trade agenda in 2006 and beyond: a view from washington isc/sclc spring 2006 meeting

© Copyright AAFA. All rights reserved. 2006

Trade Agenda in 2006 and Beyond:A View from Washington

ISC/SCLC Spring 2006 Meeting

Stephen LamarSr. Vice PresidentAmerican Apparel & Footwear Association

April 2006


Where are we in 2006?

• What’s Hot in Washington

• Trade Agenda


Washington Political Scene• 194 Days Until the Next Election• Democrats Smell Blood..• Perception That Republicans “Smell”

– Scandals– White House Missteps– Budget Deficit– Iraq– Gas Prices– “Do Nothing” Congress?

• Reverse of 1994?– Problem: Democrats Have No Ideas


Washington Agenda

• Budget• National Defense/Homeland Security• Tax• Health Care• Energy• Immigration?• Port Security• Lobby Reform?


Where are we in 2006?

• What’s Hot in Washington

• Trade Agenda


Trade Agenda• 429 Days Until Expiration of TPA• Doha Round• Free Trade Agenda• China/Enforcement

– Schumer/Graham– IPR

• Trade Aspects of Port and Immigration Debate• Dogs and Cats

– CAFTA Fix– Misc. Trade Bill– Burma– Vietnam– Trade Preference Programs

• New Leadership


FTA Agenda

• In place:– 8 FTAs with 11 countries (14 countries)

• Pending/Under Negotiation– 11 FTAs with 15 countries

• Opportunity:– Reduce Duties/Duty Free– Permanent Access/More Comprehensive

• Danger:– Tight Rules of Origin/Enforcement– Sloppy/Delayed Implementation

• Status: Steady but slow progress.


• Israel• NAFTA• Jordan• Chile• Singapore• Australia• Morocco

Current and Future U.S. Free Trade Agreements

• CAFTA-DR*

• Bahrain• Oman• Peru• Colombia• Panama

• Ecuador• Thailand• UAE• SACU• FTAA • ASEAN• Middle East

In force Under negotiation Pending Proposed Potential

• South Korea• Malaysia• Egypt• Indonesia* El Salvador, Honduras, Nicaragua only.Note: Peru, Colombia and Ecuador may be merged.


Other Major U.S. Trade Preference Programs

1. 9802 Programs2. CBTPA3. Jordan QIZ4. Egypt QIZ5. AGOA6. ATPDEA7. Insular Territories

Goal: Reduce U.S. Duties


Tariff PeaksAverage Duty by HTS Chapter

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

U.S

. D

uti

es a

s a

Per

cen

t

of

To

tal

Imp

ort

s

Source: USITC

Travel Goods

Textiles, Apparel, and Shoes


Who Pays U.S. Duties? (part I)

Percent Allocable to Textiles/Apparel/Footwear (Ch. 50 to 65) in 2005

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

Imports Duties

Per

cen

t of

Tot

al U

.S.

Imp

orts

or T

otal

U.S

. Du

ties

Col

lect

ed

Source: USITC


Who Pays U.S. Duties? (part II)Top 10 Apparel and Footwear Exporters to

the U.S. (2005)

Apparel Footwear

Duty Free Not Duty Free

ChinaBrazilVietnamIndonesiaItaly

ChinaMexicoHondurasBangladeshEl Salvador

IndonesiaVietnamIndiaDom. Rep.Cambodia

ThailandMexicoDom. Rep.Hong KongIndia

Source: USITC


Who Pays U.S Duties? (part III)

$0

$2

$4

$6

$8

$10

$12

$14

2005 Total ImportsBillions of Dollars

Belgium

Bangladesh

$0

$50

$100

$150

$200

$250

$300

$350

$400

2005 Total Duties CollectedMillions of Dollars

Belgium

Bangladesh

Bangladesh Effective Duty Rate: 14.7 percentBelgium Effective Duty Rate: 1.0 percent

Source: USITC


Doha Round

• Multilateral Negotiations (2001)• Opportunity:

– Reduce Duties Further– Eliminate Non Tariff Barriers– Harmonize and Facilitate Trade

• Danger:– Proposals to Limit Impact on Textiles– Reintroduce Quotas/Extend Safeguards

• Status: Going nowhere fast


Did Safeguards Work?

• Ended Self Imposed Uncertainty for Many• Textile and Apparel Production: Down• Textile and Apparel Imports: Up

– Imports from Asia: Up– Imports from Mexico/CAFTA: Down

• Textile And Apparel Import Penetration: Up• Textile and Apparel Employment: Down• Apparel Prices Down


China’s Incredible GrowthU.S. Apparel Imports from China

(millions of SMEs)

01000

2000300040005000

60007000

Source: US Commerce Department


China’s Incredible Growth?

U.S. Apparel Imports from World(millions of SMEs)

0

5000

10000

15000

20000

25000

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

ROW China



U.S. Apparel Imports 1994 & 2005

0%10%20%30%40%50%60%70%80%90%

100%

19

94

20

05

China Rest of Asia NAFTA/CAFTA ROW



More on Safeguards…

2005 Actual Safeguard Levels vs. 2006 Safeguard Levels for Key Products in Bilateral Agreement

0

5

10

15

20

25

Cotton KnitTops 2005

Cotton KnitTops 2006

Cotton Pants2005

Cotton Pants2006

Mil

lion

s of

Doze

ns

Source: U.S. Department of Commerce

1.7% 4.2%

Percent of U.S. import market during 1st 2 months of 2006


What to DoAbout China?

China WTO Obligations

– IPR Issues

– Currency

– Distribution Rights w/in China

China Safeguards–Bilateral Agreement–Textile Safeguards–Product Specific Safeguards

Trade Remedies–Anti Dumping/CVD–Congressional Action


A word on CAFTA-DR• 3 countries implemented

– Still waiting for CR, DR, and Guatemala

• Footwear working well.• Textile and apparel issues (Go to Asia):

– Co Production Nightmare– Pockets/Linings and TPL Change– Socks Change– Cumulation– Other Technical Fixes


How Are Other Countries Doing?

U.S. Apparel Imports from Selected Countries

0

200

400

600

800

1000

1200

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

Mil

lion

s of

SM

Es

Vietnam

Bangladesh

Sri Lanka

India

Pakistan

Cambodia

Indonesia

Thailand

Philippines



For Rest of 2006…

• Homeland security will remain critical

• Trade enforcement will remain important

• Duty free will be a slow process

• Trade fatigue plus mischief in Congress will discourage much positive action.


American Apparel and Footwear Association

1601 N. Kent Street, 12th Floor

Arlington, VA 22209

703-797-9041

[email protected]

www.apparelandfootwear.org

Thank You

trade agenda in 2006 and beyond: a view from washington isc/sclc spring 2006 meeting

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