Industry Pushes for Passage of USMCA and Import Tax Relief Act

Date: Tuesday, March 5, 2019
Source: Sourcing Journal

Trade might be playing second fiddle to Congressional investigations on issues related to election meddling and other White House behavior, but President Trump’s actions on global commerce are still getting much attention from the apparel and retail industries.

The American Apparel & Footwear Association (AAFA) on Monday announced its full support for quick passage by Congress of the U.S.-Mexico-Canada Agreement (USMCA).

The USMCA is essentially a replacement for the 25-year-old North American Free Trade Agreement (NAFTA). It was negotiated between the three countries in somewhat contentious talks after Trump said he would scrap NAFTA if he couldn’t get the trade updates he was after.

“Our North American apparel and footwear value chain is an integral component of the future of our industry. USMCA provides the stability and predictability that we need for our companies to invest in the region as we grow our footprint,” said Rick Helfenbein, president and CEO of the AAFA. “Today, more than 200,000 American jobs in our industry are supported by NAFTA. We are calling on Congress to approve the USMCA this year and for the administration to quickly and seamlessly implement it.”

AAFA had backed the USMCA negotiations and called for the pact to be trilateral in order to not harm to the industry’s supply chains after Trump threatened to strike separate bilateral trade deals before ultimately signing the trilateral USMCA in late November.

Tom Glaser, vice president of VF Corp, and president of supply chain at the company, who is also chairman of AAFA, said, “To meet the needs of today’s retail environment, apparel and footwear companies need to have a diverse supply chain that can meet consumer expectations. The North American region is a key part of this matrix and the USMCA will be an important part of its future.”

Employing a graphical representation to indicate the need for swift passage and enactment of the accord, AAFA pointed out that jeans produced in Mexico contain many U.S.-made components, from sewing thread spun in North Carolina and fabric woven in Texas and Georgia, to buttons and snaps made in Kentucky and Georgia, and pocketing from California.

One of the other chief trade issues of the Trump administration has centered on the unilateral imposition of tariffs in an attempt to control trade flows. This has particularly involved imports from China that has led to the world’s two leading economies to trade punitive tariff measures and caused uncertainty among companies in many industrial sectors.

The National Retail Federation (NRF) has called on Congress to pass legislation introduced last week that would require a process be established to exclude some items from the Trump administration’s tariffs on $200 billion worth of Chinese imports.

“We are encouraged by the progress made between the United States and China, but tariffs are still taking a toll on hardworking Americans across the country,” said David French, senior vice president for government relations at the NRF. “Establishing a timely and efficient tariff exclusion process is the least Washington can do for American businesses that have no alternative supplier and for working families that rely on everyday products… We urge Congress to move swiftly in approving this commonsense legislation.”

The first two lists of tariffs on Chinese imports, imposed last summer under Section 301 of the Trade Act of 1974 included exclusion processes, allowing American importers to apply for tariff relief. However, the third list, which took effect last September and targeted $200 billion of Chinese goods, including many consumer products, does not have an exclusion process.

The Import Tax Relief Act, introduced by Sen. James Lankford, (R.-Okla.), and Chris Coons, (D.-Del.), and Rep. Ron J. Kind, (D-Wis.), and Jackie Walorski, (R-Ind.), would require the administration to provide an exclusion process for the third tariff list and any future tariffs under Section 301. Under the legislation, exclusions would be required to be granted for imports that have no commercial availability outside of China, those for which a tariff would cause an increase in consumer prices for low- and middle-income families, and those that do not directly benefit from China’s non-market policies, including elements of its “Made in China 2025” program.

According to data released by Tariffs Hurt the Heartland–a campaign backed by NRF–recent tariffs imposed by the administration cost U.S. businesses $2.7 billion in November 2018 alone.

 

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