NCTO Advisory to the Trade — February 28, 2019
Making the U.S. Textile Industry Heard in Washington

Making the U.S. Textile Industry Heard in Washington

 This weekly column was launched to assist U.S. textile companies with practical advice regarding tariffs, trade, and federal regulations. Now, with just a over two weeks before the NCTO 2019 Annual Meeting, the most practical advice to the trade is to attend and fully immerse yourself in all aspects of the meeting program. NCTO has an outstanding roster of government presenters to discuss policy matters and industry speakers to address the theme of American Textiles: Building Stronger Local Supply Chains. Equally important to the health of the industry is the location of the meeting, Washington, D.C., which provides the opportunity to engage in person with U.S. government policy-makers.

International trade policy, government procurement policy, regulations relating to workplace, consumer, and environmental safety — all the laws enacted by our elected officials and regulations promulgated by executive agencies — can do much to foster, or hinder, the ability of the domestic textile industry to build stronger local supply chains, compete globally, provide good-paying jobs, and support our communities. The 2019 NCTO Annual Meeting, which will take place on March 19-21, will be our industry’s most high-profile opportunity this year to hear from, and speak to, those decision-makers in Washington who have so much potential to affect the health of our industry.

Our distinguished guests — high-ranking officials from the White House, the United States Trade Representative’s office, U.S. Customs & Border Protection, and the U.S. Department of Commerce — will convey first-hand insights into the various policy matters that directly impact our businesses.  Moreover, the meeting is structured to ensure that we as an industry have the opportunity to convey our perspective on critical issues to key congressional and Administration policy makers. The Annual Meeting is also when NCTO members head to Capitol Hill to discuss industry priorities with key members of Congress.

Several issues face our industry in 2019 —

  • Advocating for passage of the U.S.-Mexico-Canada Agreement, an extension and improvement of NAFTA.
  • Fighting efforts to dilute the Berry Amendment.
  • Monitoring ongoing trade agreement negotiations with the UK, EU, and Japan.
  • Opposing efforts undermine U.S. production and employment, such as:
    • Including apparel articles in the Generalized System of Preferences.
    • Broadening the Customs de minimis regulation that allows imports to circumvent tariffs on direct-to-consumer shipments.
    • Eliminating U.S. duties on high-performance outerwear.
    • Providing duty breaks for the use of recycled materials.

The above list is by no means exhaustive, even of the known issues, not to mention new threats that may arise at any time.

The staff of NCTO is prepared to advocate for our industry with position papers, testimony, and calling on elected officials and their staff.  However, nothing is more potent in Washington than a constituent, who provides good-paying jobs in the district, explaining to our Washington officials precisely how proposed government policy will directly impact those jobs.

The officers, directors, and staff of NCTO thank each one of our member companies who participate in the Annual Meeting. We understand that you are temporarily setting aside the needs of your businesses to come to Washington because you understand that the health of your business can be affected by what happens in Washington. As the saying goes, “Just because you don’t take an interest in politics doesn’t mean politics won’t take an interest in you.”

Finally, at the NCTO Annual Meeting you will hear an update on the TextilePAC, the only PAC in Washington dedicated solely to the interests of the U.S. textile industry. The contributors to the TextilePAC have helped us increase the effectiveness and reach of this essential aspect of our federal lobbying activity.

NCTO Advisory to the Trade — February 21, 2019
Miscellaneous Tariff Bill Duty Suspension

Miscellaneous Tariff Bill Duty Suspension

Background

Since 1982, most Congresses have passed legislation called the Miscellaneous Tariff Bill to temporarily reduce or suspend tariffs on certain imported products and make technical corrections to U.S. tariff laws. The MTB duty suspensions and reductions are designed to boost the competitiveness of U.S. manufacturers by lowering the cost of imported inputs without harming domestic firms that produce competing products.

Companies within NCTO’s membership benefit from MTB duty suspensions relating to certain animal hair fibers, such as camel hair and man-made fibers, such as certain acrylic and rayon, not available from a domestic U.S. source. The MTB also provides for suspension of duty on certain chemicals and textile machinery not available from a U.S. manufacturer. Overall, there are scores of individual duty suspension provisions that provide tariff relief to U.S. textile manufacturers. The duty suspensions now in effect will expire at the end of 2020 unless renewed.

