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Textile News
James A. Morrissey, Washington Correspondent

Agreement Reached On New Trade Policies

By James A. Morrissey, Washington Correspondent

The Democratic leadership of the House of Representatives and officials of the Bush administration have forged new trade policy guidelines that could have a major impact on textile and apparel trade. The agreement is designed to clear the way for congressional approval of four pending free trade agreements (FTAs) and extension of the presidents trade promotion authority (TPA), and maybe even give new life to the World Trade Organizations Doha Round of trade liberalization negotiations.

US Trade Representative Susan C. Schwab said the bipartisan agreement creates a "clear and reasonable path forward" for congressional consideration of FTAs with Peru, Colombia, Panama and South Korea; and for bipartisan work on extension of TPA, an essential element in negotiating future agreements.

The agreement triggered a generally favorable response from textile and apparel lobbyists, although some say it does not go far enough and fails to address basic problems.

The key element was inclusion of labor standards and environmental preservation provisions in the four agreements that already have been negotiated and in any future agreements. Although the Bush administration has been reluctant to include labor and environmental standards in trade agreements, House Speaker Nancy Pelosi, D-Calif., said that changed with Democrats taking control of Congress. The change in policy, she said, is "recognition of the results of the November election."

The agreement received a solid but conditional endorsement of the National Retail Federation (NRF). Eric Autor, vice president and international trade counsel, NRF, said the agreement is a "significant breakthrough" that has the potential to be very important for reauthorization of the presidents trade negotiation authority and pending and future trade agreements. However, he expressed the hope that the labor and environmental provisions will not be used "for protectionist purposes."

Likewise, the American Apparel and Footwear Association endorsed the agreement, expressing the hope that FTAs with Peru, Colombia, Panama and South Korea will receive swift approval, and noting that it should also lead to approval of TPA for the president.

The agreement drew a mixed reaction from textile lobbyists. Saying that the agreement is a "first initial step" toward building a new consensus on trade, Cass Johnson, president, National Council of Textile Organizations, warned "fundamental issues remain and must be dealt with." He said these include the need to take steps to combat Chinese currency manipulation, Chinas and other countries subsidies; take action against other unfair trade practices; and insist on better Customs enforcement. Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said that while addressing labor and environmental issues is "laudable," the agreement falls short of addressing "fundamental flaws in US trade policy." He urged the US government to take action against foreign value-added taxes, currency manipulation, intellectual property violations; and to self-initiate anti-dumping and countervailing duty cases against countries engaged in illegal trade practices.

The US Business and Industry Council, which represents some 1,500 small and medium-sized manufacturers including textiles, called the agreement a "sellout of US producers and workers because it does not address what it called vastly more important problems with US trade policy."

Under the guidelines, FTA participants would be committed to adopting and enforcing labor standards endorsed by the International Labor Organization that outlaw child labor, enforced labor and actions that prohibit workers from joining unions and bargaining collectively. In addition, countries would have to take steps to prevent environmental degradation.

Trade analysts in Washington believe the new guidelines will likely pave the way for approval of the pacts with Peru and Panama, but problems may exist with Colombia because of political problems, and with South Korea because automobile and farm interests feel the pact as negotiated does not provide sufficient market access. US textile manufacturers support the pacts with Peru, Panama and Colombia, but they are concerned about the schedule for phasing out tariffs on South Korean imports.
May 15, 2007