U.S.-China Commission Fields Questions on Growing Chinese Fentanyl Trade and a U.S. Loophole that Facilitates Importation of Illegal Products into the U.S. Market

The U.S.-China Economic and Security Review Commission released its annual report to Congress Tuesday, covering a wide range of topics and issuing key findings, policy recommendations and executive summaries.

Several questions were raised during the briefing on pressing issues, including the surge of fentanyl shipments from China, the de minimis loophole and the Uyghur Forced Labor Prevention Act (UFLPA).

During the meeting, Commissioners fielded questions on the upcoming Asia-Pacific Economic Cooperation (APEC) summit in San Francisco where fentanyl is on the agenda.

Commission Chairman Carolyn Bartholomew stressed that enforcement mechanisms are key in tracking and stopping the flow of fentanyl and other narcotics that are being shipped directly to U.S. consumers at alarming rates.

She said fentanyl precursors are measurable and quantifiable and pledged to continue scrutinizing whether progress is being made by the Chinese to enforce the law and reduce the tsunami of fentanyl reaching the U.S. market.

Vice Chairman Alex Wong said the commission’s research, which culminated in a 2021 Issue Brief titled “Illicit Fentanyl from China: An Evolving Global Operation,” highlighted the increase in fentanyl precursor movement in recent years from China through third countries and ultimately into the U.S.

“I want to highlight that that increase occurred in the post-pandemic period. Now, you will all remember that during this period we saw a number of supply chains across commodities and finished goods out of China being very strained and experiencing a lot of delays,” Wong said. “The only supply chain that was not only not strained but seemed to increase and increase its efficiency and speed was the movement of fentanyl precursors out of China.”

Wong also said the Chinese government often says it is unable to enforce the law and track producers and shippers of fentanyl precursors.

“They would say to me, ‘We don’t have as much power as you think.’ And I would always say well you have more power than you say, particularly when we are talking about a government that strives very hard to enhance its ability to surveil and track and exert precise pressure on individuals throughout its 1.3 billion population,” Wong added. “So, they can do more on fentanyl. My hope is that discussions tomorrow and our continued pressure on the Chinese results in action. It really is a major detriment to our society health-wise and our social fabric that needs more attention.”

Commissioners Kim Glas and Mike Wessel voiced alarm about the Section 321 de minimis mechanism, which is a legal provision in U.S. trade law that has unintentionally acted as a gateway to an explosion in e-commerce shipments that come in largely uninspected and duty free, endangering American consumers and undermining U.S. manufacturers.

Commissioner Mike Wessel raised the de minimis issue as it relates to fentanyl, facilitating packages into the U.S. with little to no inspection.

“Fentanyl is being transited that way as well. De minimis is a vector not only for products emanating from the Xinjiang region, whether it’s textile or other products; there have been a number of studies across a number of supply chains—solar, aluminum, car parts, but fentanyl is also coming in through the de minimis loophole,” Wessel said. The administration has the legal power to act. There needs to be something done.”

See Wessel’s remarks here:

Commissioner Jacob Helberg said it was “laughable” that the Chinese government has said it does not have the power to crack down on the illicit trade.

“Clearly, if they want to put an end to this fentanyl trade, they could probably do it overnight,” he added.

“Last year in 2022, 110,000 Americans died from fentanyl overdoses in this country. It has ravaged and completely hollowed entire communities across this country. You are seeing it rightfully become an incredibly salient political issue in this current presidential election cycle,” he said.

Commissioner Glas voiced concern about the lack of Customs enforcement of products made with slave labor, fentanyl and other dangerous products that enter the U.S. market through the de minimis loophole, largely uninspected and duty free.

“To put it into context, last year the U.S. imported $184 billion worth of textiles and apparel and only $35 million was detained for inspection (by U.S. Customs and Border Protection).

Glas stressed that with 20 percent of the world’s cotton grown in Xinjiang, China, where the use of forced labor has been widely documented, and 80 percent of cotton products made in China containing Xinjiang cotton, a large volume of the tainted apparel is making its way into the U.S. uninspected.

“One of the things our research paper did was look at Shein and Temu and the growing influence of these Chinese e-commerce websites, and the national security risk and consumer security risks these kinds of platforms [pose],” Glas said. “The fact is that the U.S. government under its current trade policy rewards these platforms when they directly ship these products to the U.S.”

See Glas’ remarks here:

Glas noted that de minimis was created 100 years ago for tourists who were bringing back sweaters or other souvenirs and not having to pay a tariff.

But e-commerce has changed the system and the rules of the game.

“In 2015, 150 million de minimis packages came in. Now, we are on track for 1 billion packages of individually wrapped boxes. You do not have to provide information on the country origin. What is in the box? Is it safe? Does it meet Consumer Product Safety Commission regulations? Is it an illegal product? Is it a forced labor product? None of that is ever labeled. No box says ‘fentanyl.’ No box says, ‘forced labor product.’”

