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By SPESA
Below is a collection of stories related to trade and government policy that may impact the sewn products industry around the world.
USTR Extends PPE Tariff Exclusions On March 10th, the Office of the United States Trade Representative (USTR) published a six-month extension of Covid-19 related product exclusions from Section 301 duties covering imports from China. The list of products includes personal protective equipment (PPE). The Section 301 exclusions were set to expire on March 31, 2021, after USTR previously extended them in December 2020. The agency determined it would be inappropriate to allow the exclusions to lapse in consideration of the ongoing efforts to combat the pandemic. The exclusions are now extended through September 30, 2021. The full list of products subject to exclusions is included in the Annex of the December 2020 Federal Register Notice.
Related:
The Biden administration is defending President Trump’s 2018 expansion of tariffs on Chinese goods against lawsuits brought by thousands of U.S. companies, which claim Trump overstepped his authority. Read more.
United States Trade Representative nominee Katherine Tai testified before the Senate Finance Committee last month outlining her vision for leading the agency. She highlighted addressing the challenges posed by China, along with rebuilding international alliances and re-engaging international institutions. Read more.
Court Challenges First Sale Rule Speaking of goods from China, on March 1st, a ruling from the U.S. Court of International Trade (CIT) called into question the viability of “first sale” for companies sourcing from China and Vietnam. First sale is widely used by apparel importers as a method of lowering import tariffs. The ruling could increase the customs duty expense of sourcing apparel from these countries by an average of 10-15%, depending on how U.S. Customs and Border Protection (“CBP”) decides to apply the decision to other importers. Read more.
U.S. PPE Legislation Introduced U.S. Representatives Bill Pascrell, Jr. (D-NJ-09) and Patrick McHenry (R-NC-10) re-introduced the American PPE Supply Chain Integrity Act March 1st to “help end America’s over-reliance on personal protective equipment (PPE) and medical supplies from China and other foreign nations.” The legislation was previously introduced last year as one of several similar initiatives to promote domestic PPE manufacturing. Read more.
ICYMI: There was a Fox News piece making the rounds recently featuring a Republican Member of Congress’s plea to President Biden to mandate all PPE be manufactured in the United States. Read it here.
Opportunity to Comment on Hong Kong Labeling Rule Back in July 2020, CBP announced a change that required imported goods produced in Hong Kong to be labeled as “Made in China.” Shortly before the requirement took effect in November 2020, Hong Kong initiated a dispute complaint with the World Trade Organization (WTO) claiming the change violated WTO rules. While the WTO proceedings are ongoing, USTR is inviting public comments on the issue. Anyone looking to share how this change may affect their business is encouraged to do so by April 12th.
Related-ish: U.S. Senators Mike Lee (R-UT) and Angus King (I-ME) re-introduced the Reinforcing American-Made Products Act in February aiming to strengthen American manufacturing by creating one national “Made in USA” labeling standard. Read more.
U.S. & EU Temporarily Suspend Retaliatory Tariffs According to a joint statement released by the United States and the European Union, both parties have agreed to temporarily suspend the additional tariffs they implemented on one another as part of their long-running aircraft subsidy dispute. The U.S. reached the same agreement with the United Kingdom. The temporary suspensions — which began March 4th for UK products and March 11th for EU products — will initially last four months, hopefully buying time for all parties to reach an agreement. Read more.
EU Supply Chain Due Diligence Law On March 10th, the European Parliament voted by an overwhelming majority to pursue adoption of a binding EU law that would require companies to conduct environmental and human rights due diligence along their supply chains or face consequences such as fines, sanctions, or civil action. The law would encompass both EU and non-EU businesses that are active in the EU market and operating in high risk sectors. The European Parliament is now calling on the European Commission — the body responsible for drawing up proposals for new European legislation — to move forward on the legislation. The Commission has announced it will present its legislative proposal on the matter later this year.