Start NOW to prepare for renewal filings or new duty suspension filings

No later than October 15, 2019, the U.S. International Trade Commission (ITC) will open a web portal for submission of petitions for suspension of import duties. That web portal will be the only way to file petitions. Paper or email filings are not accepted, and Members of Congress no longer can initiate a request on behalf of a constituent. To be included in the next MTB, a tariff suspension must meet three criteria.

  1. It must be non-controversial, meaning that if a U.S. manufacturer of the article in question objects, the petition will be denied.
  2. The amount of tariff revenue foregone cannot exceed $500,000 per year per petition.
  3. Finally, the request must be administrable, meaning that Customs must be able to identify the subject merchandise when presented at the port. This is why, for example, a duty suspension cannot be granted based on the end use of the article and, rather, must be based on objective characteristics of the article.

In determining whether an MTB meets these criteria, each request undergoes a thorough vetting process by the ITC, the Department of Commerce, and U.S. Customs and Border Protection.

Companies seeking to renew any duty suspension they currently enjoy should start now to prepare their requests for renewal. Changes in the tariff schedule or in trade patterns sometime result an expected renewal request being redrafted as a new request. Further, should there be any question about the correct tariff classification of a fiber, interested companies should file now for a Customs Binding Ruling Letter. In the last round of suspension requests, one company had to wait eight months to get a Binding Ruling.

Responding to Requests for Duty Suspensions

In addition to preparing requests for duty suspensions on inputs not available domestically, U.S. textile manufacturers should also be prepared to oppose MTB requests for items that would undermine your U.S. production and employment.

Suggestions for Improving the Process

The law directs the ITC to report to Congress on the effects on the U.S. economy of duty suspensions. That report will include a broad assessment of the economic effects of such duty suspensions on producers, purchasers, and consumers in the U.S. The law also requires that the Commission solicit and append to the report recommendations with respect to those domestic industry sectors or specific domestic industries that might benefit from permanent duty suspensions.

As part of the ITC review process, NCTO will be expressing opposition to the inclusion of finished products, noting that they distort the intended premise of providing duty relief on inputs that undergo further processing by U.S. manufacturers. We will also be closely monitoring any report recommendation to make duty suspensions permanent. Temporary duty suspensions provide needed relief to U.S. manufacturers who must import raw materials not available domestically, while still leaving an incentive to return manufacturing to the U.S. With regard to products that have not been subject to longstanding duty suspensions, a hastily-enacted permanent suspension could dampen interest in reshoring that production and effectively remove that tariff classification from the list of articles that USTR can negotiate in future trade deals.

A public hearing will be held April 8, 2019. The deadline to file a request to appear at the hearing is March 18, 2019. The deadline for post-hearing briefs is April 15, 2019. The deadline for other written submissions is April 23, 2019. The report will be submitted to Congress by October 18, 2019.

NCTO Advisory to the Trade — February 14, 2019
Made in USA Claims

Made in USA Claims 

Background

The current resurgence in US manufacturing arises from a growing realization that it makes sense — commercially and ethically — for the products Americans consume to be made in America. However, many start-up businesses have jumped onto the US manufacturing band wagon without understanding the legal requirements for making an unqualified “Made in USA” claim.

Most textile articles, including apparel and home textiles are governed by the Textile Fiber Product Identification Act or the Wool Products Labeling Act. These Acts, administered by the Federal Trade Commission, set forth specific requirements regarding Made in USA claims. In the case of an apparel or home textile article covered by the Acts, it is not enough to product the finished article in the US. If you make, for example a shirt, or a bedspread, in the US, you cannot make an unqualified “Made in USA” claim unless the fabric was also made in the US. Likewise, a sweater knitted in the US cannot be labeled simply “Made in USA” unless the yarn was also spun in the US. Apparel and home textiles assembled in the US of imported yarn or fabric must be labeled “Made in USA of Imported Yarn” or “Made in USA of Imported Fabric.” This is referred to as a qualified Made in USA claim.

We applaud manufacturers who opt to manufacture consumer textile products in the US.  When apparel and home textile products are made in the US they are more likely to contain US-made yarn and fabric than similar items made in other countries. However, it is important that US producers of consumer textiles understand that if they do not use US yarn or fabric, and then go on to make an unqualified made in USA claim, they are committing consumer fraud and could be subject to FTC enforcement actions, including fines.

