             |
FEBRUARY 15, 2008
Today, THA is pleased to provide the first edition of Footnotes, a new weekly update on Washington developments affecting the legwear industry. This year may see action on a wide array of trade, tax, product safety, labeling, government procurement and environment issues that could alter the competitive landscape for THA members. Footnotes will give you a leg up on these issues and what they might mean for your business – ensuring you are up to speed and ahead of the curve.
House Committee Approves Legislation Extending Andean Trade Preferences
The House Ways and Means Committee agreed February 14 to legislation extending existing duty free treatment for certain apparel and other products from four Andean countries (Bolivia, Colombia, Ecuador and Peru) through the end of 2008. Those preferences are currently set to expire on February 29. The legislation replaced a broader measure (H.R. 5264) introduced by Ways and Means Chairman Charlie Rangel (D-NY) earlier this week that would have extended Andean preferences and similar programs for the Caribbean and other developing countries until September 30, 2010. That measure faced opposition from the Administration and House and Senate GOP lawmakers concerned about the treatment of U.S. investors in Bolivia and Ecuador and eager to build pressure for passage of a pending free trade agreement with Colombia this year.
According to Capitol Hill sources, the full House likely will take up the Committee approved legislation during the week of February 25. The bill will then move to the Senate for final approval and to the President for signature. A measure extending Caribbean preferences, which expire on September 30, likely will be taken up later. If Congress does not act to extend Andean preferences before they expire at the end of this month, businesses will be required to pay duties on imports of covered apparel and other products from those countries entered after midnight on February 29. Consistent with past practice, however, those duties likely will be refunded once an extension is approved.
Honduras Sock Imports Hit New High as CITA Threatens Tariff
U.S. cotton hosiery imports from Honduras increased by more than 100 percent in 2007 compared to the previous year, according to preliminary full year trade data released by the Commerce Department on February 7. Overall U.S. cotton hosiery imports grew by just over 8 percent. On January 18, the U.S. Committee for the Implementation of Textile Agreements (CITA) announced its intent to apply a textile safeguard measure to cotton socks imported from Honduras. Under the CAFTA-DR Free Trade Agreement, CITA can impose a tariff up to 13.5 percent on cotton socks from Honduras through December 31, 2008. Honduras has 60 days (until March 18, 2008) to request consultations on the proposed measure. After the 60-day period, CITA has 30 days to make a final decision.
Senate Considers Legislation Increasing Penalties for Product Safety Violations
Senate lawmakers are currently considering legislation that would broaden the authority of the U.S. Consumer Product Safety Commission (CPSC) and increase penalties for product safety violations. In addition to a measure backed by business and passed unanimously by the House last year (H.R. 4040), Senators are also considering a controversial bill (S.2045) sponsored by Senator Mark Pryor (D-Ark.) that could expose manufacturers, private labelers, distributors and retailers to increased liability if found to violate laws administered by the CPSC – including the Flammable Fabrics Act.
Manufacturers are particularly concerned about provisions of the Pryor bill that would increase maximum civil penalties for product safety violations above the $10 million included in the House-passed measure, authorize state attorneys general to enforce laws administered by the CPSC (possibly resulting in various interpretations of product safety laws across multiple jurisdictions), and extend whistleblower protection for employees of manufacturers, private labelers, distributors, and retailers.
According to Capitol Hill sources, the Senate could vote on the matter as early as this week, but most likely after lawmakers return from President’s Day recess on February 25. However, it is not yet clear whether they will vote on the House measure, the Pryor bill, or some combination of the two.
Customs Extends Comment Period on Proposed Elimination of “First Sale Rule”
In a Federal Register notice published February 7, U.S. Customs and Border Protection extended the public comment period on a controversial proposal to eliminate a valuation rule that often lowers duties paid on imported textiles, apparel and other products. Comments are now due by April 23. Based on a 1988 Court of Appeals decision, the so-called “first sale” rule allows U.S. importers to value entering goods at the lower price a foreign wholesaler paid the overseas manufacturer of those goods, rather than the higher price paid by the importer to the wholesaler. The U.S. duty is then applied as a percentage of the lower “first sale” price. Customs states the change is necessary to bring its procedures in line with a 2007 technical decision by the WTO Customs Valuation Committee.
