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Washington Outlook Archive
James A. Morrissey, Washington Corrrespondent

Tariff Policies Will Shape Future Textile Trade

James A. Morrissey, Washington Correspondent

A lthough the so-called Doha Round of World Trade Organization (WTO) trade liberalization negotiations is not scheduled to be completed until the end of 2004, US government trade officials are well on their way toward shaping positions they plan to take as the talks progress. From the standpoint of textile trade, what happens with tariffs and non-tariff barriers could very well determine the future course of the US textile industry.

At a recent round of market access hearings conducted by officials from the Departments of State, Commerce and Labor; and the US Trade Representative (USTR), lobbyists for the US textile industry and importing interests expressed sharply divergent views as to what they would like to see happen as a result of the WTO negotiations.

The importers want to see all tariffs and non-tariff barriers eliminated as soon as possible. That is not necessarily the so-called 0 for 0 approach to tariff reductions, by which all countries would immediately bring all of their tariffs down to zero. While that would be their ultimate goal, it is not practical in the real world of international trade. What they want to see is unspecified reciprocal reductions in tariffs, including those of the United States. As Steve Lamar, senior vice president of the American Apparel and Footwear Association (AAFA), says, "At the end of the day, we must have meaningful reductions in tariffs and non-tariff barriers." He says this can be accomplished in a number of ways, and at this point his organization remains "flexible."

The American Textile Manufacturers Institute (ATMI) is taking a much harder line. It says other countries should bring their tariffs down to match those in the United States before any further tariff concessions should be granted. ATMI says many developing countries have failed to live up to commitments made in the Uruguay Round of trade negotiations in 1993, and they should not be "rewarded" with further tariff reductions until they open their markets to imports.

Of equal importance, according to Carlos Moore, ATMI's senior vice president, is a "sectoral approach" to market access negotiations. In other words, textile and apparel and other industries should be considered as separate entities and not get lumped into more general negotiations, where they could be used as trading chits for other sectors such as agriculture or services. Moore says, "A sectoral negotiation is crucial to getting effective access to many markets that are closed to US products today."

He adds that a sectoral approach focuses entirely on obstacles to trade and prevents some countries from creating linkages and trade-offs with other products and trade practices. He believes issues such as theft of intellectual properties and other fraudulent trade practices also should be dealt with in a sectoral framework.

Textiles and apparel were considered separately in the Kennedy, Tokyo and Uruguay Rounds of trade negotiations, and at the present time, it appears that the US government is leaning toward that approach for textiles and some other industries. Questions of how to protect US anti-dumping and countervailing duty laws likely will be considered in general negotiations because a wide variety of industries are involved.


US Presses For Free Trade Agreements
Armed with new trade negotiation authority, the Bush administration is moving forward on a rash of trade agreements that could mean good news or bad news for textiles, depending upon how they are structured.

The administration has free trade or bilateral trade agreement negotiations on its agenda for Singapore, Chile, Morocco, Central America, South Africa, all of Latin America and the 10 nations that comprise the Association of Southeast Asian Nations (ASEAN). Agreement has been reached with Chile and Singapore. Details are expected soon. Those negotiations had been underway for some time, but they became bogged down when the president lacked the "fast track" negotiation authority that Congress now has granted. With Republicans controlling Congress, the administration's trade agenda likely is in for smooth sailing.

Trade officials hope to conclude a Central American pact next year, since the United States already has agreements with the Caribbean nations. US and Central American trade officials hope a broader agreement will result in greater reciprocal market access. Next in line would be a Free Trade Area of the Americas pact designed to have hemispheric trade displace imports from the Far East and Asia.

The ASEAN nations are the newest entry in the free trade marathon. While the White House announcement emphasized opportunities for increased agricultural exports if tariffs in the ASEAN nations are reduced, textiles could be an important and perhaps crucial part of the negotiations. The ASEAN group - which includes nations such as Indonesia, Malaysia, the Philippines, Thailand and Vietnam - will be highly controversial.

As to what all this means for the US textile industry, ATMI believes all such pacts need to include a yarn-forward rule of origin, with minimal exceptions and tough Customs enforcement. That could be a plus for domestic manufacturers. On the other hand, importers say textile agreements should be as free as possible of tariff and non-tariff barriers such as country-of-origin rules and other restrictions supported by ATMI. That could result in much freer access for imports into the US market and further erosion of domestic textile production.

US Industry Hits Indonesia's Market Closing
The US textile industry and its supporters in Congress are strongly attacking Indonesia's closing of its markets to all imports of textiles and apparel, not so much because Indonesia is a significant market, but to highlight problems with countries that export large quantities to the US while protecting their home markets. The Indonesian government recently announced it was closing its markets to all textiles and apparel imports in response to a flood of imports from China.

Van May, ATMI chairman, quickly fired off letters to Secretary of Commerce Donald L. Evans and USTR Robert Zoellick, charging that the ban is a violation of WTO rules. He urged the US government to conduct "consultations" with Indonesia immediately, and if Indonesia refuses to lift the ban, the US should similarly ban imports from Indonesia.

Indonesia is not a particularly important export market for US-made textiles, as exports in recent years have hovered around $15 to $17 million, but Indonesia last year exported $350 million worth of textiles and apparel to the United States. Textile industry officials see this as a classic example of how countries ship huge amounts of textiles and apparel to the US while sharply limiting or closing their own markets.

In his letters, May charged that Indonesia has "high tariff rates, arbitrary customs valuations, add-on taxes, excessive paperwork and customs delays that have limited US textile exports." US textile manufacturers would like to see imports from not only Indonesia, but also India, Pakistan and some of the major Asian nations restricted unless they open their markets to US products. In addition, May expressed concern that if the Indonesian action is not reversed, other nations under siege by Chinese imports also would close their markets to all textile and apparel imports.

Government Seeks Help With Piracy Efforts
As the government steps up its efforts to combat piracy of textile and apparel designs, the US Customs Service is urging textile companies to lend a hand by officially recording their patents and copyrights and providing guidance for Customs agents. Company names and logos can be protected by registering them with the US Copyright Office at the Library of Congress. The recording fee is $190 and usually takes about a week to process. Product designs may be protected by registering them with the US Patent and Trademark Office of the Department of Commerce.

Customs officials say this type of protection helps them pursue and prosecute patent and copyright violators. In addition, if a company thinks one of its products is at risk of being knocked off, it can prepare detailed product training materials describing genuine products, so Customs agents can better distinguish genuine articles from knock-offs. Textile manufacturers estimate that intellectual property piracy costs them at least $100 million a year.

December 2002