In addition to protecting American consumers, the Textile and Wool Labeling Acts are intended to create an incentive for US producers of consumer textile products to source their yarns and fabrics domestically. If you are a US producer of yarn or fabric and you believe that a potential customer, a US producer of consumer textile articles, is bypassing you by using imported yarns or fabrics, while still trying to benefit from an unqualified Made in USA claim, NCTO can raise those concerns with the FTC on your behalf.

What’s Covered by the Made in USA Rule?

Nearly all apparel and home textiles are covered. The list is very long. In fact, it is easier to state what is not covered, as follows:

  • Upholstery or mattress stuffing that is not reused. If the stuffing is reused, the label must say so.
  • Outer coverings of upholstered furniture, mattresses and box springs.
  • Linings, interlinings, filling or padding used for structural purposes. If used for warmth, though, the fiber must be disclosed. In addition, if you state the fiber content of linings, interlinings, filling or padding, the products are not exempt.
  • Stiffenings, trimmings, facings or interfacings.
  • Backings of carpets or rugs and pads or cushions for use under carpets, rugs or other floor coverings.
  • Sewing and handicraft threads.
  • Bandages, surgical dressings and other products subject to the federal Food, Drug and Cosmetic Act.
  • Waste materials not used in a textile product.
  • Shoes, overshoes, boots, slippers and all outer footwear. But socks and hosiery are covered; slippers made of wool are covered under The Wool Rules.
  • Headwear, including hats, caps or anything worn exclusively on the head. Wool hats are covered under The Wool Rules.
  • Textiles used in handbags or luggage, brushes, lampshades, toys, feminine hygiene products, adhesive tapes and adhesive sheets, cleaning cloths impregnated with chemicals, or diapers.
  • Also note, this discussion relates solely to articles covered by the Textile and Wool Rules. Other consumer products are covered by an entirely different standard for Made in USA claims.

One step removed rule

The FTC, in guidance to the trade has stated: “In deciding whether to mark a product as made in the U.S. either in whole or in part, a manufacturer also must consider the origin of materials that are one step removed from the particular manufacturing process. For example, a yarn manufacturer must identify imported fiber. A manufacturer of knitted garments must identify imported yarn. A manufacturer of apparel made from cloth must identify imported fabric.”

NCTO Announces Kimberly Glas as Next President & CEO

WASHINGTON, DC – The National Council of Textile Organizations (NCTO) is pleased to announce the appointment of Kimberly Glas as the organization’s new President & CEO, effective April 29th of this year.  Ms. Glas will succeed Augustine “Auggie” D. Tantillo, who previously announced his intention to step down from the same position at NCTO.

Current NCTO Chairman Marty Moran, CEO of Jefferson, Ga.-based Buhler Quality Yarns, noted that the selection follows a rigorous search process that led to her unanimous approval by NCTO Board of Directors. Ms. Glas brings over 20 years of experience in government policy development and advocacy. Her multi-faceted career includes spearheading manufacturing and trade policy efforts on Capitol Hill, serving as a key leader on behalf of the textile industry in the Obama Administration, and most recently leading a non-profit organization working to advance critical policies to grow quality, U.S. jobs in the clean energy economy.

“We are fortunate, at this time of change and challenge to have Kim take the helm of this organization,” said Moran. “The U. S. textile industry is experiencing an exciting and dynamic period.  A new policy environment has evolved in Washington that places a greater emphasis on domestic manufacturing and Kim is an excellent choice to steer the industry through these new opportunities,” Moran added.  “NCTO has worked very closely with Kim over the years on Capitol Hill and in the Obama Administration.  Kim brings a strong combination of leadership skills, policy and advocacy know-how, and industry knowledge and has extensive experience working on manufacturing, trade, competitiveness, and sustainability issues.  We are thrilled she is taking on this important role at this time.”

“I am honored and excited for the opportunity to lead NCTO and to work on behalf of this innovative industry.  I am grateful to Auggie for his leadership and all his support and friendship over the years and am deeply appreciative to the NCTO membership for this incredible opportunity,” said Glas.  “I could not be more excited about taking on this role. I know how critical this industry is to so many across the United States and the value it represents. I am thrilled to be able to work on its behalf to advance its priorities.”