She said if the administration closed the de minimis loophole today, the goods would be transported by freight through normal entry process and be part of a larger Customs inspection strategy.

See her remarks here:

To view the entire Commission briefing, please see the link here.

Videos created by: Rebecca Tantillo

VA’s Inaction in Implementing the Make PPE in America Act is Hurting American Textile and Apparel Manufacturers

It has been 19 long months since legislation designed to increase federal purchases of American-made PPE was enacted, but the inaction of at least one key federal agency in purchasing more domestically-produced items is posing a threat to the very U.S. supply chain that stepped up overnight to protect our nation during the COVID pandemic.

Fortunately, at least, one congressional oversight committee is taking notice.

The overarching question on the mind of many U.S. textile and apparel executives who retooled production lines to produce millions of facemasks, hospital gowns and other critical PPE items at the height of the pandemic is whether they will ever see a demand signal and contracts from the Department of Veterans Affairs (VA).

This leading agency which procures PPE for the government seems to be mired in bureaucratic red tape when it comes to fully implementing a strategic plan to purchase more American-made PPE, as mandated by law.

The legislation at the heart of the matter—the Make PPE in America Act, which took effect in February 2022—requires that all PPE purchased by the Departments of Health and Human Services (HHS), Homeland Security (DHS) and VA be made by manufacturers in the United States using domestic components.

Last week, a House congressional oversight committee held a hearing and finally started asking the right questions of VA officials.

On Thursday, the House Committee on Veterans’ Affairs’ (HVAC) Subcommittee on Oversight & Investigations held a hearing on “VA Procurement: Made in America,” to explore the agency’s action plan on several Made in America policies, including the Make PPE in America Act.

The chairwoman of the oversight subcommittee, Rep. Jen Kiggans (R-VA), raised concerns about the VA’s inaction and lack of a strategic plan.

“Congress and both this administration and the Trump administration made it a priority to ensure the federal government is buying American-made products,” Kiggans said in her opening statement.

However, she expressed serious concerns about the VA’s approach, noting that a year and a half after the law was enacted, “there appears to be very little that has changed.”

“I understand that new legislation takes time to implement, but issues at the VA don’t normally get better with time. A recent inspector general report highlighted significant issues with VA’s compliance with decades-old Made in America laws.”

She also noted it is concerning that she has heard from industry leaders that as recently as a few months ago the VA “didn’t even seem to have a plan to implement the law.”

See her remarks here:

https://youtu.be/ndzZawcJG6w | Video Credit: Rebecca Tantillo

“Many American companies have overhauled their production lines to meet the demand for world-class goods and supplies,” Kiggans said. “The VA must similarly change their procurement process to step up their outreach and market research to identify opportunities to work with American companies. I’m concerned many of these companies will be forced to close down their operations if the VA doesn’t immediately follow the law and take a more proactive approach to buying American.”

“Relying on foreign products in a time of crisis is a flawed strategy that unfortunately was felt directly by the VA employees and veterans,”said Rep. Frank Mrvan (D-IN) in his opening remarks. “This requires a concerted effort across VA to comply with the laws and the presidential directives in place to provide opportunities for American companies to provide personal protective equipment and other supplies.”

“Without a consistent demand for these products, we cannot ensure that American companies will be around for the next crisis,” he added.

In his written submission and opening remarks at the hearing, Michael Parrish, the VA’s Principal Executive Director of the Office of Acquisition, Logistics and Construction and Chief Acquisition Officer, stressed the agency is committed to full implementation of its statutory requirements but noted “achieving the goals espoused in these statutes, policies and executive orders takes time.”

He acknowledged that availability of 100% domestically-produced PPE “requires a clear and organized federal demand signal to support the existing and future industry investments, innovation as well as a long-term commitment. VA is committed to working with other Federal agencies to communicate to industry the importance of domestically-produced PPE.”

He claimed the VA has found in many instances that inputs of PPE are “not yet [manufactured] in the U.S. and raw materials are manufactured overseas.”

This statement will undoubtedly cause concern among NCTO member companies who have worked vigilantly to be certified over the past three years and repeatedly communicated to the VA and other agencies that there is an existing supply chain ready and able to meet their procurement needs. The root of the problem is not lack of capacity, but rather lack of planning, strategy and demand signal on the part of the VA.

Parrish said the VA has taken the following steps thus far: developing an executable acquisition strategy for each PPE item identified in the Make PPE in America Act that has been prioritized for action; developing common requirements and an acquisition strategy for all items on the consensus PPE list by the end of calendar year 2023; and reporting noteworthy accomplishments towards the development of a long-term PPE strategy under the President’s Management Agenda.

