September 7, 2010

Recent Job & Export Figures Give Textile Industry Something to Smile About

While the message has been doom and gloom in many industries as the job losses mount, the U.S. textile manufacturers had something to celebrate last month – albeit after a rather gloomy 2009. Seasonally-adjusted textile employment increased for the fourth straight month in July and was 0.1% higher than in July 2009 and 0.7% higher than at the end of last year. More importantly, the July performance marked the first time in about 15 years that textile manufacturing employment grew in year-on-year terms. While the addition of 300 new jobs (1,500 new jobs in non-seasonally-adjusted terms) during July 2009/10 did not create a media frenzy or make much of a dent on the U.S. unemployment rate, it broke a long-lasting negative trend and has brightened the outlook for the textile industry.

A large share of U.S. textile employment is involved in the production of yarns, fabrics and other textile items that are sold overseas. Textile exports are growing briskly this year, up by 23% to US$4.9 billion from January-May 2009 to January-May 2010 after falling by 19% to US$10 billion last year. Tellingly, countries with whom the U.S. has a free trade agreement accounted for an overwhelming 81% of all U.S. yarn exports, 68% of all fabric exports and 64% of all exports of textile made-ups during January-May 2010. Textile exports to Chile (+70%) and Peru (+85%) grew vigorously during the first five months of this year while shipments to more traditional regional customers like the DR-CAFTA region (+19%) and Mexico/Canada (+21%) also did very well.

These figures underscore the importance of FTAs for the textile industry and continue to suggest that the future performance of textile exports will depend to a large extent on the ability of U.S. manufacturers to strengthen their existing business relationships and establish new partnerships with companies located in FTA partner countries. It also highlights the need to approve the pending FTAs with Colombia, Panama and South Korea, which are likely to provide an additional boost to textile exports in the years ahead. Finally, it is worth noting that non-tariff barriers such as over-burdensome paperwork requirements when making FTA claims need to be avoided in order to continue to encourage manufacturing using US fabrics and yarns.

For more information contact Alvaro Ferreira: aferreira@strtrade.com or Nicole Bivens Collinson: nbc@strtrade.com.

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August 17, 2010

House Seeks to Close Loophole on Labeling Fur in Apparel

If the House passed bill, the “Truth in Fur Labeling Act of 2010” (HR 2480), sponsored by Representative James Moran (D-VA), is approved by the Senate, any and all apparel that has fur attached to it will have to be properly labeled as to the type of fur it contains. This bill is designed to extend the existing labeling requirements to all garments containing any amount of fur. Currently, garments that contain fur valued at $150.00 or less do not require the fur to be labeled. This loophole in the existing standards set under the “1951 Fur Products Labeling Act” allows for garments that are just lined or trimmed with real fur to be sold without being labeled as such. Thus, consumers may be misled and may purchase garments that contain real fur while believing it is faux fur. Recent tests by the Humane Society found that most of the products tested had domestic dog, wolf or raccoon dog fur and were either mislabeled or not labeled at all.

The Senate will now take up the companion bill (S. 1076), introduced by Senator Robert Menendez (D-NJ) and Senator Susan Collins (R-ME).

If you have any questions, or for more information on fur labeling requirements, please contact David Olave, dolave@strtrade.com.

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August 11, 2010

MTB is Law and Uncle Sam May Owe you Money!

Today, President Obama signed the U.S. Manufacturing Enhancement Act a.k.a. the Miscellaneous Tariff Bill, setting in motion the possibility for those products in the bill to claim a refund for duties paid since January 1, 2010. The bill, as we previously blogged, was for the most part an extension of pre-existing MTB provisions that had expired on December 31, 2009. New provisions that were introduced during the 110th Congress (back in 2008) and vetted favorably by the Administration are also included. Congressional staff report that they are already working to have a second MTB later this year that would include new bills requested during the 111th Congress.

So, if you lost your duty free status on December 31, 2009 and want a refund for duties you have paid since that time, you can file for a refund even if an entry has been liquidated for more than 180 days. However, you need to do it within 180 from today – the date of enactment of the legislation. For entries not yet liquidated, it would make sense to notify the ports where your goods entered to make sure they liquidate with a refund. Please let us know if we could assist you in this process. Send an email to iinsua@strtrade.com.