Ms. Glas most recently served as Executive Director of the BlueGreen Alliance, a national partnership of labor and environmental organizations working to advance the creation of quality U.S. jobs in the clean energy economy. In this capacity, she worked closely with labor, environmentalists and U.S. industry at the intersection of energy, the environment and trade to advance common-sense policy solutions in order to help achieve a stronger economy and a more sustainable future.

Prior to that, from 2009 to 2014, Ms. Glas served as the Deputy Assistant Secretary for Textiles, Consumer Goods and Materials at the U.S. Department of Commerce under the Obama administration. In this capacity, Ms. Glas managed three offices of nearly 40 employees and oversaw programs and strategies to improve the domestic and international competitiveness of the U.S. textile and apparel industries. Ms. Glas worked closely with the United States Trade Representative, other key agencies, and Congress to advance a multitude trade policy interests critical to the U.S. industry, including advancing fixes to the CAFTA-DR agreement to help maintain and grow the U.S. textile workforce.

Ms. Glas also brings extensive Capitol Hill experience, having worked for U.S. Representatives Michael Michaud of Maine and John J. LaFalce of New York.  Kim helped to initially organize, and then served as the key Congressional staffer for the House Trade Working Group, a key coalition of Members of Congress that works extensively on trade policy and domestic competitiveness issues to this day.

NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers, including artificial and synthetic filament and fiber producers.

  • U.S. employment in the textile supply chain was 550,500 in 2017.
  • The value of shipments for U.S. textiles and apparel was $77.9 billion in 2017.
  • U.S. exports of fiber, textiles and apparel were $28.6 billion in 2017.
  • Capital expenditures for textile and apparel production totaled $2.4 billion in 2016, the last year for which data is available.

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CONTACT: Rebecca Tantillo
(202) 822-8026
www.ncto.org

 

NCTO Advisory to the Trade — February 7, 2019
U.S. Section 301 Tariffs on Goods of Chinese Origin

U.S. Section 301 Tariffs on Goods of Chinese Origin

Background

On August 14, 2017, the President issued a Memorandum instructing the Trade Representative to determine whether to investigate under Section 301 of the Trade Act of 1974 laws, policies, practices, or actions of the Government of China that may be unreasonable or discriminatory and that may be harming American intellectual property rights, innovation, or technology development.

NCTO supports the ongoing Trump administration’s Section 301 case against China’s intellectual property abuses, testifying on and submitting written comments documenting the damaging effects of China’s IP theft on U.S. textile manufacturers. In doing so, NCTO advised placing tariffs on finished products, such as apparel and home furnishings, which would bring greater benefit to the North American textile supply chain. NCTO was also successful in removing products such as rayon fibers and most textile machinery, while continuing to push for an exclusion process for items not available domestically.

The United States and China are currently in high-level negotiations to determine if a settlement can be reached to resolve the 301 IPR case.  March 1, 2019 is the target date set by the Trump administration to reach a negotiated settlement.

So far three tranches of tariffs have been imposed. Below, in reverse chronological order, are the three tranches.

Tranche Three

On September 17, 2018, (just 12 days after the close of the September 6, 2018, comment period, and just two days after the transcript of the hearing was made available on regulations.com) USTR announced the final Tranche Three list of 5,745 full or partial lines of the original 6,031 tariff lines as the final Tranche Three list with 10% additional tariff to be imposed starting September 24, 2018. They fully or partially removed 297 tariff lines from the original proposed list. Included among the products removed from the proposed list are certain consumer electronics products such as smart watches and Bluetooth devices; certain chemical inputs for manufactured goods, textiles and agriculture; certain health and safety products such as bicycle helmets, and child safety furniture such as car seats and playpens.

Starting January 1, 2019, the level of the additional tariff was to increase to 25%. On December 3, 2018, the President announced that the tariffs would not increase on January 1st and stay at 10% while the U.S. and China negotiated. If no agreement is reached, they will go to 25% on March 2, 2019.

