael Gale, the American Apparel Manufacturers Association’s government relations director, said, “We are encouraged the President is proposing to enact CBI parity, but until we see the details, we can’t comment further.”
Brenda Jacobs, a Washington attorney for the U.S. Association of Importers of Textiles and Apparel, termed President Clinton’s CBI plan “a non-event.”
“It doesn’t mean anything without details, but if it contains provisions like NAFTA’s that severely limit the use of fabrics to those only made in the U.S., it won’t provide the basis for expanded trade,” she said.
Robert Hall, a National Retail Federation vice president, said early indications are that any CBI parity provision backed by the administration would be “even more protectionist” than NAFTA.
The 1997 Labor Department request for $118.7 million to crack down on sweatshops is 19 percent more than 1996 levels. In a news conference, Labor Secretary Robert Reich said targeting bad actors among the nation’s 22,000 sewing shops is among his agency’s top budget priorities.
Reich said he is as “cautiously optimistic” about Congress approving Labor’s 1997 funding request, even though it still has not approved the agency’s budget for this year. The ongoing 1996 budget stalemate has forced Labor to fund its programs on a piecemeal basis as Congress intermittently doles out money via continuing resolutions.
Some of the proposed 1997 increase in Labor’s antisweatshop money would be used to target industries known to employ undocumented foreign workers. Reich said the garment industry “appears to be one of the major magnets for illegal aliens coming into this country.”
More money would be available to purchase apparel and other goods under a Treasury Department request for tax cuts for families that would total $107.5 billion over seven years, including a tax credit of up to $500 for each dependent child and a deduction of up to $10,000 for post-secondary training and education.
Part of the cost of these benefits will be offset by $52.8 billion in revenues from the closure of several corporate tax loopholes, including the abolition of the “lower of cost or market” (LCM) method of inventory accounting, which allow companies to write down the cost of certain goods, such as damaged or unfashionable garments. Treasury asserts that the LCM method understates taxable income.
Cecelia Adams, director of tax, budget and health care for the International Mass Retail Association, said the change could cost retailers who use the LCM method millions of dollars a year. IMRA has been lobbying key Republicans in Congress and they oppose banning the LCM method, she said.
The President requested an additional $65 million more for the Customs Service in fiscal 1997 so the agency can add 600 new positions, most of them on the Southwestern border.
While engaged primarily in drug interdiction, new staffers will also be seeking illegal merchandise crossing the border, said a Customs spokesman.
For the first time since at least the early Reagan years, the proposed federal budget does not seek to eliminate funding for two textile-apparel industry research centers — the Textile Clothing Technology Center and the National Textile Center University consortium.
“This news, assuming it is correct, is pleasing to us, because of all the hard work and efforts we’ve made over the years to get the attention of people who have committed these dollars,” said Mike Fralix, director, manufacturing and educational resources with TC2, Cary, N.C.
Congressional Republicans criticized the President’s budget for just about everything, including its increase in the capital gains tax.
“I can’t find anything in the budget that is a significant decrease in spending,” said Senate Budget Committee chairman Pete Domenici (R., N.M.). Domenici said any GOP budget plan would include a decrease in the capital gains tax rate.
Senate Majority Leader Bob Dole (R., Kan.) said he planned to pursue balanced budget talks with Clinton, but added, “If he had been serious about that we could have had that New Year’s Day.”
Congressional leaders plan to meet with Clinton today to discuss the budget plan.
— Fairchild News Service

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