Following a multi-agency Make PPE in America Industry Day in April, at which NCTO President and CEO Kim Glas participated in a panel discussion, Parrish said the VA issued a request for information to Blanket Purchase Agreement holders participating in the VA’s MSVP program to “gauge how many are fully compliant with Made in America Act requirements.”

“To date, through vendor self-certification, VA has identified 129 items on its MSPV product list that are 100% Made in America compliant,” Parrish said in his written submission.

Among the PPE items that are not yet compliant are things like nitrile gloves, he noted.

“The journey requires support beyond the Federal health care space of VA (and DoD) to achieve the goal, maintain supply chain resiliency and reduce dependency on overseas markets for PPE requirements ranging from raw materials to finished products,” Parrish noted.

Rep. Aumua Amata Coleman Radewagen (R-AS), a non-voting delegate in the House of Representatives, asked a series of questions related specifically to the VA’s implementation efforts, noting that she has met with manufacturing associations representing American PPE producers that “feel they are being underutilized by the VA.”

Radewagen asked VA officials testifying at the hearing to explain the process for identifying domestic PPE sources, whether the VA has entered into any PPE procurement contracts since the law was enacted; and, if so, what percentage of these contracts are compliant with the Make PPE in America Act as well as how the VA ensures the PPE it purchases from its vendors is compliant with the Make PPE in America Act.

Andrew Centineo, Executive Director of Procurement and Logistics for the VA in conjunction with the U.S. Department of Veterans Affairs, said several agencies met with industry partners in April at the government-sponsored Industry Day and have since held medical surgical prime vendor industry opportunities, in addition to biweekly engagements with industry.

He said the feedback he has received from industry is that it will provide the products but it needs assurances the demand signal from the VA and other agencies is there.

See the full exchange with VA officials here:

https://youtu.be/B4Pc1L8Hp4c | Video Credit: Rebecca Tantillo

NCTO has been strongly advocating for full implementation of the legislation and pushing for a strong demand signal for American-made PPE.

See an op-ed by NCTO President and CEO Kim Glas here: Opinion: The Time to Act on American-Made PPE Is Now.

In addition, Glas participated in the multi-agency Make PPE in America Day in April.

See three clips from her remarks here:

This failure to date on the part of the VA and the lack of a demand signal from agencies and the private hospital sector is hurting U.S. textile and apparel manufacturers that retooled production chains overnight and are now left sitting with idled capacity and very few purchasing orders.

Three NCTO member companies outlined their concerns in a press release last week.

“The VA and all federal agencies need to fully implement this law immediately. It is critical to the viability of the domestic PPE supply chain and to our nation’s long-term health and national security,” Glas said in the statement. Without the commitment, our manufacturers will be forced to shutter operations and the PPE domestic supply chain will disappear, leaving our country overly reliant once again on unreliable imports from China and other foreign suppliers,” she added.


NCTO Chairman Norman Chapman Outlines Priority Issues for U.S. Textile Industry

NCTO Chairman Norman Chapman, who is president and CEO of Inman Mills, recently outlined a wide range of policy issues the organization is engaged in this year to maintain the domestic textile industry’s competitiveness, expand its investments and exports, and strengthen customs enforcement of illegal trade practices.

Speaking at a Southern Textile Association’s conference on Aug. 23 in Belmont, N.C., Chapman explained the important role NCTO plays in representing the industry’s voice in Washington.

“Good representation in Washington is critical for our long-term survival as an industry,” Chapman told the audience. “As I have heard [Parkdale Mills Chairman and CEO] Andy Warlick say many times, ‘If you’re not at the table, you’re on the menu.’ It’s important to not be on the menu. I’ve been in Washington quite a bit lately. I can assure you that we’re not on the menu. We’re absolutely at the table and we’re well represented on both sides of the aisle.”

Chapman said the industry “performed remarkably well during the pandemic and got a lot of people’s attention in Washington. So, we are in a position to play a little more offense, but we do spend a lot of our time defending the industry.”

Onshoring and Nearshoring Textile and Apparel Manufacturing—Maintaining Strong Textile Rules in CAFTA-DR

NCTO has engaged heavily in promoting the importance of the co-production chain with Central America and other Western Hemisphere trade partners.

Central to growth and investment in the region is maintaining strong rules of origin in the United States-Dominican Republic Central America Free Trade Agreement (CAFTA-DR), which has facilitated$15.1 billion in two-way trade and supports a co-production chain supporting more than 1 million workers in the U.S. and Central America.

As nearshoring and onshoring trends continue to gain momentum, some $2 billion of textile and apparel investment has gone into Central America and the U.S. over the past 18 months.

NCTO hosted or participated in numerous congressional and administration visits to CAFTA-DR and U.S. textile facilities over the last 18 months, and conducted over 30 joint congressional meetings in February with regional partners.