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August 4, 2010

2010 GSP REVIEW UNDERWAY; MILLIONS OF DOLLARS AT STAKE

Yesterday was the first deadline to submit requests to modify the list of products eligible for duty-free treatment under the Generalized System of Preferences (GSP). The next deadline will be November 16th, when comments requesting waivers of the competitive need limitations (CNLs) will be due. Now is the time to revise import value levels and market shares for products that could breach the CNLs and, if necessary, begin work on petitioning the U.S. government for a waiver. For 2010, the total market share limit remains at 50% and the maximum value of imports allowed under GSP will go up to $145 million. Products with waivers in place for more than five years will be limited to $217.5 million in imports and 75% of total market share.

As a reminder, the GSP program was initiated in 1976 and offers duty-free treatment for 4800 products from 131 designated countries and territories throughout the world. Products and countries participating in the program are reviewed on a yearly basis. Companies and countries have millions of dollars at stake during each GSP review. The most recent GSP review, published on July 1, 2010 resulted in:

· withdrawal of duty-free treatment for imports of certain passenger tires and shrimp products from Thailand, wood flooring from Brazil and gold necklaces from India;

· continuation of duty-free treatment for fresh-cut miniature carnations from Colombia and silver jewelry from Thailand;

· addition of frozen beans and frozen mixed vegetables to the list of GSP-eligible products as of July 1;

· continuation of duty-free treatment for 110 products from 19 beneficiary countries because of De Minimis waivers;

· acceptance of petitions to review whether Sri Lanka has met GSP eligibility criteria related to worker rights and whether Argentina has met the criteria related to the enforcement of arbitral awards; and

· continuation of eligibility reviews of Lebanon, Russia and Uzbekistan regarding intellectual property rights protection and Bangladesh, Niger, the Philippines and Uzbekistan regarding worker rights.

Navigating the GSP procedures for submissions and understanding what are the most important elements taken into account by the U.S. government during the review can be a difficult task. The Office of the United States Representatives itself has noted that “any person or party making a submission is strongly advised to review the GSP regulations”. If you would like assistance during this process, please contact our ST&R professionals in Washington, D.C., Jennifer Mulveny, jmulveny@strtrade.com, or David Olave, dolave@strtrade.com.

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August 3, 2010

ON LABOR ENFORCEMENT, SOME CARROTS AND MORE STICKS

The Department of Labor announced July 29, 2010 a new contribution of $10 million to support the Government of El Salvador’s efforts to combat and eradicated child labor. One day later, the USTR Kirk made an unprecedented statement calling the Guatemalan government for consultations under the CAFTA-DR Free Trade Agreement (FTA). These announcements are only the latest in a series of actions highlighting the prominent role of standards enforcement for the current U.S. Administration.

Less than two weeks prior, the U.S. government published a list of products believed to be made under forced child labor, known as the EO 13126 List. Federal contractors who supply products that appear on the EO List must certify to the contracting officer that the contractor has made a good faith effort to determine whether forced or indentured child labor was used to mine, produce or manufacture any end product furnished under the contract and that, on the basis of those efforts, the contractor is unaware of any such use of child labor.

There are other U.S. government initiatives where action on labor enforcement is imminent. The Department of Agriculture is expected to publish recommended procedures to ensure that products harvested with child or forced labor are not sold in the U.S. market. The Department of Labor (DOL) is also to develop its own standards and guidelines for industries, based on the Trafficking Victims Protection Reauthorization Act (TVPRA) list of goods that DOL has reason to believe are produced by forced labor or child labor in violation of international standards. On the legislative front, the proposed Senate version of the Customs Enforcement Reauthorization Act will seek, among other things, to eliminative the “consumptive demand” clause for products made with forced labor and to establish a labor enforcement office within the Immigrations and Customs Enforcement Agency.

