DHS Issues Final Rule Covering Buy American Requirements for Textile & Apparel Products

(Textile World – James A. Morrissey)

The Department of Homeland Security (DHS) has issued its final rule covering Buy American requirements for its purchases of textile and apparel products under the American Recovery and Reinvestment Act of 2009. The agency adopted, without change, its interim rule issued last August 17, and in effect rejected a number of objections from textile manufacturers, organized labor and others.

DHS said it received comments from 26 organizations and individuals and members of Congress who suggested a number of changes, as they felt the interim rule did not carry out the full intent of the legislation. Commentators called for changes in the de minimis exceptions to the rule, the definition of national security interests and the listing of some of the trading partners with which the United States has preferential trade agreements; and they also called for the DHS to “mirror” the Berry Amendment, which covers textile and apparel purchases by the Department of Defense.

Read more here. The text of the final rule is available in the Federal Register for June 9, Vol.75, No.110/Rules and Regulations, here.

CPSC Takes Over Detention Notices

(Apparelnews.net)

The Consumer Product Safety Commission will begin sending detention notices to importers found to have violated CPSC statutes.

Previously, detention notices were sent by the U.S. Customs and Border Protection.
The two agencies recently held a joint webinar to explain the shift, which begins June 14.

Going forward, detention notices will be sent by a CPSC compliance investigator or field officer. The notices will include information about the violation, including a description of the violation and the corresponding statute, as well as CPSC contact information. The importer will have five days to resolve the initial detention with test results or other relevant information.

According to Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, CPSC hopes to resolve these issues within 30 days. However, the law firm, which specializes in customs and export issues, cautions importers against waiting for the 30 days to pass.

According to a release from the law firm, “Goods will not be deemed excluded if CPSC fails to make a determination within 30 days. This is significant as the importer will not be able to file a protest on the 31st day as is the case when goods are detained by CBP.”

Additional information about the CPSC and the 2010 Consumer Product Safety Improvement Act is available at the CPSC’s website.

Support ‘Made in Canada’ Clothes: Manufacturers

(CBC.ca)

Canadian clothing manufacturers are hoping the federal government will use Thursday’s budget to boost the number of articles bearing the ‘Made in Canada’ label by cutting duties on the importation of raw materials.

The North American manufacturing industry has struggled since free trade opened the market to clothing from abroad.

Fifty-per cent of jobs in the Canadian textile industry were lost over the past decade after the federal government dropped tariffs on cheaper-made clothing from overseas, according to a lobby group representing some 500 Canadian manufacturers.

Though higher gas prices and changing attitudes have provide a recent boost to the industry, high duties remain a serious obstacle for Canadian manufacturers according to the Canadian Apparel Federation.

“You could have a garment that is made in Vancouver, or Montreal or Toronto— and you are paying up to 14 per cent duty just on fabric — so that makes you uncompetitive,” said the group’s executive director, Bob Kirke.

The increasing cost and uncertainty involved in importing goods from halfway around the world is forcing many companies to reconsider imports in favour of domestic production, Kirke said. Read more here.

New Legislation Would Remove Import Tariffs on Outdoor Apparel

(Outdoor Industry Association)

Legislation to remove import tariffs on recreational performance outerwear was introduced in both the House and Senate July 10. Rep. Earl Blumenauer, D-Ore., said the Optimal Use of Trade to Develop Outerwear and Outdoor Recreation (OUTDOOR) Act (H.R. 3168 and S. 1439) will eliminate duties on jackets and pants used for outdoor activities like skiing and hunting that are not currently made in the U.S. These duties average 17% and can be as high as 28%.

The bills would also require companies benefiting from the tariff elimination to contribute a portion of their savings to the Sustainable Textile and Apparel Research Fund, which would make grants available to certain non-profit organizations to advance U.S. competitiveness in lean manufacturing technologies and supply chain analysis. The STAR Fund grants will be made available through a competitive process administered by the Department of Commerce and are designed to help the global textile and apparel industry minimize energy and water use, reduce waste and global warming emissions, and incorporate sustainable practices into product life cycles. Read more here.

