CUSTOMS RULING DUE ON CBI

Byline: Joanna Ramey

WASHINGTON — One of the things that Sen. Jesse Helms (R., N.C.) is passionate about is protecting fabric dyers and finishers in his state from competition in the Caribbean Basin.
On the House side, passions run equally deep among Trade Subcommittee members for another apparel trade issue: permitting sweaters from Sub-Saharan Africa, knitted in the region using locally made yarn, to enter the U.S. duty free.
What both issues have in common is how the Customs Service decides which apparel imports can enter the U.S. duty- and quota-free under legislation passed last year covering both regions.
In the case of the sub-Saharan African-made sweaters, Customs recently ruled the garments don’t qualify for duty-free treatment because, according to the agency, the knitted panels sewn together to form the sweaters aren’t technically fabric. If the panels were deemed fabric that in turn were “cut and sewn” into sweaters, the garments would qualify for trade benefits under the legislation.
Regarding Helms’s pet concern, Customs has yet to rule whether a garment produced in the Caribbean Basin using U.S. fabric loses its duty-free status if the fabric is dyed or otherwise finished in the Caribbean Basin. The agency’s decision, expected by next month, will be one of several rulings regarding how the minutiae of last year’s trade bill should be put into practice.
Importers of apparel from the region are concerned Helms will get his way.
“It would be just one more thing making it difficult to do business,” said Larry Martin, president of the American Apparel & Footwear Association.
Helms has repeatedly argued the legislation’s intent was to protect the U.S. textile industry, since the bill gives the bulk of its trade benefits to garments made of U.S.-produced fabric. As Helms sees it, dyeing and finishing is an integral part of fabric production, employing upward of 120,000 workers in the U.S.
To drive home his point, Helms last Wednesday urged Treasury Secretary Paul O’Neill to have Customs stipulate that the legislation’s duty and quota breaks are extended only to garments made of fabric produced and finished in the U.S., according to a source.
Helms, in an apparent sign of goodwill toward O’Neill — who oversees Customs — lifted a hold the lawmaker placed on a pending Senate confirmation vote for an undersecretary of the Treasury.
As for the flap over the African sweaters, the House Trade Subcommittee this week is poised to send O’Neill and Customs officials a letter stating the case that sweater panels, indeed, should be considered cut fabric under the legislation.
To Julie Hughes, vice president of international trade at the U.S. Association of Importers of Textiles and Apparel, Customs has a history of interpreting apparel regulations that puts sweater panels on equal footing with pieces of fabric.
“It seems to me this is a no brainer,” she said.
Should either side fail to garner Customs’ attention, their issues could be addressed in special legislation commonly known as a technical corrections bill.
In the meantime, at least in the Caribbean Basin, retailers and other importers appear to be holding back on placing new orders from the region until Customs releases its regulations regarding the trade bill, said Jim Conner, executive vice president of the American Yarn Spinners Association.
As an example, Conner said the annual allotment given in the legislation for knitted fabric made from regional fabric is less than 4 percent filled and the allotment for knit T-shirts has been filled by only 14 percent.
“The retailers look at this and say, ‘I can’t afford to have the axe drop at some point and keep my goods from getting in,”‘ said Conner, of the industry awaiting the Customs’ ruling. “It’s a pretty complicated mess.”