COLOMBIA WANTS EQUAL TRADE RIGHTS
Byline: Joanna Ramey
WASHINGTON — Now that its neighbors to the north have been granted preferential trade status, Colombia wants equal treatment on exports to the U.S.
Without it, apparel makers in Colombia face the reality that their already slim 0.66 percent share of the U.S. apparel import market will shrink after Oct. 1.
That’s when a U.S. trade bill goes into effect granting duty-free status to apparel produced in the Caribbean and in Central America on goods in which U.S. textiles are primarily used. The region, with 24 percent of the U.S. import market, is already chief competitor of Colombia, along with Mexico, whose own NAFTA free-trade breaks have boosted its apparel market share to 16 percent.
In order to maintain their apparel export market, the Colombians are turning to Congress for help, asking lawmakers for duty breaks almost equal to their Caribbean and Central American neighbor nations.
Their argument is that the U.S. should be concerned about the Colombian garment industry at a time when the U.S. is spending close to $1.3 billion in military aid to fight the country’s flourishing narcotics industry and right its economy. Colombia currently has a 20 percent unemployment rate.
According to government statistics, the Colombia apparel industry directly employs about 200,000 workers, and about 80 percent of their production is in the assembly of U.S.-made textiles. The sector also accounts for around 11 percent of the country’s manufacturing employment.
Paul Arcia, president of ARC International, which employs 1,500 workers in its Barranquilla garment factory, expects to lay off 900 workers by Jan. 1 if Colombia isn’t given apparel trade breaks. Now, Arcia pays an average 5 to 6 percent duty on garments entering the U.S. when they’re produced from U.S. textiles that are also cut in the States.
Even this relatively slim tariff — average nonpreferential apparel tariffs are around 17 percent — makes a difference for an industry in which low prices reign.
Arcia said he already lost a pending sportswear contract with Sara Lee a matter of days after the Caribbean Basin legislation was passed. He said Fruit of the Loom has said it won’t renew its contract in December, and other vendors are asking him to absorb the duties on shipments, citing the price difference in the duty-free Caribbean Basin.
The 24 Caribbean and Central American nations “all of a sudden have a terrific edge, and now we’re the odd man out,” Arcia said. He calculates that a shipment of 100,000 pairs of jeans, costing about $8 each to produce in Colombia, carries a $75,000 duty.
On June 27, Sen. Bob Graham (D., Fla.), whose state is a center of cutting U.S. textiles for offshore assembly, introduced a bill that would grant duty-free status to Colombian apparel imports containing U.S. components. The measure, called the Plan Colombia Trade Act and intended primarily to target Colombia, also covers other Andean countries Bolivia, Ecuador and Peru, with which the U.S. has a trade pact. Of the four, Colombia has the only developed apparel export industry.
Plan Colombia has six sponsors in the Senate, including Sen. Charles Grassley (R., Iowa), chairman of the Trade Subcommittee. In the House, the bill is still awaiting a sponsor.
Although House trade lawmakers typically favor trade-liberalizing legislation, there’s concern among members about the precedent of seeking partial trade breaks while the U.S. is negotiating a Free Trade Agreement of the Americas, which would cover all of North and South America. The Andean Trade Preference Act, which involves non-apparel trade, also expires in 2001, and renewal negotiations begin next month.
Brenda Jacobs, a Washington attorney hired by Colombia to lobby for immediate apparel duty breaks, said Colombia garment makers can’t wait for these pacts to be concluded.
“We’re under an emergency situation,” Jacobs said.
Jacobs said she expects Plan Colombia to be less politically volatile than the recently passed duty-dropping legislation covering the Caribbean Basin and sub-Saharan Africa. Unlike the Caribbean Basin program, Plan Colombia covers only apparel produced from U.S. textiles. The Caribbean Basin bill has allowances for garments that use regional fabric.
In addition, “we don’t view this as something that threatens apparel jobs in the U.S.,” said Jacobs, figuring that lost Colombia manufacturing would simply shift to the Caribbean Basin.
Ann Hoffman, legislative director of UNITE, said that on principal the apparel and textile union opposes trade bills like Plan Colombia. She questions how Colombia, in any event, will survive.
“We have just made a massive giveaway of U.S. apparel and textile jobs through the [Caribbean Basin]-Africa bill,” she said. “I don’t frankly know what’s left for Colombia to pick off.”
Adding to Colombia’s apparel-industry drama is the shortened congressional calendar. There are just six weeks left on the agenda before Congress adjourns for the year.
Graham said Plan Colombia’s best hope for passage is to attach it to an unrelated bill, like one of the federal funding measures now barreling through Congress.
“We’re looking for any means to get the trade bill up,” he said.