Apparel Importers Want Obama to Drop Tariffs, Discriminatory Treatment

(World Trade Interactive)

A trade association representing U.S. textile and apparel importers has called on the incoming Obama administration to eliminate tariffs on such goods, avoid discriminatory treatment of imports and improve the transparency of trade policymaking in this sector. The U.S. Association of Importers of Textiles and Apparel stated in a recent white paper that the January 1 removal of the remaining quotas on imports from China signals “a transformative moment” that “compels a complete re-thinking of apparel trade policy.” The group’s recommendations include the following.

• Eliminating tariffs – Both quotas and high tariffs on textile and apparel products have imposed a costly burden, particularly on consumers with low incomes. Now that quotas have been scrapped, and given the ongoing economic downturn, the elimination of tariffs “must be a top priority.”

• Avoiding discriminatory treatment – The discriminatory treatment of imported textiles and apparel that has marked decades of trade agreements and unilateral preference programs should be discontinued in favor of “simple, user-friendly and uniform rules premised on real business practices.” Apparel products should no longer be excluded from development programs such as the Generalized System of Preferences. The domestic textile industry should be required to follow the rules (e.g., standing to bring trade remedy cases) set forth in U.S. trade laws.

Read more here.

U.S. Customs Seminar: Importing Apparel into the U.S. – December 16, 2008

(Ontario Apparel)

Presented by: United States Customs and Border Protection – Kristine Dodge, Jim Neubert, Maryalice NowakHosted by: The Canadian Apparel Federation (CAF)

Toronto - Yorkdale Holiday Inn Tuesday December 16, 2008
1:00 p.m. - 1:30 .m. Registration, 1:30 p.m - 4:00 p.m. Seminar

CAF/Apparel Ontario Members: $35.00 (plus GST)
Non-members: $70.00 (plus GST)

Seminar topics:

• Requirements for companies importing goods into the U.S., including “reasonable care”
• Enforcement priorities and procedures
• Best practices companies should follow re. documentation etc.
• Procedures for both NAFTA and third country (including China) merchandise

Please click here to download registration form. Complete and return by fax to: (613) 231.2305

US Consumer Product Safety Commission (CPSC) Requirements: Apparel Shipments

(GHY International)

We have received numerous requests from our clients with respect to the CPSC requirements for shipments of apparel into the United States effective November 12, 2008. We have been communicating with the Canadian Apparel Federation and other trade associates to get some clear guidelines. Quite simply, we have asked the question: “What documentation am I going to need on November 12 to ensure my product clears Customs?” Here is what we have been able to find out as of today:

• For a list of all that are controlled under CPSC please go to the list of regulated products on the CPSC website.

• Exemptions can be found under 1610 and 1610.38. Garments may be exempt based on the weight. You still need a Certificate but would just indicate the exemption (16CFR1610.37(d)).

A sample Certificate of Conformity (that includes completion instructions and FAQ) is available here (PDF file).

We have put the following two links on our website under Trade News Bulletins:

• A slide show outlining the program is available here.
• An informative summary by the trade law firm Sandler, Travis & Rosenberg is available here.

GHY will continue to update our website www.ghy.com and to send out emails to those clients we know will or could be directly impacted by this legislation. If you would like to be added to our mailing list, please contact Vicki Deluca at GHY International.

EU and China to Limit Chinese Clothing Exports to Europe Until End of 2008

(The Canadian Press)

The European Union and China have agreed to cap Chinese clothing exports to Europe until the end of 2008, the European Commission said Tuesday.

The EU’s executive arm said it would run “joint import surveillance” with the Chinese Foreign Trade Ministry for the next year for some types of clothing instead of lifting all quotas on Chinese textiles as originally planned for the start of 2008.

Some European manufacturers had feared that they would have to compete with a flood of cheap Chinese bras and T-shirts when quotas were lifted. EU officials had asked China to try to contain its ballooning exports to Europe, the largest purchaser of Chinese goods.

