Textile World | September 26, 2006
Trade Bill Is A Major Concern For Textiles
By James A. Morrissey, Washington Correspondent
In a move that is strongly opposed by US textile manufacturers, the chairman of the House Ways and Means Committee has introduced legislation that will make major changes in the textile provisions of two trade agreements and also promote investments in African facilities by US companies. Rep. Bill Thomas, R-Calif., will seek quick approval of the bill during the waning days of the current Congress, under suspension of the House rules.
The Washington-based National Council of Textile Organizations (NCTO) said the bill is a “job-destroying trade package,” and it urged textile-state members of Congress to protest against the action with the House leadership.
The bill would create a tariff preference level (TPL) with Haiti that would permit imports from other countries using a value-added approach. Under that approach, if 50 percent of value added to products is done in Haiti or any other free trade agreement (FTA) country, the goods may enter duty-free. The value-added TPL would begin at 221million square meter equivalents (SMEs) and would grow to 537 SMEs in five years. NCTO contends value-added TPLs are unenforceable and the US government would have to rely on an honor code, which it says “invites massive fraud and primarily encourages China to transship.”
The Thomas bill also extends until September 2008 the current provision in the African Growth and Opportunity Act (AGOA) that allows duty-free access for AGOA apparel made with fabric from anywhere in the world up to a limit of 3.5 percent of all US apparel imports. In addition, it adds a new rule of origin that would require 50-percent African content, which would grow to 60 percent by 2015, when AGOA is due to expire.
The bill also would provide a US tax credit for US corporations investing in sub-Saharan Africa.
NCTO President Cass Johnson said the Thomas bill would “primarily benefit China” and undercut the Central America-Dominican Republic Free Trade Agreement, the North American Free Trade Agreement, and Caribbean Basin Trade Preference Agreement and other FTAs. For the first time, the legislation would allow duty-free access for yarn and fabric from Africa.