INSIDE US TRADE, OCT 9

Sessions Lifts Hold, But Snowe Still Stalling GSP, ATPDEA Extension
Passage of a one-year extension for the Andean Trade Promotion and Drug Eradication Act (ATPDEA) and the Generalized System of Preferences (GSP) program at press time remained stalled in the Senate over demands by Sen. Olympia Snowe (R-ME) that the government do more to help address the needs of small businesses.
The House passed an extension for the ATPDEA and GSP programs on Dec. 14 by a voice vote under suspension of House rules. The House bill would move up a biennial ATPDEA review of all beneficiaries to June 30, 2010.
While Snowe has not placed a formal hold on the preferences bill, she has in the context of preferences extension raised her desire to see the Office of the U.S. Trade Representative create an assistant U.S. trade representative for small business, sources said. Snowe introduced a bill, S. 2861, that would mandate the creation of this position on Dec. 9.
U.S. Trade Representative Ron Kirk last October pledged to help promote the interests of small- and medium-sized businesses in U.S. trade policy, but declined to create a new slot for an assistant U.S. trade representative (Inside U.S. Trade, Oct. 9).
At press time, one major hurdle to the bill’s passage was cleared when Sen. Jeff Sessions (R-AL) agreed to lift a hold he had placed on the bill earlier in the week.
Sessions agreed to do so after receiving a pledge from Kirk that USTR would review the eligibility of certain sleeping bags under the GSP program next year. Sessions originally placed the hold because a constituent company, Exxel Outdoors Inc., is facing severe competition from Bangladeshi sleeping bags that are entering the U.S. duty-free under the GSP program. Exxel Outdoors employs about 100 workers in Alabama.
However, USTR has not committed to remove these sleeping bags from the GSP program. Sessions had originally demanded a legislative fix this year on the issue as a condition for lifting his hold, one source said.
“Ambassador Kirk assured Senator Sessions that he agreed to review a petition from Exxel to rightfully remove sleeping bags from eligibility for duty-free treatment under GSP,” a Sessions spokesman said in a statement. “This appears to be a satisfactory solution to this problem and we are pleased to allow the GSP bill to move forward.”
Sessions believes that the sleeping bags in question should never have been eligible for GSP benefits because they were covered under the expired Multifiber Arrangement (MFA), which set quotas on garments.
In a Dec. 7 letter to USTR Ron Kirk and Commerce Secretary Gary Locke, Sessions and Sen. Richard Shelby (R-AL) argued that under U.S. law, textile products subject to textile agreements on January 1, 1994 are not eligible for GSP.
The senators argue that sleeping bags had been covered by the MFA, which was in place at that time, and therefore should never have been eligible for GSP benefits, according to the letter. If that is the case, USTR would have to remove the sleeping bags from GSP eligibility, one Senate aide said.
However, a USTR spokeswoman described the eligibility criteria for textile and apparel products differently.
She said that the key issue in determining whether a textile or apparel article qualifies under the GSP program for duty-free treatment is whether that article was eligible under the GSP program in 1994. This is because under the GSP statute, textile and apparel articles which were not eligible articles on Jan. 1, 1994 may not be designated as articles that receive duty-free treatment under the GSP program.
Prior to 1994, the criteria for determining if a textile or apparel article was eligible was complicated, in that the MFA was only the “starting point for the [eligibility] analysis rather than the determinative factor,” the spokeswoman said. Instead, the GSP statute, prior to 1994, “focused on textile and apparel articles that were subject to U.S. bilateral textile agreements,” the spokeswoman said.
“In summary, the issue is not whether a textile or apparel article could be covered under the MFA, but whether it was covered under a U.S. bilateral textile and apparel agreement,” the spokeswoman said.
Generally speaking, the GSP program is not meant to include any items that are “import sensitive,” and some sources said that past administrations have interpreted this term to include all items that were covered under the MFA, which expired in 2005. However, one source said that the definition of this term should be revisited in light of the fact that the MFA has lapsed.
Several sources expressed frustration at what they considered to be the last-minute hold by Sessions. But one source said this characterization was unfair, and pointed out that the joint letter dates from earlier this month. This source pointed out that representatives for Exxel Outdoors discussed this issue with the Office of the U.S. Trade Representative in November.
In the senators’ letter, they argue that China dominates the market for the sleeping bags in question, but that U.S. manufacturers are able to compete because Chinese imports face duties, which one source said are set at 9 percent. The letter claims that “a major operation” has moved out of China and into Bangladesh and can now benefit from duty-free exports to the United States. This is hurting U.S. manufacturing interests, according to the letter.
Sessions and Shelby argue in their letter that the administration “has clear authority” to remove the sleeping bags due to what they consider their mistaken eligibility under GSP. -- Jamie Strawbridge