We expect the enforcement of labor standards to continue. International governments and companies ought to be aware of the challenges and opportunities under the current environment. If you would like to learn more about any of the initiatives aforementioned, or you would like to know how you can better protect your business from labor violations allegations, please contact Mo Rajan, mrajan@strtrade.com, or David Olave, dolave@strtrade.com.

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July 26, 2010

AES Penalties –Know Before You File

US Customs and Border Protection (“CBP”) has stepped up its issuance of penalties for Electronic Export Information (EEI) filing errors in recent months. In a webinar given this past June (“CBP Outbound Issues Webinar”), CBP noted that in the first six months of 2010, over 1300 penalties were imposed for AES violations. The most common EEI errors identified by CBP include: wrong port of export; incorrect date of departure, incorrect consignee; incorrect values on export merchandise; no or incorrect carrier identification; incorrect Schedule B Number; and, failure to amend the AES record when changes became known to the filer.

Census delegated authority to enforce and impose penalties for violations of the Foreign Trade Regulations to CBP. On January 2, 2009, CBP published its guidelines for the calculation of penalties for AES errors. It is important to note that CBP penalties may be assessed against any and all culpable parties (e.g., USPPI, FPPI, forwarding agent, customs broker and/or carrier). The maximum penalty for violations of the electronic export filing regulations is $10,000, or $1,100 per day in the case of late filings. The CBP guidelines also describe the various mitigating and aggravating factors that can impact these penalty amounts.

In today’s challenging economic times, you need to ensure that every penny is wisely spent, and penalties paid for inadvertent AES errors are just money wasted. If you are an exporter or forwarder, it is crucial to take the time to ensure that your AES filings are timely made and correct. Our “SMART Review” process can help. The SMART® Review is an innovative and interactive alternative to the typically burdensome, pricey, third-party export compliance audits. In conducting the SMART® Review, our team of professionals use electronic trade data sources and STR/STTAS’ advanced automated systems and analysis capabilities to provide exporters and forwarders with a cost-effective way to identify AES errors, assess their export compliance status, take corrective action if warranted, and enhance their internal control programs. For more information, contact Melissa Proctor at mproctor@strtrade.com or Anu Gavini at agavini@strtrade.com for assistance.

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July 23, 2010

We fought and finally got ½ an MTB

After nearly a year of political wrangling we finally wrestled this puppy to the ground and the House passed the miscellaneous tariff bill – now referred to as the “U.S. Manufacturing Enhancement Act” (H.R. 4380) or at least half of the MTB.

The story begins well over two years ago, when the House of Representatives first started collecting bills and reviewing them through the Administration’s inter-agency process. Once the process was completed, the House waited almost one year for the Senate to take similar action. In December of 2009 the Ways and Means Committee publicly released an MTB draft, but different priorities in the Congressional agenda impeded the process from moving forward. Republicans and Democrats began blaming each other for the long delay. The result was that only “extensions” of expiring MTB provisions were included in this bill.

As we reported in our April 21, 2010 post entitled “My Moratorium is Better than your Moratorium,” House Republican Members took a one-year “earmark moratorium” in March to respond to a similar halt on earmarks taken by Democrats. Finally the Democrats called the Republican bluff bring the bill up vote under what is called a “suspension vote,” which meant that two-thirds of the votes where required for the bill to pass, making it imperative to gather even more Republican votes.

The hours before the vote were tense. Republican leadership sent letters to their Members asking them to vote against the bill because it would be considered a violation to the earmark moratorium. Several Republicans wanted to vote in favor of the MTB but did not want to break ranks with the Party. Democrats, on the other hand, wanted to put the blame on the Republicans if the bill failed to pass, so they had to get all their Members to vote in favor of the bill. As the vote was taking place, the “Yeas” on the Democratic side started to climb, and a dozen Republican votes joined in. The Republican votes increased further, making it more and more likely that the bill would gather the necessary two-thirds majority. As the vote was about to close and the bill had gathered all the necessary votes, several Republicans who had initially voted against the bill began switching their votes.

In the end, the House approved the MTB by what it looked like a bipartisan (378-43) vote. 42 of the 43 votes against the bill came from Republicans, the great majority of them strong trade supporters who stuck to the moratorium in the end. Only one Democrat voted against the bill.

