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CHINA — COMMERCE DECISION INCREASES PRESSURE ON CONGRESS TO ACT ON CHINA CURRENCY The U.S. Department of Commerce announced August 31 that it has declined two petitions requesting that the Department initiate an investigation into whether alleged currency manipulation by China amounts to a countervailable subsidy under U.S. trade remedy laws. The announcement is likely to spark a firestorm already brewing in Congress over China's currency. In fact, the powerful House Ways & Means Committee has already announced a September 15 hearing to review the currency issue and discuss pending legislation sponsored by Congressman Tim Ryan (D-OH) that would punish China over the currency issue. The legislation, the Currency Reform Fair Trade Act (H.R. 2378), which is now co-sponsored by almost one-third of all House members, would make currency manipulation a subsidy under U.S. anti-dumping (AD) and countervailing duty (CVD) laws, making it much easier to bring and win trade remedy cases against U.S. imports of specific products from China. In response to growing calls for action, the White House has sent U.S. National Economic Council Director Lawrence Summers and Deputy National Security Adviser Thomas Donilon to Beijing to discuss currency and other contentious issues. AAFA has strongly opposed any effort by Congress to punish China for its alleged currency manipulation, arguing that any unilateral action by Congress could spark a trade war that will close the Chinese market to U.S. fashion accessories brands and increase prices for fashion accessories in the United States at a time when we can least afford it. Congress could vote on the Ryan bill or similar legislation to punish China as early as this month. (Nate Herman)
AAFA OPPOSES DOD EFFORTS TO INSERT "REVERSE AUCTION" PROVISIONS IN ALL DOD CONTRACTS Last month, the Defense Logistics Agency Troop Support (formerly Defense Supply Center Philadelphia (DSCP)) announced its intention to include "Reverse Auction" and Low Price Technically Acceptable (LPTA) acquisition procedures on all new solicitations. AAFA responded to the sudden announcement with a letter to DLA Troop Support Commander Brigadier General Scott Chambers, which explained the problems associated with moving away from the current "Best Value" system. While the Department of Defense has said that they do not intend to utilize "Reverse Auction" and LPTA procedures very often, their notion has caused a great deal of concern throughout the domestic manufacturing base of apparel, footwear and textiles, since factors such as quality and past performance could no longer be utilized in awarding of contracts. (Kurt Courtney) DEFENSE AUTHORIZATION BILL STALLED Congressional leaders have thus far been unable to move the 2011 National Defense Authorization Act. A Democratic request for unanimous consent to schedule votes on a defense authorization bill after the recess was blocked before Congress adjourned for the August Recess, but Democrats said they still hope to bring the measure up in September. Armed Services Committee Ranking Member John McCain (R-AZ) vigorously objected to the UC request, saying he opposed several provisions in the bill, including one that would repeal the 1993 law banning openly gay individuals from serving in the military. McCain also spoke out against a provision authorizing military hospitals to perform elective abortions if the procedure is paid for by private funds. Current law allows abortions at military hospitals only to save the life of the mother or in the instances of rape or incest. Ultimately, the bill's fate will depend more on time than politics, as there are only three weeks of session before Congress adjourns again so that members can return to their home states to campaign for the November elections. (Kurt Courtney)
