GHAGRA QUOTA HAS IMPORTER, INDIA GOING AMOK
Byline: Carol Emert
WASHINGTON — An importer and trade officials of India are skirmishing over skirts with the U.S. Customs Service.
The controversy revolves around a popular type of Indian skirt, called a ghagra, generally loose, crinkled and ankle-length. With no advance warning, Customs on July 1 placed these skirts under quota when they are fitted with elasticized waistbands. Previously, the skirts had been treated as folklore products admitted into the U.S. without quota.
The Customs decision applies to all folklore items that have elasticized waistbands, including pants and dresses, from countries with a folklore provision in their bilateral trade agreements with the U.S. However, the Indian skirts are by far the largest affected category.
Contesting the decision is Ivory International, a Miami-based importer, which claims the ruling violates the U.S. bilateral agreement with India.
Customs says it can exclude elasticized items because the definition of folklore skirts does not mention elastic — it only states that the skirts must have hook or drawstring closures. Most or all of the skirts in question have both a drawstring and elastic in the waistband.
“We looked at the skirts with elastic waists and determined that…elastic is not considered a traditional component to the garment,” a Customs spokesman said. “It is considered a modern-day convenience.”
But Ivory and Indian trade officials are making the opposite argument: Since elastic is not specifically excluded by the agreement — as are zippers, for example — it should be allowed. They also note that Customs has approved such nontraditional features as power-loom fabric and polyester for use in the skirts.
Ivory’s import manager, Adrienne Waldron, said Customs has been admitting ghagras with elasticized waists as non-quota items for many years, and it is only since imports surged recently that Customs decided that elastic disqualified garments for folklore treatment.
The U.S. imported approximately 417,000 dozen ghagras from India in the first four months of 1994, compared with a total of 584,000 dozen in all of 1993, according to information from International Development Systems Inc., Washington, a trade consulting firm. As recently as 1991, ghagra imports stood at fewer than 50,000 dozen annually.
The Customs spokesman denied that import levels were a factor in putting elasticized ghagras under quota. The decision was made recently because it was only recently that Customs noticed the elastic and decided it was not traditional, he said.
Opponents of the decision also contend that the decision violates a provision of the bilateral trade agreement which states that discussions between the two countries must take place before any changes in quota categories are made.
“If [Customs] did not like the elastics, they should have called us up and said, ‘Look, this is not included,’ and we could have had a discussion,” said L.D. Ralke, first secretary, commerce, at the Indian Embassy here. “Now a lot of importers here and exporters in India are at a loss.”
Said the Customs spokesman, “My understanding is we had the authority to do it. Otherwise we would not have done it.”
An Indian trade team met with U.S. officials two weeks ago, but no progress was made. The next discussion will take place Monday.
One major retailer using the skirts is J.C. Penney Co. The chain has 8,000 ghagras with elastic waists in stock and has ordered 20,000 more for delivery through the end of the year, said Larry Lonergan, a buyer, when contacted last week. The company has sold 6,000 of the skirts at $18 each since it started carrying them in the beginning of June, he said.
Lonergan said his supplier — not Ivory — assured him that it has enough inventory to fill the rest of the year’s orders.
Meanwhile, Ivory, whose accounts include some mass merchandising chains, may have to abandon more than 2,000 dozen ghagras worth upward of $200,000 that arrived after July 1 without the visas that accompany quota merchandise, Waldron said. Ivory’s exporter in India is trying to buy quota for those shipments, for which Ivory is now paying storage fees.
Waldron has another 12,500 dozen skirts worth $1.4 million scheduled to leave India next month. She said she is debating whether to buy quota for them because if the Customs decision is invalidated, the quota will be useless to her and its value will likely fall.
The cost of Indian skirt quota already has risen to about $25 per dozen from $21, she said. The quota situation is likely to become increasingly tight as the year progresses, she said, since India routinely filled its skirt quota of 910,000 dozen before the new category was added.
Waldron said if the Customs decision is not changed soon, she may move her production to Nepal, where quota is cheaper.
“There are many ways we can lose money in this,” said Waldron, who expects to post a loss on her ghagra business this year, although the company overall should remain profitable.
If production of the skirts is delayed for very long, the shipments may have to be flown, rather than sent, more economically, by ship. “And ultimately we could lose a customer if we’re not very careful. That’s where you’re highest liability is.”
Ivory is currently awaiting a reply from the Committee on the Implementation of Textile Agreements, an interagency group with jurisdiction over quota matters. Tom Travis, Ivory’s attorney, said he has asked CITA to review both the decision on elastic and whether the lack of discussion with India violates the bilateral.
Travis, a partner with Sandler, Travis & Rosenberg, Miami, also sent samples of Ivory’s skirts to Customs, asking them to examine the skirts and reconsider their decision.
“Ours is clearly a traditional ghagra, and just looking at the elastic is not the only test,” said Travis, noting that the skirts are made with traditional, handprinted fabric.
If CITA and Customs both decide to stand by the earlier decision, Ivory may file a protest with the Customs Service. If the issue cannot be settled administratively, the case could ultimately wind up in the Court of International Trade, although it is too early to speculate whether that might happen, Travis said.
— Fairchild News Service