During his presentation at the STA conference, Chapman discussed the importance of this region and the strong rules of origin in free trade agreements that help facilitate trade and support U.S. and regional textile and apparel industries.

“The yarn-forward rule is at the heart of our free trade agreements and prevents non-signatory countries from being able to get a free ride,” he said.

study conducted by Werner International found that it is “reasonable and achievable to double the trade out of CAFTA-DR to the U.S. in the coming years.” It would equate to additional investments totaling $6 billion, creating 180,000 jobs in the U.S. textile industry and 2.17 million jobs in the CAFTA-DR region creating even more resilient supply chains, according to the study.

But Chapman warned that some importers have been trying to “rewrite the rules” and dismantle CAFTA-DR, calling for expansion of the short supply provision in the agreement, which would ultimately  give China a back door to a free trade deal it is not a party to and displace existing production and investment in the region and the U.S. Thanks to the work of NCTO, the administration and a significant bipartisan group of lawmakers have continued to voice support for maintaining strong textile rules.

“Fortunately, today, the Biden administration has acknowledged the value of the yarn-forward rule and indicated they do not intend to undermine the rule or change the process of short supply,” Chapman said. “And NCTO is also working on a win-win proposal exploring unique policy solutions around taxation.”

China 301 Tariffs

Chapman also outlined the importance of maintaining the Section 301 China penalty tariffs on finished apparel and textiles, outlining when they were first implemented by the Trump administration and subsequently continued by the Biden administration.

“Virtually everything from China has a 301penalty tariff on it,” Chapman noted, explaining that the tariffs are linked to intellectual property theft by the Chinese government.

NCTO’s objectives include supporting the continuance of the penalty tariffs on finished textile and apparel products, while allowing for exclusions on manufacturing inputs and machinery not available elsewhere. In addition, the organization supports letting the remaining exclusions for finished personal protective equipment (PPE) products expire, given the capacity of U.S. producers and that of our free trade agreement partners.

The U.S. Trade Representative’s office is currently undergoing a statutory 4-year review process.

Last summer, representatives of domestic industries benefitting from the trade actions requested a continuation of the tariffs, launching a next phase of review.

NCTO and the U.S. Industrial and Narrow Fabrics Institute (USINFI) filed a joint formal submission

to the U.S. Trade Representative’s office in January, outlining how the 301 tariffs on finished apparel and textiles counteract China’s unfair trade advantage and give U.S. manufacturers a chance to compete.

“Obviously, we would like to keep these tariffs in place,” Chapman said, while letting exceptions for PPE imports expire. “The textile industry made a tremendous amount of PPE during the pandemic that reverted back to China very quickly afterwards,” he added.

NCTO textile leaders also recently met with U.S. Trade Representative, Ambassador Katherine Tai, in Washington whom Chapman noted has been “very supportive of our industry.”

“She also toured some of our facilities down here and her support will be critical in our fight to keep the 301 tariffs,” Chapman said.

Enforcement of the UFLPA

Customs enforcement of the Uyghur Forced Labor Prevention Act (UFLPA), which bans the importation of products made with forced labor in Xinjiang, China, is also a major focus area for NCTO.

China has been illegally forcing Uyghur ethnic minority population in Xinjiang to harvest cotton and produce cotton apparel in China’s Xinjiang Uygur Autonomous Region (XUAR), according to countless news reports and investigations by human rights organizations. The Chinese government, according to numerous reports and investigative news reports, have detailed nearly 1 million Uyghurs, in Xinjiang, where they have been subjected to torture, forced labor, religious restrictions and even forced sterilization.

Chapman also noted that 20% of the world’s cotton is grown in Xinjiang while 85% of China’s cotton is grown in the region,

NCTO continues to engage with U.S. Customs and Border Protection (CBP) officials, other administration officials and key allies on Capitol Hill to press for more enforcement of this critical legislation.

Closing the De Minimis Loophole

Another major focus area for NCTO is closing a legal loophole in U.S. trade law, known as Section 321 de minimis waivers.

De minimis shipments, which have exploded in recent years with the growth of e-commerce, are undermining efforts to hold China accountable and the nation’s ability to enforce the Uyghur Forced Labor Prevention Act (UFLPA).

The de minimis trade loophole is being aggressively used by e-commerce companies and mass marketers.  It allows goods valued at $800 or less per person to arrive at our doorsteps duty-free each day through e-commerce.  U.S. officials estimate approximately 2.7 million de minimis packages enter the U.S. market each day that otherwise would be subject to tariffs, penalty tariffs, taxes and customs inspection. In addition, de minimis shipments are being utilized to facilitate Xinjiang forced labor apparel into our closets.

“All countries have different de minimis values. China’s de minimis value is $7. Unfortunately, [certain} Chinese companies have mined our trade laws and use this de minimis law to import their product from China into the U.S., completely duty free,” Chapman said.