PRODUCT SAFETY — MORE CALIFORNIA PROPOSITION 65 NOTICES ISSUED Professional California Proposition 65 litigants Russell Brimer, Anthony E. Held, Consumer Advocacy Group and the Center for Environmental Health (CEH) in recent weeks have separately issued six new "60-day" notices alleging that brands and retailers sold cosmetic/toiletries bags (Notice 1, Notice 2, Notice 3, Notice 4), bag tags, handbags (Notice 1, Notice 2, Notice 3, Notice 4, Notice 5), wallets (Notice 1, Notice 2, Notice 3), children's bags/apparel, belts (Notice 1, Notice 2), sandals (Notice 1, Notice 2), Footwear with leather, vinyl and imitation leather components (Notice 1, Notice 2), children's shoes and women's shoes in California that contained phthalates (5 notices) or lead (14 notices) in violation of Prop 65. The notices serve as intent to bring a lawsuit against the recipients alleging that the products sold in California contain certain chemicals in violation of a California law known as Proposition 65 (Prop 65). There have been 62 "60-day" notices issued to about 300 manufacturers and retailers of fashion products since the beginning of the year — 14 notices were issued in August alone. The notices filed by the Center for Environmental Health (CEH) are likely the first step for many companies to "opt-in" to a settlement approved June 1 by the court between CEH and dozens of brands and retailers to settle a range of cases under Prop 65. Proposition 65 is a California law that requires "warning labels" on ALL products (not just children's products) sold in California that contain lead, phthalates, cadmium and any one of 850 other chemicals that the State of California believes could cause cancer or reproductive toxicity. Prop 65 allows so-called "citizen enforcers" to enforce the law. NGOs, other groups and even private Californian citizens can sue in California courts and collect part of the fines. (Rebecca Mond) PRODUCT SAFETY — CPSC ISSUES FINAL RULEMAKING ON DEFINITION OF A CHILDREN'S PRODUCT Ignoring comments from most business groups, the Consumer Product Safety Commission (CPSC) on August 25 released its final interpretive rule on the definition of a children's product. The Consumer Product Safety Improvement Act (CPSIA) defines a "children's product" as "a consumer product designed or intended primarily for children 12 years of age or under." The proposed rule details what factors should be used in determining whether a product should be considered a children's product under the CPSIA. In its final rulemaking, the CPSC reiterated their position that, "...if an older child or adult is as likely, or more likely to interact with the [product] than a child, such a [product] would not be a product designed or intended primarily for children 12 years of age or younger, and thus, would not be considered a children's product." The CPSIA lays out four factors that are to be taken into account when determining whether a product is a children's product or not. The proposed rule elaborates on each of these factors. While the proposed rule provides clarification that diaper bags and similar products are not considered children's products under the CPSIA and attempts to provide some clarification for backpacks, the final rulemaking fails to provide clear guidance on clothing and shoes. The CPSC will likely vote on the final rulemaking at its September 9 meeting. (Rebecca Mond)
PRODUCT SAFETY — AAFA SUBMITS COMMENTS TO CPSC ON REASONABLE TESTING PROGRAM AND COMPONENT TESTING AAFA recently submitted comments to the Consumer Product Safety Commission on two proposed rulemakings, "Conditions and Requirements for Testing Component Parts for Compliance with All Applicable Rules, Bans, Standards or Regulations" and "Testing and Labeling Pertaining to Product Certification." The proposed rulemakings define how a manufacturer will test for compliance to the Consumer Product Safety Improvement Act (CPSIA). In addition, the proposed rulemakings define the circumstances when a company can use supplier based component testing particularly with regards to children's product third party testing. AAFA's comments pressed the CPSC to permit greater flexibility so that manufacturers could concentrate on creating a "reasonable testing program" that fits their business operations. AAFA's comments further argued that by prescribing a "reasonable testing program," manufacturers can more easily focus resources on compliance to ensure products meet product safety standards. In addition, AAFA's comments requested the CPSC clarify the rulemaking's language to ensure that raw material testing would be permissible and to try to alleviate the record keeping burden on manufacturers. (Rebecca Mond) MISCELLANEOUS TARIFF BILL BECOMES LAW, TEMPORARILY REDUCES OR ELMINATES IMPORTS DUTIES ON CERTAIN FOOTWEAR AND OTHER ITEMS The AAFA-supported U.S. Manufacturing Enhancement Act of 2010 (H.R. 4380) became law on August 26. The law extends most miscellaneous tariff bill (MTB) duty-reduction or duty-elimination provisions that expired December 31, 2009, including a number of footwear and textile provisions, and creates a few new MTB provisions reducing or eliminating duties. The