NATIONAL JOURNAL - December 16, 2009
 
TRADE: ALABAMA SENATORS WON'T ROLL WITH TIDE ON PREFERENCES By Peter Cohn
 
Sleeping bag imports from Bangladesh are tying up Senate efforts to extend soon-to-expire duty-free benefits for thousands of products from more than 130 developing countries.
 
Sen. Jeff Sessions, R-Ala., has put a hold on the bill, passed unanimously by the House Monday, on behalf of Exxel Outdoors, Inc., which manufactures sleeping bags and other camping products in Haleyville, Ala. They want to add language revoking eligibility for sleeping bags to enter the United States duty-free under the Generalized System of Preferences, after imports of the product from Bangladesh skyrocketed by over 1,000 percent in the last year.
 
Firms including South Korean outdoor-equipment maker OFMA Camp, Ltd. -- an Exxel competitor for sleeping bag sales to U.S. retail outlets -- have moved production from China to Bangladesh to take advantage of lower costs.
And, Exxel and the Alabama senators argue, to benefit from duty-savings under GSP, as China is not eligible for the program, while Bangladesh is.
 
"We want to make sure our constituents are not discriminated against," said Sen. Richard Shelby, R-Ala., who with Sessions penned a letter dated Dec. 7 to Commerce Secretary Locke and Trade Representative Kirk urging them to eliminate sleeping bags from the list of GSP-eligible products.
 
Sleeping bags were added to the list in 1992, and the senators wrote "they never should have been eligible" because they are like other sensitive textile products currently excluded from GSP. The issue was rarely noticed until recently because China has 99 percent of the sleeping bag imports to the United States and companies are only beginning to take advantage of Bangladesh as a manufacturing location. "We strongly encourage you to take swift action to correct a fundamental oversight in U.S. trade policy that is threatening hundreds of jobs," Sessions and Shelby wrote.
 
The Obama administration and Senate Finance Committee leaders were working to alleviate Sessions' concerns without amending the preferences bill.  Altering the bill now was considered too precarious because the House was set to adjourn for the year on Wednesday night, and any changes would have to be approved in that chamber as well.
 
Sources said a side deal could be worked out, perhaps with a letter pledging to give the matter a serious look next year.
 
Exxel has about 30 percent of the U.S. sleeping bag market and about 115 employees. It prides itself on having moved production and jobs out of China and into Alabama. Its founder and CEO, Harry Kazazian, discovered it was actually cheaper to make sleeping bags in the United States than in China and now U.S. production accounts for about 80 percent of its total. Kazazian argues that, at a time when others are shipping jobs overseas, his firm represents an anomaly that is reversing the trend.
 
In a statement, Kazazian said competitors overseas have an unfair advantage on two fronts. On top of contending with duty-free imports from Bangladesh, he said, Exxel has to pay duties on raw materials imported from China used in making sleeping bags that firms operating in Bangladesh do not have to pay. "We are fighting hard to preserve our U. S. jobs. We just want to keep our American factory on an even playing field," Kazazian said.
 
Exxel also had some high-powered lobbying help in getting their point across to lawmakers and the White House. The firm recently hired Sorini, Samet & Associates LLC to advocate on its behalf. Ron Sorini is a former USTR chief textile negotiator, and Andrew Samet was a top aide to the late Sen. Daniel Patrick Moynihan, D-N.Y., and was a Labor Department official in the Clinton administration.
 
U.S. business groups badly want the preferences programs extended, and some even made the House bill a "key vote" on trade in the 111th Congress, despite its unanimous passage. They are set to save nearly $800 million on tariffs next year that they'd be forced to pay if Congress let GSP, and a separate program for Andean countries, expire.
 
"I think it would be an irresponsible act" to let the programs lapse, said House Ways and Means Trade Subcommittee Chairman Sander Levin, D-Mich.
 
Sessions' hold wasn't the only obstacle to the preferences bill. Although she wasn't formally blocking the measure, Sen. Olympia Snowe, R-Maine, let it be known she wants to see movement on her bill to create an assistant U.S. trade representative in charge of small business issues, sources said.
 
On another time-sensitive trade measure, it appears a miscellaneous tariff bill will have to wait until next year -- including Sessions-sponsored duty breaks on sleeping bag components. Covering hundreds of products generally only found overseas, numerous companies had been pressing Congress to act before duty suspensions or cuts expire at the end of the year.
 
The Ways and Means panel introduced its version late Wednesday, but it will wait until early next year to move. The matter was held up for much of the year by demands for greater lobbying transparency measures by Senate Finance ranking member Charles Grassley, as well as a desire by the administration to review each provision.
 
It also ran into late objections from Sen. Debbie Stabenow, D-Mich., who said too many finished products made overseas were being granted tariff breaks. "We should be focused on seeing how many U.S. products we can make in the United States," Stabenow said. "From my standpoint, these have been growing tremendously, 500 more since the last bill, and it's time to focus more on it long-term."