Apparel Importers Prepare for a Post-2008 World

(Deborah Belgum — apparelnews.net)

The world of apparel importing will change drastically at the end of 2008.

But how it will change is the unanswered question.

Safeguard measures that curb imports on 34 categories of apparel and textiles from China will expire on Dec. 31, 2008.

No one is sure what will happen after 2008. More safeguard measures could be imposed. Anti-dumping measures could be requested or countervailing duties could be sought to stem Chinese apparel.

But Janet Labuda, the chief enforcer of apparel and textile quotas and duties for U.S. Customs and Border Protection, doesn’t believe her job will disappear overnight.

“I know our resources in border protection will be shifted to free-trade preferences and revenue protections,” she said. “And if China has to continue to pay high duty rates, I don’t know how that will affect our enforcement.”

Many Chinese manufacturers are renowned for finding clever ways of getting around paying duties. They have been known to classify apparel as toys, brooms, toilets and other non-duty or low-duty items. They have also been known to ship goods to another country and then the United States to fly below the quota radar.

Labuda wondered whether domestic manufacturers will file anti-dumping cases restricting Chinese apparel imports after 2008. “People think anti-dumping cases will occur. I have my doubts,” she said. “They have to prove material injury to a U.S. industry, and it is very expensive to pursue. Five years ago, it cost about $1 million in legal fees, and now it would be about $3.5 million.”

Because of foreign-trade subsidies on some apparel exports, she believes that importers will pressure the U.S. government to slap countervailing duties on clothing coming from Asia. That has already been discussed on items coming from Vietnam, which joined the World Trade Organization this year. The organization promotes free trade among the group’s 151 countries that are members. China joined in 2001.

Under WTO rules, a country can launch its own investigation into foreign subsidies and decide to charge extra duties. “The test here is not as difficult,” she noted. Labuda was in San Pedro, Calif., speaking on Sept. 12 at the sixth annual China Conference, a two-day event organized by Cargo Business News.

With China now the largest apparel supplier to the United States, its role after 2008 is keeping many people guessing.

But Robert Krieger, president of Krieger Worldwide, a Los Angeles customs brokerage and freight forwarder, suggested watching Europe and seeing how it handles its apparel and textile quotas on 10 categories that expire at the end of this year.

“If the EU [European Union] starts initiating anti-dumping measures against China, then it is time to panic,” he said.

Krieger suggested preparing Chinese factories for anti-dumping investigations by making sure business records are in order.

Profit margin With textiles accounting for 42 percent of the $25.1 billion in duties collected on goods coming into the United States last year, Labuda said she doubted the government would issue a green light on Chinese apparel after 2008.

“Chinese goods continue to pay a large portion of that 42 percent,” she said.

Customs will be scrutinizing goods coming from countries that are part of the various free-trade agreements and trade-preference pacts struck in recent years by the Bush administration.

“I think Chinese imports will continue to increase, and they may continue to transship [to a third country] to keep [apparel and textile] statistics down and stay off the radar,” she said.

One concern is that after 2008, the apparel and textile market will be flooded with Chinese goods, pushing lesser-developed countries such as Indonesia, Turkey and various African nations out of the business.

“AGOA [the African Growth Opportunity Act] is falling apart, I have heard,” Labuda said. “What the role of the WTO is will be very interesting from our perspective.”

Ilse Metchek, executive director of the California Fashion Association, noted that any time the market is flooded with goods, the price drops and it becomes less desirable. “When there is dumping in fashion, it kills,” she said.

Bruce Berton, director of international business consulting at Stonefield Josephson Inc., a Los Angeles accounting firm, believes that China could curtail its own apparel exports.

He recalled when silk first started being exported from China to the United States in 1991. “There was so much silk coming in from China that the Chinese asked our government to put a quota on silk to increase the price,” he said. “The U.S. could raise the duty ratios on Chinese goods.”

He also noted that the Chinese government is pushing its business community to establish more high-tech industries that deliver higher profit margins and revenues than the apparel industry. “I don’t see the apparel industry growing, especially if industries move inland, where transportation costs are higher,” he said.