duties are suspended or reduced on these items through December 31, 2012. The legislation makes the extension of expiring provisions in this bill retroactive back to January 1, 2010. Companies have 180 days to file for refunds of duties paid. Please note that while most of the expired footwear and textile provisions are included in this draft bill, in the case of the outdoor footwear provisions, many of the duty reductions have been lowered in order to stay under the MTB-mandated limit of $500,000 revenue lost annually by the U.S. government. Further, other expired MTB provisions were not included in this bill because of lack of interest, or because they were deemed too controversial. Click here to see a list of all of the expired MTB provisions on footwear and textiles and what happened to those provisions under the new law. (Nate Herman) ITC ISSUES FINAL RECOMMENDATIONS TO PRESIDENT ON FOOTWEAR WITH TEXTILE OUTSOLES The U.S. International Trade Commission (ITC) last month issued its final recommendations to President Barack Obama with regards to the ITC's 1205 study on the tariff classification of footwear with textile outsoles. With the publication of the final recommendations, any changes to the current treatment of footwear with textile outsoles is very unlikely to occur before January 2011 and possibly later. The ITC's final recommendations closely mirrored the U.S. Department of Treasury's recommendations in the initial January 15 letter Treasury sent to the ITC urging the ITC to launch the investigation. AAFA supports the ITC's final recommendations because the proposal recognizes that 99 percent of all footwear sold in the United States today is imported and legitimizes the use of textile outsoles to reduce the import duties paid on those imports. At the same time, the ITC's final recommendations protects the small, yet vibrant, footwear manufacturing industry that still exists in the United States. President Obama will make a final decision on the ITC's recommendations by the end of this year. (Nate Herman) BSR APPAREL MILLS & SUNDRIES WORKING GROUP CONTINUES TO GROW BSR's Apparel Mills & Sundries Working Group is comprised of leading apparel and retail companies, and their suppliers, who have cooperated in creating a consistent set of expectations socially responsible and environmentally friendly working conditions. Members of the working group collaborate to create a non-traditional audit which fosters strong communication and transparency between buyers and sellers. (Greg Yahr) EPA RELEASES ACTION PLANS ON CHEMICALS Last month, the U.S. Environmental Protection Agency (EPA) released proposed action plans to reduce consumer risk from benzidine dyes, hexabromocyclododecane (HBCD) and nonylphenol (NP)/nonylphenol ethoxylates (NPEs) under the Toxic Substances Control Act (TSCA). These chemicals are commonly used in dyes, flame retardants and industrial laundry detergents. Under the new plans, some of the chemicals will face stricter reporting requirements, inclusion on EPA's Chemicals of Concern list, as well as a potential ban on usage. Comments on the action plan are due October 31, 2010. (Greg Yahr) AAFA URGES BANGLADESH TO ADDRESS ONGOING LABOR SITUATION AAFA sent a letter September 1 to His Excellency Mr. Akramul Qader, Ambassador of Bangladesh, regarding the ongoing labor situation in Bangladesh. The letter, which was CCed to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), expressed strong concern about the Bangladeshi government's handling of the continuing labor unrest and urged the government to resolve the situation quickly. Further, the letter, which AAFA sent on behalf of the industry, also expressed strong reservations regarding the government's handling of the ongoing situation with the Bangladesh Center for Worker Solidarity (BCWS) and the arrest of BCWS employees and urged the government to address the BCWS issue. On the same day, 19 members of Congress who comprise the International Workers Rights Caucus, sent a letter to six major corporations urging them to take action on the Bangladesh situation, including requesting that they stop work with two factories that have been involved in the BCWS issue. (Nate Herman) MEXICO REMOVES MOST U.S. TEXTILES FROM PUNITIVE DUTIES IN ONGOING MEXICO TRUCKING ISSUE The long-standing cross-border trucking dispute between Mexico and the United States continues to prompt Mexico to impose retaliatory tariffs on a number of U.S. goods. Mexico announced August 18th that it revised the retaliation list. The new list still hits a broad section of U.S. exports to Mexico, including many agricultural products. On the plus side, however, most exports of U.S.