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Washington Outlook Archive

Textile Makers Seek Government Help

James A. Morrissey, Washington Correspondent

W ith the Obama administration and Congress working on ways to create and save jobs throughout the economy, US textile manufacturers are seeking government help to stem the flow of job losses. The Bureau of Labor Statistics says the textile industry has lost 102,000 jobs since 2005 and 39,000 last year alone. Textile manufacturers are looking to the government for help in a number of areas, and they are encouraged that Washington appears to be making an effort to help turn things around.

Buy American
Textile manufacturers are pressing the Obama administration to expand coverage of the Buy American provisions in the American Recovery and Reinvestment Act of 2009 to cover a broader range
of government agencies. For several years, textile manufacturers and their supporters in Congress tried unsuccessfully to expand to other government agencies the Buy American requirements
for Department of Defense (DoD) procurement of textile products under the so-called Berry Amendment. When the Department of Homeland Security (DHS) was created, they saw a new opportunity, but Congress balked at it, as government agencies have been opposed to those restrictions. However, declining employment in the manufacturing segment of the economy and the ecnomic stimulus package presented a new opportunity, and this time around, Congress enacted the Kissell Amendment, modeled after the Berry Amendment.

The Kissell Amendment requires that uniforms purchased by the Transportation Security Agency (TSA) be 100-percent US-made, and industry representatives believe it leaves the door open for expansion to other DHS agencies such as the Federal Emergency Management Agency, Customs and Border Protection, Secret Service, and Citizenship and Immigration Services. Textile industry representatives say the DoD's current purchases of $2.8 billion under the Berry Amendment support some 35,000 US jobs, and they believe the TSA purchases under the Kissell Amendment could produce another 20,000. Expansion of the Kissell Amendment beyond the TSA uniforms would be dependent upon where it can be determined that Buy American would be in the interest of national security and the Obama administration's desire to expand coverage. Because the Kissell Amendment states it must be applied in a manner "consistent with United States obligations under international agreements," it would be necessary for the administration to work with other governments to clear the way for any expansion. Textile lobbyists will be asking President Barack Obama to use his authority to expand coverage, or they could seek additional legislation if necessary.

Another provision in the new economic stimulus package says iron, steel and manufactured products used in construction funded by the aid package must be made in the United States unless they are not available or would increase the cost of the overall project by more than 25 percent. Manufacturers of geotextiles see opportunities under the manufactured products category.

While several overseas countries and officials of the World Trade Organization (WTO) have expressed their concern over protectionist measures, US manufacturers claim Kissell Amendment requirements do not violate any international commitments, and they charge that many of the complaining countries have laws of their own to protect domestic manufacturers.

Laura Jones, executive director of the United States Association of Importers of Textiles and Apparel, whose organization historically has opposed Buy American, believes the new measures  "are not right way to go," saying that "this type of thinking can lead to other areas of protectionism that are not healthy."

Since the Buy American effort has the strong support of organized labor as well as many manufacturing industries, it could fare well with the Obama administration and the Democratic Congress.

China Trade Issues
Problems with Chinese trade, which accounts for more than half of the total US trade deficit and more than half of apparel imports, remains on the radar scope of textiles and other manufacturing industries. Both President Obama and the Democratic leadership of Congress have been outspoken in citing the need for action to combat what they see as China's illegal and unfair trade practices.

In connection with this confirmation hearing before the Senate, Treasury Secretary Timothy F. Geithner accused China of manipulating its currency and said the United States would move aggressively to address the problem.

The International Trade Commission (ITC) has begun monitoring Chinese imports of 34 apparel product categories that were released from quota controls last December 31. The action was requested by the leadership of the House Ways and Means Committee, who are concerned there might be a surge in imports from the "sensitive" product categories following removal of quotas. The ITC report will trace historical patterns of trade and report to the committee every two weeks on current developments. If a surge is detected, it would form the basis for the United States to invoke its trade remedies such as countervailing duties or other actions.

On a broader scale, US textile manufacturers, organized labor and other industries continue to press for action to counteract what they say is China's currency manipulation, and before the new administration took over, the US Trade Representative (USTR) filed a dispute settlement case with the WTO against what it says are various illegal subsidies that China provides its industrial sector. The USTR case charges that China is granting rewards for exporting, preferential loans for exporters, research and development funding to develop new products for export, and payments to lower the cost of export credit insurance. The USTR action was due in part to an investigation by US textile trade associations that cited a wide range of subsidies China uses to promote its exports.

While the Bush administration favored negotiations over harsher actions such as punitive tariffs being pushed by a number of key members of Congress, the Obama administration is likely to take a much stronger stance on a number of China trade issues.

CPSC Nets Funding, Expanded Authority
A newly constituted Consumer Product Safety Commission (CPSC) will have considerable impact on a number of textile industry issues. Under the Bush administration, CPSC limped along with two of three eligible commissioners and a lack of funds. But Congress has given CPSC new funding and expanded authority stemming from the flap over lead in toys and other children's products. The Consumer Product Safety Improvement Act (CPSIA) has created a whole new ball game. It will require all consumer products subject to existing regulations to comply with a testing and certifications process. Manufacturers can determine how they want to go about testing, but they must certify that their products meet safety standards. While CPSC's first action under the new law applied to lead and phthalate contents in children's toys and products intended for children, it applies to all other regulated products and could eventually be applied to upholstery fabric and bedding products standards that are under development at CPSC.

CPSC created a fire-storm when it ruled, and a federal court concurred, that the testing and certification apply retroactively. Recognizing that the retroactivity was causing major problems in the marketplace, CPSC on February 6 granted a one-year stay for certain testing and certification requirements. The commission stated that "until additional decisions are issued, all businesses ... must still be sure that their products conform to all safety standards and similar requirements, including the lead and phthalates provisions of CPSIA." In other words, manufacturers need not test their products in any specific manner during the moratorium period, but their products nevertheless must meet the requirements of the standard. That did not solve problems with retailers, who are concerned that products they have on their shelves or on order could at some later date be deemed not in compliance. The action was designed to give CPSC time to finalize rules that could relieve certain
materials and products from testing. US textile manufacturers have made a strong case that none of their products contain lead, and that is probably true with imports as well.

March/April 2009