Eliminating the first sale rule could increase the cost of importing a wide range of manufactured goods from Asia, Europe and elsewhere that do not receive duty-free treatment under a U.S. free trade agreement or preference program. However, an increase likely would be especially significant for textiles and apparel, which are generally subject to higher duties than other products. The proposed change has already sparked strong opposition. On February 11, nearly 100 U.S. importers, retailers and industry groups sent a letter to Homeland Security Secretary Michael Chertoff seeking its immediate withdrawal.
[Federal Register notice: click here]
President Signs Economic Stimulus Plan, Including Tax Breaks For Business
The Economic Stimulus Act of 2008, signed by President Bush on February 13, includes several provisions designed to boost commercial investment by increasing deductions and providing accelerated depreciation for certain business property acquired and placed into service in 2008. Specifically, the new law increases the value (to $800,000 from $510,000) qualifying property expenses for which certain businesses may claim a deduction – and nearly doubles the size of the maximum deduction to $250,000 (from $128,000). In addition, the law provides an additional depreciation deduction of 25 percent of the value of qualified business property. The additional depreciation applies to first and second-year deductions. Businesses contemplating the purchase of new machinery, equipment and other capital goods in 2008 could benefit from these changes, and should seek the advice of qualified tax advisors before purchasing.
[Economic Stimulus Act of 2008: click here]
[provisions: click here]
President Requests Additional Funding for Import Safety, Enforcement
The President’s fiscal year 2009 budget request, released on February 4, seeks additional funding for manufacturing competitiveness, import safety and enforcement. The request includes an extra $8 million for a Commerce Department program that helps U.S. manufacturers compete with overseas rivals, an additional $9 million for agencies that administer U.S. antidumping and subsidy laws, and more resources for U.S. Customs and Border Protection. The request comes as some Capitol Hill lawmakers are considering existing and possible new legislation to address China’s undervalued currency and subsidized imports. It is not yet clear how or whether any of the proposed increases will be reflected in actual legislation. Congressional Democrats rejected the President’s overall budget, citing proposed cuts in healthcare, medical research and education spending.
Commerce Considers NAFTA Short Supply Petition on Wet Spun Acrylic Fiber
In response to a petition filed by a U.S. manufacturer, the Committee for the Implementation of Textile Agreements (CITA) has requested public comments on whether certain solution dyed, wet spun acrylic fiber can be supplied by the domestic industry in commercial quantities in a timely manner. Comments are due to CITA by February 25.
Alleging the fiber cannot be supplied domestically in commercial quantities in a timely manner, the U.S. firm has specifically asked CITA to consider whether the North American Free Trade Agreement (NAFTA) rule of origin for warp pile fabrics (classified under HTS subheading 5801.35) should be modified to grant duty-free treatment to such fabrics made with solution dyed, wet spun acrylic fiber produced outside North America. If CITA agrees with the U.S. manufacturer following an investigation and review of any public comments, it may recommend that the President proclaim the modification.
In cases like this, the burden of proof is always on the petitioner to demonstrate “short supply”. The requested modification to NAFTA rules of origin likely would lower the cost or enable the production of warp pile fabrics in North America – but possibly at the expense of potential domestic suppliers.
[requested public comments: click here]
Customs Extends Deadline for Haiti HOPE Declaration of Compliance
In a February 1 memorandum, U.S. Customs and Border Protection extended the deadline for submission of annual compliance declarations by apparel importers who “aggregate” to meet the value-content provisions of the Haiti HOPE Act. The Act allows specified apparel products from Haiti to enter the United States duty-free if the cost or value of materials and the direct costs of processing performed in Haiti or one or more countries with which the United States has a free trade agreement or trade preference program in place is not less than 50 percent of the declared customs value of those products. Importers may meet the 50 percent threshold either shipment by shipment or by “aggregating” costs over a one-year period. Aggregation gives importers certain flexibility in production and shipping, as long as their total annual shipments as a whole meet the value-content requirement. Importers using this method now have until February 21 to submit compliance declarations. Customs may deny all claims for duty-free treatment filed during the previous year by importers who fail to submit a declaration by the deadline.
|
|
|
  |
