THE MATTER OF SHORT SUPPLY
Byline: Kristi Ellis
WASHINGTON — Likening the short-supply process in preferential trade agreements to a game of roulette, industry groups are calling for clearer guidelines, but the government claims its decisions are based on consistent and thorough reviews.
For its part, the industry wants to know how the Committee for Implementation of Textile Agreements determines what is in short supply in the U.S., as well as the criteria the agency judges.
Short-supply provisions, contained in the Trade and Development Act 2000 for Caribbean countries and sub-Saharan African nations, allow garments made of non-U.S. materials to qualify for duty-free status if they are not commercially available in a timely manner in the U.S.
Apparel and textile companies who import yarns and fabric from third-party countries have filed a total of 11 short-supply petitions since the trade bill went into effect a year ago and the list continues to grow. CITA, charged with making the final recommendation to the President, has denied three requests and approved one under the Caribbean Basin Trade Partnership Act, approved one under the African Growth & Opportunity Act and denied one under NAFTA. CITA receives input from a number of sources, including the U.S. Trade Representative’s office, the International Trade Commission and Congress.
“Every time we make a decision, some people are happy and some are unhappy,” said Phil Martello, director of the trade data division at the Office of Textiles and Apparel. “If they don’t get the outcome they are looking for, they have their slant.”
Charles Bremmer, director of international trade at the American Textile Manufacturers Institute said his group’s members, who typically oppose imports, have made a significant investment in Mexico since NAFTA went into effect.
“Some of the denials (and exceptions) were justified and some were not,” said Bremmer, although he remains highly critical, contending that CITA’s decisions are “subjective” and not based on empirical data.
Martello acknowledged that any decision based on written documents is subjective, but he said the agency specifically looks for a direct domestic substitute for the imported product: “Give us a why and send us some samples that show why product ‘x’ is substitutable for product ‘y.”‘
On the importer side, there are concerns about unclear CITA guidelines and inconsistencies, said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles and Apparel.
Each petition should be ultraspecific in terms of descriptions of the product that the domestic industry allegedly cannot supply in a timely manner, Martello said, because “if a petition does not provide specific information, there is very little to work with.” He did note that petitioners are improving as the process moves forward. If a company receives a denial, it can resubmit a petition with a narrower definition and restart the 60-day clock, Martello noted.
In every case CITA has denied, domestic textile producers have contended in public comments that they can produce the fabric or yarn named in the petition.
“When a company says ‘we already make this product or we are capable of making this product,’ that is a very strong statement,” said Martello. “Once we have accepted a petition, we are looking for any [domestic] products that are directly substitutable.”
The impact of a short-supply denial on manufacturers varies. Fabrictex, a fabric maker employing more than 350 people in its Lincolnton, N.C., plant, has laid off one-third of its workforce as a result of the CITA ruling on solution-dyed viscose yarns, said Brenda Jacobs, an attorney representing the company who is also general counsel of the USA-ITA.
Jacobs said five textile mills came forward during the public-comment period and claimed they could produce the right fabric for Fabrictex. To date, only one of the five has developed material for Fabrictex and it doesn’t meet the company’s specifications on color or turnaround, she said. Jacobs called Fabrictex a “victim” of the early learning process of short-supply petitions and plans to file a new petition, which she believes will stand a better chance.
On the other end is Amicale, which has filed two petitions for camel hair and cashmere yarns under CBTPA and NAFTA and received two denials. Amicale resubmitted a petition under NAFTA last week with a narrower focus.
Boris Shlomm, president of Amicale, supports the flexibility in the law to allow for short-supply requests and credits CITA with making clarifications on its guidelines. In Amicale’s case, the company is attempting to expand its exporting to the Caribbean, Mexico and Canada, so no business was lost, according to Shlomm.
“Short supply is important because it gives the industry an opportunity to appeal to CITA for a practical solution to these problems,” Shlomm said.