“The unfortunate thing is we don’t know what’s in them. They completely bypass customs. They are self-declared on value and [inspected] through random sampling,” he added.

Further, over 50% of these shipments contain apparel products.

“So, this has literally become a free trade agreement for China. As I mentioned, there are 301 penalty tariffs. They don’t pay the penalty tariffs. They’re duties on textiles that come into the U.S. They don’t pay duty. This is widely recognized as a problem in Washington, but there’s a real fight on our hands,” Chapman said.

Legislative Priorities

On the legislative front, Chapman outlined several other top areas of engagement, including efforts to push Congress to reauthorize the Miscellaneous Tariff Bill (MTB), which is legislation that temporarily suspends or reduces import tariffs on manufacturing inputs that are unavailable domestically. Textile manufacturers benefit from duty breaks on inputs such as acrylic and rayon fibers and various chemicals that are not produced in the U.S. The MTB bill lapsed at the end of 2020 and Congress has thus far not advanced legislation to reauthorize it.

NCTO is also engaged in working with Congress to pass the FY 2024 National Defense Authorization Act (NDAA), which includes an economic impact assessment and language to strengthen the Berry Amendment by covering additional purchases of home furnishing items.

Equally as important is passage of a new farm bill.

The farm bill is up for a 5-year renewal this year and Congress is currently considering the legislation.

Various cotton and textile programs are contained in the farm bill that are important to NCTO as well as to the National Cotton Council (NCC).

They include renewal of: the Economic Adjustment Assistance for Textile Manufacturers program (EAATM), Pima Cotton Trust Fund and Wool Manufacturers Trust Fund.

“This is very important legislation for us to get wrapped up,” Chapman said.

NCTO and Applied DNA Sciences Featured in Wall Street Journal Video on Banned Chinese Cotton Continuing to Flow into the U.S. Market

The Wall Street Journal posed a critical question in a new video out on “Why Banned Cotton From China is So Hard to Keep Out of the U.S.”

The video, which is posted on the Wall Street Journal’s website here, features NCTO President and CEO Kim Glas and NCTO member, Applied DNA Sciences President and CEO James Hayward.

It traces the Chinese cotton supply chain, which is under fire globally for utilizing illegal forced labor, and highlights how contradictory government policies and insufficient enforcement have failed to prevent cotton apparel made with forced labor in Xinjiang, China from entering the U.S. market.

There is no doubt that the cotton apparel made with forced labor in Xinjiang, China and imported to the U.S. is severely impacting the competitiveness of the U.S. textile industry. 

In fact, the low level of enforcement by Customs and Border Protection (CBP) is extremely concerning, given that legislation known as the Uyghur Forced Labor Prevention Act (UFLPA), which bans the importation of imported products made by forced labor, was implemented 14 months ago.

At the same time, nearly 3 million shipments per day come into this country under the Section 321 de minimis mechanism, largely uninspected and duty free, which gives China another backdoor to our market and rewards their predatory trade practices.

NCTO is calling for stepped up enforcement of the UFLPA and closure of the “de minimis” loophole, which facilitates this trade and gives China duty-free backdoor access to the U.S. market.

In the video, the Wall Street Journal “unpacks the complexity of the supply chain to explain why experts believe much of the cotton is still making its way to the U.S.”

NCTO Amplifying the Policy Issues Impacting the Industry

On the communications and press front, NCTO President and CEO Kim Glas penned two important and insightful op-eds, outlining how Section 301 tariffs and the U.S.-Dominic Republic (CAFTA-DR) agreement are helping the U.S. textile industry, a key American manufacturing sector, compete.

In the first piece, Kim wrote a joint op-ed with CECATEC-RD Executive Director Patricia Figueroa that showcases perspectives from both the U.S. and Central American textile and apparel industries on the state of nearshoring in Central America and focuses on the region and our co-production chain as a strong sourcing alternative to Asia, even in a down market.

Read the op-ed here: Why Central Ameria Makes Sense–Even in a Down Market

The second opinion piece, titled “Keep China in Check: Don’t let Section 301 Tariffs Expire,” published by The Hill, outlines how the Section 301 tariffs on finished apparel and textile products has created a more level playing field against unfair trade practices, such as forced labor in China.

It is a timely opinion piece, in light of the U.S. Trade Representative Office’s pending four-year review and decision that will weigh heavily on the U.S. textile industry.

Please see a link to the op-ed on The Hill’s website here: Keep China in check: Don’t let Section 301 tariffs expire.


Wilson College of Textiles Receives $2M in USAID Funding

North Carolina State University’s Wilson College of Textile has received $2 million in funding to establish a technical textile training program in Honduras, which comes at a pivotal time of onshoring and nearshoring for the textile and apparel industry.

