Opinion

Congress and 2 Trade Policies Could Be the Difference between Shuttering, Surviving or Thriving

It is a challenging time for everyone in the retail and manufacturing sector and up and down the supply chain. Many companies have suspended and limited operations to keep their workers and consumers safe, consistent with global health guidelines. At the same time, many have stepped up to the plate and repurposed facilities, factories and supply chains to produce and distribute items of personal protective equipment and other urgently needed medical materials.

For the most part, businesses and workers across the country are hurting like never before. Congress and the administration have responded with four stimulus plans, so far, to assist and another is in the works. The apparel and footwear industry certainly supports these much-needed stimulus bills but has urgently pressed our recommendations for additional policies. As we turn to a recovery-focused approach to reopen the country, it is important that Congress remember to take action on the renewal of many programs that expire this year.

There are two trade preference programs that, when renewed by Congress, would provide valuable opportunities and relationships for American businesses in the apparel and footwear industry:

1.) The first is the Caribbean Basin Trade Partnership Act. This program allows preferential trade access for Caribbean countries to the U.S. market. Duty-free access and proximity to the United States make this program understandably attractive. There is also a program requirement to use U.S. or regional yarns and fabrics which in turn, supports U.S. textile exports and U.S. textile jobs.

CBTPA celebrates its 20th anniversary this year and is set to expire on Sept. 30, 2020. With the coronavirus crisis, the need for certainty in this region is more important than ever. U.S. apparel and footwear companies have been proud to work on, support enactment of, and operate under this program during the past two decades. Since it was enacted, the CBTPA has provided an important trade policy basis to support U.S. investment in and exports to U.S. allies in the Caribbean Basin.

But over time, the CBPTA has evolved into a program that primarily benefits Haiti as many other Caribbean Basin trading partners have graduated to the U.S./Central America-Dominican Republic Free Trade Agreement. Along with the Haitian Hemispheric Opportunity through Partnership Encouragement Act, and the Haiti Economic Lift Program Act, the CBPTA now anchors an important trade partnership with Haiti.

Unfortunately, CBTPA’s looming expiration date is having adverse impacts on long-term planning and decision-making for U.S. companies doing business in Haiti.

Although HOPE and HELP do not expire for another 5 years, the amount of trade still done under CBTPA threatens to burn a permanent hole in the U.S./Haiti trade partnership if the CBTPA is not renewed. Approximately 30 percent of U.S. apparel imports from Haiti enter the United States under the CBTPA. Moreover, 100 percent of apparel that was imported into the United States under the CBTPA in 2019 was imported from Haiti. Allowing CBTPA to expire would result in devastating consequences for the U.S. textile and apparel companies and their Haitian partners who rely upon this program. This is why we have asked Congress to renew CBTPA ASAP.

2.) The other crucial program important to U.S. companies is the Generalized System of Preferences. GSP is the largest U.S. trade program that provides nonreciprocal, duty-free treatment for certain U.S. imports from eligible developing countries. This program allows American businesses to use duty savings to compete internationally, lower costs for American families, employ more American workers and invest in new products. GSP is also an effective enforcement tool to open foreign markets, protect intellectual property, and improve workers’ rights.

However, GSP is set to expire at the end of 2020. It’s critical that GSP does not lapse this year like it did in 2017. If the program were to expire this year, much-needed cash would be taken out of the hands of companies who are now struggling due to the pandemic. Although Congress typically extends the program retroactively so importers can get duty refunds, that is not a given and the delay in returning funds to American businesses could have a catastrophic impact on the American economy and workforce. In 2019, the industry saved approximately $297 million in duties that would have been imposed on imports of travel goods, allowing American companies to more efficiently use these funds.

GSP has bipartisan support and renewal should not be a heavy lift. That is why we are pushing Congress to act now.

A singular constant of the “new normal” due to the COVID-19 pandemic is the uncertainty we are facing given the unclear progression of this virus and it’s economic impact. But one thing we do know is that these two trade programs – which have been staples of U.S. trade policy for generations – benefit U.S. companies IF they can be extended on time. With so much doubt now defining our daily lives, it’s refreshing that Congress can look to some trusted trade programs to inject certainty into the world.

Reopening the country and getting Americans back to work will only be successful if we use all the tools in our toolbox, including some that just need to be renewed.

We urge Congress to act swiftly and renew CBTPA and GSP.

 

Beth Hughes is vice president, trade and customs policy at the American Apparel & Footwear Association, where she oversees AAFA’s Trade Policy Committee and AAFA’s Customs Group; before joining AAFA, Beth served for six years as senior director, international affairs at the International Dairy Foods Association.

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