FULL PLATE FOR RETURNING CONGRESS
Byline: Joanna Ramey
WASHINGTON — Congress returns to town this week to an agenda filled with issues dear to the fashion industry, several of which are on unsure footing.
Already-passed bankruptcy reform legislation — a priority for retailers who had expected the bill to be signed into law by now — is hung up in an unrelated power-sharing dispute in the Senate, which is evenly split along party lines. Senate Republicans and Democrats can’t agree on how many members from each party will be named to a committee to reconcile House and Senate versions of the bill.
Another angst-causing item on Capitol Hill for the fashion industry is the pending vote on whether to continue China’s normal trade status, which keeps low tariffs on imports. Lingering fallout from China’s handling of the recent U.S. spy plane incident is fueling anti-China rhetoric that typically precedes the annual vote, to be held before August. Congress has been on its spring recess, so this week lawmakers will have their first chance to weigh in prominently on the spy plane controversy.
“Anybody who does business with China is wondering how this is going to play out,” said Steve Pfister, senior vice president for government relations at the National Retail Federation.
The future of other trade legislation is also precarious.
Starting this week, Bush administration officials have pledged to intensify efforts to secure what it calls trade-promotion authority, also known as fast-track authority, seen as crucial to further negotiations for a Free Trade Area of the Americas. The authority gives foreign countries assurance that Congress won’t change a trade agreement, but only vote to approve or disapprove it.
However, in seeking this authority, the White House will have to address the knotty issue of whether trade pacts should be used to force countries to improve labor and environmental conditions so as not to use lower standards to be more competitive. Such provisions are considered key to securing much-needed Democrat support for granting the authority, but are anathema to many Republicans.
So far, a bipartisan compromise on labor and the environment sought by trade-writing lawmakers has been elusive, with Republicans rejecting outright any standards calling for sanctions. Other, possibly more palatable, ideas include enforcing standards via fines or increasing U.S. market access as standards improve. Such a market-access reward was contained for the first time in the Clinton administration-negotiated Cambodia textile agreement.
Trade promotion authority lapsed during the Clinton administration after passage of NAFTA and several attempts to revive it have met with opposition.
Ann Hoffman, legislative director for the apparel union UNITE, said labor and environmental standards won’t easily be dispatched and thus the trade agenda will remain bogged down.
“Whatever they try to bring up is going to be controversial,” Hoffman said.
A Jordan free-trade agreement and a trade pact with Vietnam — penned in the Clinton administration — also await congressional approval, but for the time being aren’t on the front burner for consideration. Also in the wings is a bill that would give duty-free treatment to apparel produced in the Andean countries of Colombia, Bolivia, Ecuador and Peru, if the garments are made largely from U.S. textiles.
The Andean bill, supported by retailers and importers of apparel, has drawn fire from the domestic textile industry, reluctant to support another trade bill so soon after last year’s passage of one granting duty-free access to Caribbean Basin apparel made from mostly U.S. textiles.
“The law has not been fully taken advantage of by the domestic side or the foreign countries,” said Doug Bulcao, director of government relations with the American Textile Manufacturers Institute. “You would think the policy makers would give the Caribbean an opportunity first before you start to divide up the pie” with more competition.
Textile mill officials also don’t want an Andean bill considered until Customs releases precedent-setting regulations on the Caribbean Basin bill regarding dyed and finished fabrics. Textile mills only want duty breaks given to apparel produced in the region from U.S. fabric that’s also been dyed and finished in the U.S.
The dyeing-and-finishing issue continues to draw fire on Capitol Hill, where textile state Sen. Jesse Helms (R., N.C.) has vowed to block key Treasury Department confirmations by the Senate if Customs decides dyeing and finishing in the Caribbean doesn’t change the fabric’s country of origin as being the U.S.
Helms’s political arm twisting is being played out in the wings. At center stage is the President’s $1.6 trillion income tax-cut package, which retailers are supporting as a means to boost consumer spending. Although a tax cut probably won’t emerge from Congress until as late as the fall, it would be retroactive to the beginning of the year.
However, the tax cut will likely be whittled down some as lawmakers seek to increase federal funding for certain programs. One of these projects is a new Customs cargo-processing computer, to which Bush’s proposed 2002 budget only gives $130 million.
After the tax-cut bill has been dispensed, businesses will also be seeking their own tax cuts. For example, retailers want to be able to depreciate remodeling costs more quickly. Now, depreciation occurs over 39 years. But a bill introduced by Rep. Clay Shaw (R., Fla.) would change that to 10.