The United States Agency for International Development (USAID) awarded the $2 million, two-year grant to Wilson College to develop the new program in partnership with Gaston College and Catawba Valley Community College—all nationally recognized for their leadership in textiles innovation, research and education—and the Universidad Tecnológica Centroamericana (UNITEC), a leader in providing technical and engineering education in Honduras.

As outlined in press release and post from Wilson College, the program is titled Hilando Oportunidades (Spinning Opportunities) in northern Honduras and aims to  deliver training to at least 1,500 Hondurans in yarn spinning, knitting, dyeing and finishing, and apparel production. The project will be led by Melissa Sharp, associate director of Zeis Textiles Extension (ZTE) in Wilson College, who says “a key aspect of the program is the development of trackable credentials that will empower workers in Honduras’ textile industry and expand the routes to advancement.”

In addition, education technology partner Shimmy, an industrial startup, will provide training through mobile applications while credentials will be issued through Credly and maintained by NC State, providing third-party evidence of skills and training attained through Hilando Oportunidades.

The announcement of funding and the universities’ partnership followed an MOU signing in August 2022, which brought together high-level U.S. and Honduran government officials, including: Jose W. Fernandez, Under Secretary of State for Economic Growth, Energy and the Envirnonent; Jennifer Knight, Deputy Assistant Secretary for Textiles, Consumer Goods and Materials at the U.S. Department of Commerce; and Hector Zelaya, private secretary to Honduran President Xiomara Castro.

The U.S. State Department issued a statement of public support for the MOU at the time and the unique collaboration between the U.S. and Honduran institutions.

The partnership comes at a defining moment for the U.S., Honduras and Central America, which are seeing significant levels of investment in textile and apparel production as part of a co-production chain under the U.S.-Dominican Republic-Central America (CAFTA-DR) agreement.

NCTO President and CEO Kim Glas and CECATEC-RD Executive Director Patricia Figueroa recently penned a joint op-ed that showcases perspectives from both the U.S. and Central American textile and apparel industries on the state of nearshoring in Central America and focuses on the region and our co-production chain as a strong sourcing alternative to Asia, even in a down market.

In the past 18 months alone, this vibrant partnership with the region has spawned $2 billion in investments in both the U.S. and Central America, as brands and retailers continue to look for ways to diversify their supply chains.

The U.S. and this region are inextricably linked through a textile and apparel co-production chain that generated $15 billion in annual two-way trade in the sector and supports 1 million workers in the U.S. and region.

That is why this partnership and the Hilando Oportunidades training and education program in Honduras is critical, to help prepare thousands of students for the next generation textile workforce.

It is intended to create an educational pathway to economic opportunity in Honduras and the region that not only creates a skilled and resilient workforce but can also help address the root causes of irregular migration.

Current growth projections indicate a need for more than 10,000 skilled new workers in the textile industry in Honduras alone over the next five years. In order to meet these needs, educational programming is needed at all levels.

North Carolina plays a central role in this co-production chain. It is the second-largest state for textile employment nationally with over 36,000 workers, and the state’s $2.7 billion in textile-related exports leads the nation. The Northern Triangle, including Honduras, is a major export destination for U.S. yarns and fabrics that come back as finished items under the CAFTA-DR trade agreement.


Textile Execs Discuss Nearshoring Trends, Policies to Bolster the U.S. Textile Industry’s Competitiveness

NCTO President and CEO Kim Glas joined David Smith, Executive Vice President of Milliken & Company’s Textile Division and Bob Antoshak, partner at Gherzi Textile Organization, in a timely panel discussion on the trends driving nearshoring and onshoring of textile and apparel production last month.

The panel discussion, titled the “ABC’s of Nearshoring,” was held at Texworld in New York City on July 19.

The dynamic discussion touched on several key trade issues impacting the industry, including the yarn forward rule of origin in CAFTA-DR and USMCA, Section 301 tariffs and the Section 321 de minimis loophole. It also highlighted the significant investment—$2 billion in the CAFTA region in the past 18 months—and how companies can capitalize on moving production close to home.

In her opening remarks, NCTO’s Kim Glas pointed to several trends showcasing that nearshoring continues to build momentum, though apparel and textile trade is currently in a slump globally.

“It’s here to stay and it’s going to grow in the future,” Glas said, pointing to the $2 billion in new investment in both the U.S. and Central America, “as brands and retailers continue to look at ways to diversify their supply chains.”

Glas also said 2022 was a banner year for two-way textile and apparel trade with Central America, which hit $15 billion. Notably, 81 percent of U.S. exports of spun yarns go to the CAFTA-DR countries.

That is why she said she is “bullish on the future,” despite the recent dip in trade. She said the co-production chain employing more than 1.1 million workers collectively is predicated on the yarn forward rule of origin in free trade agreements such as CAFTA-DR.

