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Textile Issues Loom On Congressional Agenda

Washinigton Outlook

James A. Morrissey, Washington Correspondent

With Congress back in session, its showdown time on a number of commitments made to textile manufacturers and importers at the close of its 2001 session.In order to win congressional support for legislation granting broad Trade Promotion Authority (TPA) to the president, administration officials put forth a nine-point program to address some of the U.S. textile industrys economic woes. It also promised textile and apparel importers it would take steps to address the disruption of trade from Pakistan.Before the TPA bill passed the House, congressional leaders won over some textile state votes by promising to clear up questions surrounding the criteria for goods to benefit from the trade concession in the Caribbean Free Trade Agreement. The U.S. textile industry and its supporters in Congress have insisted that goods must be dyed and finished in the U.S. to qualify. Government officials in the Caribbean region have written to President Bush saying the dyeing and finishing restriction would be a "devastating blow" to their textile and clothing industries, and U.S. importers of clothing and textiles say that provision would undercut the presumed benefits of the legislation. The House leadership said the issue would be addressed as part of the first trade legislation to be considered during the current session.High on the congressional agenda is the Andean Trade Preference Act, which expired last December. An extension of the pact, that in its present form would for the first time includes textiles and apparel, has passed the House and is awaiting Senate action. The bill likely will be enacted, but the question of whether textiles and apparel will be included, and if so under what conditions, has made this a highly controversial issue.As the Bush administration moves forward with aid to Pakistan, textile manufacturers and importers are arguing over whether the aid package should include further liberalization of textile and apparel trade. Late last year, the administration granted Pakistan increases in some textile quotas, but importers say the Administration has not done enough. They would like to see more quotas liberalized and other steps to help encourage U.S. importers to continue doing business with Pakistan. The U.S. industry is strongly opposed to opening up additional quotas. Pakistani government officials and U.S. importers say the war on terrorism has disrupted their business with Pakistan, and the Pakistani industrys trade association says textile orders are down 70% in an industry that is heavily dependent on exports. U.S. trade officials have indicated that they would like to expand the textile concessions to Pakistan, and they contend that can do this "in consultation" with Congress.On the economic front, U.S. textile manufacturers are hoping to get tax relief in connection with the economic stimulus package that got bogged down at the end of the 2001 session. The Senates democratic leadership has indicated it wants to take another shot at enacting a compromise economic stimulus package. The U.S. textile industry is seeking a 10-year "carry-back" of taxes to help offset its current losses. Present law permits a two-year carry back; textile state lawmakers in the House supported a seven year carry-back, and the House bill ultimately called for five years. Even that could run into opposition from senators who are reluctant to grant new tax concessions to business.If the Senate makes significant changes in the Trade Promotion Authority legislation, it will have to be voted on again by the House, and textile state lawmakers once again could use their votes as leverage to get the previous commitments are fulfilled.