Tranche Three is of special interest to NCTO member because, unlike the earlier lists, it included textiles. The entirety of Chapters 50 through 60 of the tariff schedule was proposed, and eighteen 8-digit tariff lines in the textile chapters were removed from the finalized list that went into effect. That means that virtually all textile fibers, yarns, fabrics, and carpets were included in this action.

NCTO applauds the Trump Administration for including textile articles from China that are unfairly traded in contravention of China’s WTO commitments. However, there has been some unintended collateral damage. For a very limited number of early-stage processing textile inputs China is the sole source. Some of these textile inputs are ones for which NCTO members successfully petitioned for duty suspension, under the Miscellaneous Tariff Bill, only to find the duty suspension offset by the Section 301 tariffs. It is also important to note that apparel and most other textile products (Chapters 61 through 63 of the tariff schedule), which NCTO advocated should be on the list, are not subject to Section 301 tariffs. Reports of apparel retailers or consumers being affected directly by these tariffs are fake news.

Tranche Two

On August 8, 2018, USTR announced a list containing 279 of the original 284 tariff lines that were on a proposed list subject to 25% additional tariffs. These went into effect August 23. For companies with articles on that list there was an opportunity to file for an exclusion. So far no Tranche Two exclusion requests have been processed, due the backlog of Tranche One exclusion requests.

Tranche One

On April 3, 2018, USTR released a proposal to place an additional 25% import duty on products covered by 1,333 tariff classifications. Interested persons filed approximately 3,200 written submissions. In addition, USTR and the Section 301 Committee convened a three-day public hearing. The result was that 515 items were removed from the list. For companies with inputs on this list there was an opportunity to file for exclusions. The very large number of exclusion requests filed, 10,828, has meant that processing exclusions is taking a long time. As of January 30, 2019, 999 had been granted and 2,498 had been denied. Of the remaining request, 2,179 are at “Stage 3,” meaning they have passed the Initial Substantive Review of whether the exclusion request should be granted, and now USTR is consulting with Customs to determine whether an exclusion would be administrable. It can reasonably be assumed that many of the requests that have made it through to Stage 3 will likely be approved.

NCTO Announces Retirement of President & CEO Auggie Tantillo

WASHINGTON, DC –  Augustine “Auggie” D. Tantillo, President & CEO of the National Council of Textile Organizations, has announced his intention to retire from his position later this year. Tantillo has enjoyed a 38-year, multifaceted career in the Washington policy arena, most of which involved direct representation of the U.S. textile industry.

NCTO Chairman Marty Moran stated, “Due to his vast institutional knowledge and skill in navigating policy matters in Washington, Auggie will certainly be missed. On behalf of our entire membership, I want to express our gratitude to Auggie for his dedicated and important service to our industry,” Moran added.

Tantillo stated, “It has been a tremendous privilege to represent an industry that has made such an enormous contribution to the U.S. economy and the U.S. workforce. I will always be grateful for the confidence that the domestic textile sector has shown in me as the head of this important organization.”

In the spring of last year, NCTO formed a search committee to undertake the process of selecting a replacement for Tantillo. After vetting numerous highly-qualified individuals and conducting a thorough interview process with leading candidates, the organization intends to make a public announcement on Tantillo’ s replacement in the coming weeks.

Tantillo has worked in government service or government relations in Washington, D.C. since 1981. Prior to joining NCTO, he served as Executive Director of the American Manufacturing Trade Action Coalition, a trade association dedicated to furthering the interests of U.S. manufacturing, particularly with respect to textiles. At earlier points in his career, Tantillo was Deputy Assistant Secretary for Textiles & Apparel at the U.S. Department of Commerce under President George H. W. Bush, and Chief of Staff to U. S. Senator Strom Thurmond of South Carolina. Tantillo earned a B.S. in Agricultural Economics from Clemson University.

NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers, including artificial and synthetic filament and fiber producers.

  • U.S. employment in the textile supply chain was 550,500 in 2017.
  • The value of shipments for U.S. textiles and apparel was $77.9 billion in 2017.
  • U.S. exports of fiber, textiles and apparel were $28.6 billion in 2017.
  • Capital expenditures for textile and apparel production totaled $2.4 billion in 2016, the last year for which data is available.

# # #

DOWNLOAD RELEASE

CONTACT:  Rebecca Tantillo
(202) 822-8026
www.ncto.org