The next hurdle will be to get a vote in the Senate; after that, we have to begin work on the non-extension MTB provisions that were left behind to pass the other ½ of the MTB package.

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June 21, 2010

The Long Arm of U.S. Law to Get Longer

Attention foreign manufacturers! Congress wants to mandate that you have a registered agent in the United States so that you can be sued in U.S. courts.

The “Foreign Manufacturers Legal Accountability Act” (H.R. 4678) has 62 cosponsors in the House. Last week, the House Energy and Commerce Committee had a hearing on the bill, at which over a dozen Members were present.

http://energycommerce.house.gov/index.php?option=com_content&view=article&id=2041:hearing-on-hr-4678-the-foreign-manufacturers-legal-accountability-act-and-hr-5156-the-clean-energy-technology-manufacturing-and-export-assistance-act&catid=129:subcommittee-on-commerce-trade-and-consumer-protection&Itemid=70

In the Senate, companion legislation (S. 1606) has bi-partisan support. As recently as last week an effort was made to include the legislation in the tax extenders bill.

In other words, this train is moving! If you want to do anything about it, you need to act now! Please contact us iinsua@strtrade.com to find out how you can get involved.

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June 18, 2010

ARE YOUR SOCKS AND SHOES PESTICIDES?

Some companies found out the hard way that their products are pesticides, or at least should be registered as such. A prominent apparel company paid over $200,000 because they made anti-microbial claims and their product was not correctly registered.

We have a feeling that there a lot more like this company out there. Are you one of them?
Shoot us an email at esteiner@strtrade.com or nbc@strtrade.com if you would like to discuss.

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Filed under Chemical, FDA, Politics, Textile/Apparel, Trade

May 26, 2010

A New Global Standard on CSR? Introducing the New ISO 26000 on Social Responsibility

The latest draft of the International Organization for Standardization(ISO)’s ISO 26000 Guidance on Social Responsibility was approved by the ISO Working Group on Social Responsibility last Friday (May 21, 2010) at its final meeting in Copenhagen. The guidance may be finalized by the end of 2010. As an importer/retailer, it could mean reduced costs for individual factory inspections if the factories become ISO 26000 compliant. For manufacturers and exporters, it could mean reduced costs and visits by buyers/importers’ inspections for CSR compliance. In fact, some countries are considering adopting these “guidelines” as the law of the land.

The “guidance” is different from a standard only in that instead of saying “shall” it says “should” and “may” and is not intended or appropriate for certification purposes. However, this “International Standard Guidance” comes at a time when a significant segment of industry is calling for a harmonized standard on corporate social responsibility, and a uniform auditing & certification standard to relieve them of the “audit fatigue” currently experienced by many around the world.

So, what might the new ISO 26000 mean for the world of “corporate social responsibility (CSR)” and U.S. companies and consumers concerned about ethical standards? At best, the new ISO Guidance will help streamline the cacophony of existing CSR audits and certification systems to a more uniform system that’s aligned to an internationally-agreed set of guidelines, reducing costs while, hopefully, making the supply chains more responsible. At worst, it will be an additional “standard” that results in another “certification” requirement for facilities — another certificate posted alongside the many existing codes and certificates found in factory floors — adding cost but with no tangible results in supply chain practices.

The Guidance comes as a result of a long multi-stakeholder process, begun in Jan 2005 to develop an International Standard providing guidelines for social responsibility. Experts from more than 90 countries and 40 international or broadly-based regional organizations took part in the process, including representatives from consumer groups, governments, industry, labor, non-governmental organizations (NGOs), and academic institutions.

Whatever the final outcome, retailers, brands, importers and exporters concerned about social responsibility should become familiar with the new Guidance. In the end, it will be the users who determine exactly what the new ISO standard is good for, and how it will impact the world of CSR.

Stay tuned for details of ST&R’s upcoming webinars on the ISO 26000, where we will provide our analysis of the new Guidance and possible implications for different stakeholders, focusing on retailers (June 24th) and manufacturers (July 8th).

For more information, contact Donna Chung at dchung@strtrade.com.

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