Policy Experts Discuss What’s ‘Missing’ from US Trade Tools
U.S. international trade policy is in a state of flux.
When it comes to the Uyghur Forced Labor Prevention Act (UFLPA), which bars goods made wholly or partly from China’s Xinjiang Uyghur Autonomous Region on the assumption they’re produced with forced labor, the information is either “ambiguous guidance,” or downright conflicting.
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Josh Teitelbaum, senior counsel, Akin Gump Strauss Hauer & Feld LLP, acknowledged the apparel and footwear industry’s frustration with the current state of UFLPA affairs. “We’ll move to keep working with customs, explain why something’s not working,” he said. “We hear from them, they tell us when something’s not working, then we sort of work our way towards something that is much more manageable and much more effective.”
Teitelbaum shared the stage with Stephen Lamar, president and CEO of the American Apparel & Footwear Association (AAFA), at the Sourcing Journal Fall Summit on Nov. 2 during a conversation moderated by Sourcing Journal editor-in-chief Peter Sadera.
Chinese tariffs in place since they were imposed by former President Trump more than five years ago loom large, but are just one of the many trade issues facing the industry.
Teitelbaum and Lamar noted two dates from which changes might come that could have lasting repercussions in international trade: the Asia-Pacific Economic Cooperation (APEC) meeting taking place Nov. 11-19 in San Francisco, where President Joe Biden is scheduled to meet with Chinese President Xi Jinping, and Dec. 31, when certain tariff exclusions may or may not expire. Still other measures are set to expire down the road, like the Africa Growth and Opportunity Act (AGOA) which as of now will end in 2025.
Enforcement of the UFLPA remains the most complicated, Teitelbaum continued. It’s a new law, Customs and Border Protection (CBP) finds it difficult to enforce, and the kind of information required to clear a detained shipment remains unclear. Yet even without firm standards, U.S. textile concerns have written their representatives asking for more stringent enforcement.
The expiration of other measures will have significant reach. AGOA in 2025 is one, and the Haiti Economic Lift Program (HELP) and Haitian Hemisphere Opportunity through Partnership Encouragement Act (HOPEFUL) is another. There’s also the Generalized System of Preferences (GSP), which awaits renewal after expiring three years ago.
Lamar sounded a hopeful note on AGOA, following Biden’s statement urging Congress to renew AGOA, saying he would work with the House on a long term goal.
Renewal of these agreements is crucial to the strength of the U.S. relationships with the countries involved, Teitelbaum said. And not just for trade but for strategic geopolitical reasons.
“It’s an important policy tool for the US government if they want to influence what’s happening inside these countries that should be allies for us in the broader global competition,” Teitelbaum said. “We’re missing the legislative vehicle. Let’s hope we get that done.”
He noted that despite the partisanship that seems at times to cripple the federal government, the two parties are not that far apart on GSP. “What is broken down is the typical trade-off that happens between Democrats and Republicans on trade policy that would form the basis for a larger, broader agreement,” he said.
The presidential election next year could hinder getting anything done on trade, Lamar said, whether it’s the GSP or the Miscellaneous Tariff Bill (MTB), which expired 34 months ago. “There’s a lot of work that if it gets pushed into the next year, it’s gonna get harder and harder,” he said.
They agreed that the Western Hemisphere holds a great deal of promise, mainly through the Dominican Republic – Central America Free Trade Agreement (CAFTA-DR). There are political headwinds, but companies are interested in operating in the region, and it is an opportunity for those countries to make a new first impression, Lamar said. One incentive would be to enable a great deal more short supply petitions to come forward while some of those investments are coming online, to provide companies the ability to ship under CAFTA-DR. Short supply petitions are made to the Department of Commerce when there isn’t enough product available to fill an order and product can be found elsewhere. If approved, it is allowed duty-free status no matter the source.
“You create that demand signal to support the investment that’s coming in and that becomes a virtuous circle that I think will see those numbers increase,” Lamar said.
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