-made textiles to Mexico were removed from retaliation in the revised list. The tariffs come due to the U.S. government's failure in recent years to comply with a North American Free Trade Agreement (NAFTA) statute that would allow Mexican trucks access to U.S. highways. Congress terminated the program for a number of unfounded concerns that Mexican trucks were unsafe and posed security threats. President Barack Obama has pledged to reinstate the program soon. (Kurt Courtney) COURT UPHOLDS LA CLEAN TRUCKS PLAN An August 26 ruling by U.S. District Court Judge Christina A. Snyder upheld the concession requirements in the Port of Los Angeles clean-truck program that have been subject to legal challenges by the American Trucking Associations (ATA). In July 2008, ATA challenged the Los Angeles concession agreement for motor carriers, especially the requirement that trucking companies hire drivers as direct employees. Since most of the harbor trucking companies at ports across the country contract with owner-operators, as independent contractors, the Ports, Teamsters and the National Resources Defense Council have been fighting to ensure that all drivers operating within the port are unionized. Despite the fact that implementation of this plan would severely hurt many small business trucking companies, Judge Snyder surprised many in the industry by ruling last week the Port of Los Angeles concession requirements, including the employee-driver mandate, fall under the "market participant" exception to the federal law. She said Los Angeles competes with other ports for business and promoting a trucking fleet that is financially-viable and operates low-emission trucks over the long term is essential to its role as a proprietor. (Kurt Courtney) VOLKER TAX REFORM COMMISSION ISSUES RECOMMENDATION President Obama's Economic Recovery Advisory Board being chaired by former Federal Reserve Chairman Paul Volcker on August 27 unanimously approved a set of tax reform recommendations that will be delivered to the president for his review. The 126-page report did not make recommendations to the White House on reforming the tax code, but stated further that the suggestions will help inform tax writers about certain reform proposals when creating legislation. Volcker did not rule out the committee taking further action on corporate tax reform. One point raised before the vote was that the corporate tax was high compared to other countries while U.S. multinationals generated very little revenue for the government. The reform suggestions submitted to Obama also do not include any tax increases for individuals earning less than $200,000 and couples making less than $250,000. (Kurt Courtney) COMMERCE ISSUES FINAL ANTI-DUMPING ORDERS AGAINST U.S. IMPORTS OF NARROW WOVEN RIBBONS WITH WOVEN SELVEDGE FROM TAIWAN AND CHINA After the U.S. International Trade Commission (ITC) issued its final determination of injury on August 12, the U.S. Department of Commerce on September 1 issued is final anti-dumping orders against U.S. imports of certain narrow woven ribbons with woven selvedge from Taiwan and China. U.S. imports of narrow woven ribbons subject to the order from Taiwan will face a dumping duties (on top of normal duties) of 4.37 percent while U.S. imports of narrow woven ribbons subject to the order from China will face dumping duties of 123.83 percent or 247.65 percent. (Nate Herman) UNCLE SAM WANTS YOU...TO COMMENT! Congress and many government agencies are soliciting comments on a range of issues that may affect your business. For a list of upcoming comments, please click here.
AAFA WELCOMES NEW MEMBER: DIGNITY U
WEAR
Obama to Push Tax Break from The Wall Street Journal President Barack Obama, in one of his most dramatic gestures to business, will propose that companies be allowed to more quickly write off 100 percent of their new investment in plants and equipment through 2011. More New Tax Breaks for Business on Table from The Washington Post With just two months until the November elections, the White House is seriously weighing a package of business tax breaks — potentially worth hundreds of billions of dollars — to spur hiring and combat Republican charges that Democratic tax policies hurt small businesses, according to people with knowledge of the deliberations. More |
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