European Parliament Resolution of 10 March 2021 with Recommendations to the Commission on Corporate Due Diligence and Corporate Accountability (2020/2129(INL)) | National Law Review Overview of the Initiative | Just-Style Analysis of the Industry Impact
German Supply Chain Due Diligence Law Germany is the latest European country to take independent action on supply chain due diligence. (Belgium might be next.) On March 3rd, the German government agreed to implement new legislation that could fine companies millions of euros for labor or environmental abuses that occur at any point in their supply chain. The Lieferkettengesetz (Supply Chain Law) will roll out in stages, beginning with Germany’s largest companies with more than 3,000 employees in 2023 and then extending to firms with 1,000-plus employees from 2024. Subcontractors outside of Germany will be beholden to the same standards, although indirect suppliers will only be interrogated if issues are flagged. Read more here or here.
U.S. Legislation on Xinjiang Forced Labor Bills have been introduced in both the House (H.R. 1155) and the Senate (S. 65) to effectively ban all goods produced in whole, or in part, in the Xinjiang Uyghur Autonomous Region (XUAR) of China unless importers can prove that the goods were not made with forced labor. The legislation would place a high burden on companies to evaluate their entire supply chain, consider shifting sourcing or production out of the XUAR, or implement significant tracing and documentation policies to prove goods were not produced with forced labor. A good overview of the legislation is available here.
Trade firm Sandler, Travis & Rosenberg, P.A. recently pointed to this legislation as one in a raft of new bills targeting trade and investment with China.
China Fast-tracking RCEP China has ratified the Regional Comprehensive Economic Partnership (RCEP) three months ahead of schedule. The massive free trade agreement includes Australia, China, Japan, New Zealand, South Korea, and 10 Association of Southeast Asian Nations (ASEAN) members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The Chinese government is reportedly encouraging the other participants to ratify RCEP as soon as possible, and is accelerating the technical preparations to implement the agreement and ensure smooth processes around tariff reductions and certificates of origin for trade goods. RCEP will enter into force 60 days after six ASEAN member states and three non-ASEAN member states have ratified the deal. Read more.
ICYMI: Fibre2Fashion recently did a deep dive into the impact of both RCEP and the EU’s trade-based human rights policy in Southeast Asia, as well as the domestic policies affecting the sewn products industry in the region. It is an interesting read if you have the time and have no other hobbies.
Related: Apparently, China is planning to build a global rapid logistics network by 2035, which would allow goods to be delivered to neighboring countries and major international cities within two to three days. Read more.
Indonesia to Impose Safeguard Duties Sourcing Journal has reported that the Indonesian government has decided to impose a safeguard tariff to help the nation’s garment industry, which is struggling from the pandemic and a subsequent decline in gross domestic product. The import duty will range from 44 cents to $11.29 per piece on ready-made garments imported from China, Vietnam, Singapore, and Bangladesh, and is expected to be imposed within the next few months. Read more.
South Africa Approves Duty-free Fabric Imports The South African government recently approved the duty-fee import of woven fabrics to be used in domestic production. The move is meant to encourage domestic retailers to buy more locally-made clothing and to boost manufacturing jobs. Read more.
New British Covid Loan Plan On March 3rd, the U.K. launched a new state-backed loan scheme for businesses impacted by Covid-19, replacing existing programs that have seen struggling businesses borrow some 73 billion pounds so far. The new scheme will offer loans from 25,000 to 10 million pounds, with an 80% state guarantee, replacing the previous “bounce back” scheme aimed at small businesses and programs for larger firms. Read more.
Legislation to Address Truck Driver Shortage We’ve talked a lot about current supply chain and freight challenges in Behind the Seams, but haven’t yet touched on the issue of driver shortages. Nicely tying in with this month’s Women in the Industry theme, a group of senators recently re-introduced the Promoting Women in Trucking Workforce Act to support women in the trucking industry and establish a Women in Trucking Advisory Board. Read more.
Similarly, legislation has been introduced that would pave the way for commercial drivers younger than 21 to drive trucks across state lines. Read more.