Rules of origin help drive investment in yarn and fabric production. COVID created a shift in many people’s minds and drove companies to recalibrate their supply chains to diversify out of China and move production closer to market, she added.

Milliken’s David Smith stressed that the region has the capacity and capability to meet brands’ and retailers’ needs.

“Chances are the U.S. and the regional textile industry has the capabilities and the capacity to meet your needs. And if there are any gaps, I think you’ll find a listening ear and a willingness to work with you to eliminate those voids,” as reported by Sourcing Journal. “The industry is investing and growing the perception that we have limited yarn capacity or weaving capacity in the region. And when I say in the region, I’m including in the U.S.”

And he noted that just doubling apparel and textile exports from Central America, which has a U.S. import market share below 10 percent, would translate into $6 billion in investment and generate 187,000 new textile and apparel jobs in the U.S. and 2.2 million jobs in Central America.

“All we are looking for is a willing partner,” Smith said.



NCTO Executive Fly-In Highlights Critical Trade Issues & Industry’s Competitiveness

NCTO executives participated in an important Washington fly-in last month, and met with some of the most powerful members of Congress and the nation’s top trade chief to discuss issues and policies critical to the NCTO membership.

The group of U.S. textile leaders who attended the high-level meetings included: NCTO Chairman Norman Chapman, who is President and CEO of Inman Mills; Parkdale Mills Chairman and CEO Andy Warlick; Unifi CEO Eddie Ingle; Barnet President and CEO Chuck Hall; Greenwood Mills President and CEO Jay Self; Palmetto Synthetics President David Poston; Milliken Director of Government Relations JP Tyson; and associate Katherine Heilig.

NCTO President and CEO Kim Glas and Todd Ethington, Director of Government Affairs, joined this distinguished group of textile leaders in leading substantive discussions on a wide range of policy issues, including fixing the de minimis loophole, strengthening China enforcement, maintaining the yarn-forward textile rule in CAFTA-DR and other trade agreements, and passing the Miscellaneous Tariff Bill (MTB).

The fly-in came at a pivotal time as congressional and federal regulatory scrutiny of Chinese imports entering the U.S. through the Section 321 de minimis trade loophole has intensified over the past couple of months, and calls to address and potentially change this little-known legal trade mechanism continue to gain momentum.

Executives met with some of the most influential members of Congress as well as the nation’s top trade chief, Ambassador Katherine Tai, who is the U.S. Trade Representative.

In the House, the China Select Committee has begun to form policy recommendations on issues like de minimis and forced labor, and in the Senate, leaders have signaled interest in crafting a China competition package this year.

Two bills have been introduced this year to combat de minimis abuse.

The first was introduced by Reps. Earl Blumenauer (D-OR) and Neal Dunn (R-FL) in the House, in conjunction with a companion bill in the Senate led by Sens. Sherrod Brown (D-OH) and Marco Rubio (R-FL) titled the u>Import Security and Fairness Act, which would effectively prohibit China and Russia from exploiting the Section 321 de minimis mechanism in U.S. trade law.

The second bill, introduced by Sens. Bill Cassidy (R-LA) and Tammy Baldwin (D-WI) is titled the De Minimis Reciprocity Act of 2023.

Two lawmakers, with whom executives met during the fly-in, have been at the forefront of hearings and probes into the business practices and models of e-commerce companies and brands that aggressively use the de minimis loophole.

Rep. Mike Gallagher (R-WI), Chairman of the House Select Committee on the Chinese Communist Party, said in hearings recently the “de minimis exception wasn’t supposed to be a loophole for foreign businesses looking to skirt human rights legislation and taxes. “It was meant to minimize the burden on customs agents actually. Shein and Temu have built empires using this loophole to underprice American competitors. American companies can’t be expected to compete against foreign firms who turn a blind eye to forced labor and dodge our import taxes.”

Rep. Raja Krishnamoorthi (D-IL), Ranking Member of the committee, has also weighed in, noting: “Temu and Shein are, as you know, some of the fastest-growing companies in the world. In particular, they use something called the de minimis exception, which means that for shipments valued at less than $800 they are able to ship directly from China to people’s homes and they are not subject to duties and there is much less information about their place of origin.”

And, House Ways and Means Chairman House Ways and Means Chairman Jason Smith (R-MO), who also met with the executives, has said it appears the loophole is “almost an $800 free trade agreement for China for products underneath that. It’s what it looks like to me.”

In addition to de minimis, the executives discussed China trade enforcement and other trade issues with Ambassador Tai, urged support for reauthorization of the Miscellaneous Trade Bill (MTB) and reiterated the importance of maintaining the yarn-forward rule of origin in free trade agreements, such as CAFTA-DR.

