US apparel and textile industry trade bodies are submitting testimony to the administration in connection with the China tariffs this week.
The industry is testifying at the nearly two-week-long hearing on the proposed Section 301 tariffs as part of the administration’s ongoing review and consideration of the Tranche 4 of retaliatory tariffs on US imports from China.
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The National Council of Textile Organisations (NCTO) and several of its member companies and the American Apparel and Footwear Association (AAFA) are two of the trade bodies that started presenting their evidence at the first day of the hearing on Monday (17 June).
“There is little doubt that China’s extreme position in the global textile and apparel marketplace has been advanced by an elaborate system of illegal practices, that include state-sponsored subsidies, unethical labour and environmental practices and theft of intellectual property,” Daniel Nation, director of government relations for Parkdale Mills, an NCTO member said in prepared remarks for the hearing. “Consequently, Parkdale supports the existing Section 301 case against China.”
However, Nation stressed the effectiveness of the administration’s case has been “greatly diminished through the omission” of finished textile and apparel products from the various retaliatory tariff lists.
“Including finished textile and apparel products on the 301 retaliation list would greatly enhance the administration’s leverage in the ongoing negotiations and help redirect trade in this sector to the Western Hemisphere,” Nation said. The Western Hemisphere is a top export market for the US textile industry, representing US$15.7m in textile and apparel exports.
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By GlobalDataNCTO president and CEO Kim Glas added the body was pleased the proposed Tranche 4 includes finished imported items from China, which she states have “the most significant impact on US employment, production and investment”.
Glas, who is scheduled to testify at the hearing tomorrow (20 June), added: “We believe this move will lead to the re-shoring of production to the United States and the Western Hemisphere production platform. It’s critical we address and mitigate China’s rampant trade distortions.
“While NCTO members support the inclusion of finished products in Tranche 4, we are seriously concerned that certain inputs already vetted by the administration and removed from previous retaliatory tariff lists are back on this list for proposed duties,” she continued. “Adding tariffs on imports of manufacturing inputs that are not made in the US such as certain chemicals, dyes, machinery and rayon staple fibre in effect raises the cost for American companies and makes them less competitive with China. We firmly believe the integrity of the earlier exclusion process should be upheld.
“We also urge the US government to institute a fair, transparent and expeditious exclusion system for all retaliation tranches.
“Lastly, we want to flag that the administration’s 301 efforts are being undermined by shipments under the $800 Section 321 de minimis threshold, which are not subject to the retaliatory tariffs – or any tariffs. Section 321 is a substantial and growing loophole that gives China backdoor duty-free access to the US market at a time when the administration is spearheading efforts to address China’s unfair trade practices. This should be rectified both in the 301 and broader context.”
NCTO and its member companies are strongly encouraging the USTR’s office and President Trump to adopt the following recommendations:
- Enact the proposed 25% penalty tariffs on finished apparel items and other sewn products;
- Maintain the previous product input exemptions that were vetted by the US government and granted and excluded from previous tranches;
- Institute a transparent, fair and expeditious exclusion system for all tranches;
- and apply 301 retaliatory tariffs to Section 321 de minimis shipments.
Meanwhile, in a testimony also taking place on 17 June, Rick Helfenbein, president and CEO of the AAFA said the organisation wanted to make three basic points about the investigation: Tariffs can’t fix intellectual property rights issues; not to tax US consumers and; not to tax US manufacturers.
On the first point regarding IPR issues, the AAFA said it was important the attempt to fix the problems that affected the industry did not endanger its overall trading partnerships and that the attempts remained targeted to where the real issues lie.
The AAFA also called for the immediate removal of apparel footwear and home textiles from the administration’s list of proposed items to be included in the Harmonized Tariff System, noting it was “deeply disturbed” that the administration’s proposal to include them.
It said the move would hurt US consumers, companies ad workers, with prices going up, sales going down and loss of jobs.
“While you have heard us grouse about several issues that affect our members and our industry, we are genuinely pleased to see that the Administration has an on-going dialogue with China. There are many items in our relationship to fix, including recent actions taking by the Chinese government to ban US exports of scrap and textile waste used in recycling and manufacturing activities.
“It remains critically important that the administration resolve our nation’s China issues and we support that effort, while we also encourage you to accelerate the speed towards such resolution. Unpredictability in our trade relationship is not healthy we sincerely worry about the economic well-being of our industry and the of the nation at large.
“More tariffs are not a cure to what ails us. Please do not hit us with more tariffs. Remove us from the list.”
A letter was sent earlier this week signed by 138 companies including Delta Galil, Levi Strauss & Co, PVH Corp, and VF Corp to US President Donald Trump opposing the use of tariffs in the trade dispute with China.
It followed a similar address by a coalition of 661 US companies and associations which united to urge the Trump administration to avoid tariff escalation and reach a resolution with China.
