Textile trade law is a fascinating area of frustration. For some, U.S. trade laws are preferred
foreign policy tools that establish economic links among nations — usually involving foreign makers
and U.S. consumers and the promise of trade balance sometime in the future.
For others, using trade law progressively is a way to help raise least developed countries
out of poverty. U.S. merchants have interests in trade law that assists them in bringing low-cost
goods to U.S. consumers while improving the competitiveness of their operations. U.S. trade unions
want trade law to reward countries that make improvements in worker rights, freedom to organize,
child labor restrictions and wages. U.S. textile manufacturers range from hard-line protectionists
to more moderate “level playing field” players that want to ensure fair competition with foreign
sources that may have an advantage by leveraging cheap labor; low safety, health and environmental
regulations; and manipulation of currency that acts like an export subsidy.
And, don’t forget the political game of trade that attracts big dollars and support from all
of these interests and others to candidates running for office.
A news piece by
Textile World
Washington Correspondent Jim Morrissey concerning controversy over a recent trade-related
ruling states: “The controversy stems from the release by the U.S. Trade Representative of the
latest Generalized System of Preferences [GSP] Review, in which the government denied a petition
from Exxel Outdoors, a manufacturer of sleeping bags, to have them classified as textile products.
The decision will allow overseas manufacturers to avoid a 9-percent tariff on a wide range of
products, including sleeping bags, that are not classified as textile products.”
Aside from being a real head-scratcher — who knew that a sleeping bag wasn’t a textile
product? — the ruling is a brilliant example of what a tangled web trade law really is.
For background, the United States International Trade Commission concluded investigation No.
332-513 and issued Publication 4141: “Advice Concerning Possible Modifications to the U.S.
Generalized System of Preferences, 2010 Special Review, Certain Sleeping Bags.” Although in the
public version of the report, most of the data and, ironically, the advice are removed – literally
– from the document, you can see how detached from reality the world of trade policy really is.
Bangladesh — which has cheaper labor costs than China, which has a 98-percent market share of
sleeping bags imported to the U.S. — exported $17,287 worth of sleeping bags to the United States
in 2008 and $611,927 in 2009. Bangladesh also qualifies for relief under GSP, and because sleeping
bags aren’t textile products, it is not subject to the 9-percent tariff. China, on the other hand,
is subject to the tariff.
Is a sleeping bag a textile product? At the moment, no, and the ruling is a win for Cellcorp
Global Limited – rival of Exxel in the matter; the NorthPole Ltd., which has an operation in
Bangladesh and a second underway; the Peoples Republic of Bangladesh; and the National Retail
Federation.
July/August 2010