Rep. Blumenauer introduced a bill in June to reauthorize the MTB, TAA and GSP measures. The MTB is legislation that temporarily suspends or reduces import tariffs on manufacturing inputs that are unavailable domestically.  Textile manufacturers benefit from duty breaks on inputs such as acrylic and rayon fibers and various chemicals that are not produced in the U.S. The MTB bill lapsed at the end of 2020 and Congress has thus far not advanced legislation to reauthorize it.

With momentum for these and related trade issues, it is vital for our industry to be active in the conversation and we sincerely thank each of the NCTO executives who took time out of their busy schedules to make the trip to Washington to highlight the industry’s manufacturing strength and importance to the U.S. economy.

President Biden’s Historic Visit to Auburn Manufacturing Inc. (AMI)

Source: White House

President Biden’s historic visit to Auburn Manufacturing on Friday elevated our industry’s profile and reinforced its competitiveness and economic contribution in regional and national media headlines and news video clips across the country.

AMI CEO Kathie Leonard introduced President Biden and outlined the challenges her company has faced over the years, including inflation, unfair import competition and a once-in-a generation pandemic that nearly derailed her company. But a major battle she won against Chinese companies dumping silica fabric on the U.S. market, combined with federal policies aimed at bolstering U.S. manufacturing have led to a new era of revitalization and growth.

“We started in Mechanic Falls with two people (I was one of them) and have expanded exponentially over time. We are now in two places…and we now have over 50 people and we are track to increase our workforce by another 30 percent,” Leonard said.

“Growing a business, especially exponentially isn’t easy. We experienced many challenges over the years. First of all, the interest rate; it was 14 percent when we started building our first building. That’s pretty high. Secondly, China’s dumping of silica fabric, one of our major products, stole 30 percent of our domestic industry by 2016 and that forced us to file an antidumping case against China, and it was successful but very expensive.

Then, COVID hit just as we were recovering from what we’d been through the last several years. That was a really difficult time for all of us.

Leonard credited several policies, including the American Rescue Plan, and a focus on American manufacturing as catalysts that helped keep Auburn afloat and reignite the U.S. economy.

“So, we’re now back. We’re growing our workforce again. We are entering new markets and we’re upgrading our plants and equipment. While our tagline is ‘Innovation on Fire,’ we were on the brink of flaming out for a while. It really is now Innovation Reignited.”

To see a video clip highlighting key points from remarks by President Biden and Auburn’s Kathie Leonard please clip on the box or link below:

NCTO President and CEO Kim Glas was also in attendance at this historic presidential visit at Auburn Manufacturing and had a chance to meet briefly with President Biden. She said she talked about the importance of his visit to Auburn and to the whole U.S. textile industry. She also emphasized the resilience and competitiveness of our industry and stressed that with the help of his administration promoting policies to spur more onshoring and nearshoring, the industry will continue to be an important and vital contributor to the U.S. economy.

In his remarks, President Biden outlined the challenges manufacturing industries, such as textiles and paper, have faced over the past two decades, particularly in Maine, where Auburn Manufacturing is located.

He said past administrations and other economic policies led to the offshoring of manufacturing that “hollowed out” the U.S. manufacturing sector. “What did most of these guys do?  They decided to send the jobs overseas where the labor was cheaper and bring the product made back to the United States more expensive.  Entire towns and communities got hollowed out not just here in Maine, but all across America.  This is not just for Maine, this is all of America.  Small towns and medium-sized towns all across America factories got shut down,” Biden said.

President Biden pointed to a few examples of companies bearing the brunt of offshoring in Auburn and Lewiston, Maine.

“Let me remind you of a few examples: Auburn and Lewiston, right next door, used to be home to some of the country’s largest textile mills.  Bates Manufacturing was the largest employer in Maine with thousands of employees supplying the country with high-quality cloth and quilts,” he said.

Bates Manufacturing survived the Civil War, the Great Depression, and two World Wars.  But in the 1990s, American textile production moved overseas, and Bates closed up shop.  And by the way, my state used to be a gigantic producer of textile, the DuPont Company.”

He also highlighted similar examples of the impact on Maine’s iconic paper industry, which lost 8,000 jobs over the past two decades, he said.

“Take the Verso mill in Bucksport.  Founded in [1929].  [It] provided generations of good jobs and up to 40 percent — 47 percent of the town’s tax revenue.  A decade ago, it closed down, devastating the town, like so many thousands of towns all across America,” Biden noted.

Between 1990 and 2010, Maine lost nearly 45,000 manufacturing jobs, he said.

“And like we saw across the country, once-thriving cities and towns became shadows of what they used to be.  And when these towns were hollowed out, something else was lost as well.  And I come from Northeast Pennsylvania; I know about shutting down towns.  Pride — people lost their pride.

Folks, this is what trickle-down economics looks like.  But now we’re turning things around.”

Biden pointed to Kathie Leonard’s Auburn Manufacturing as a success story as he stood in the center of her state-of-the art facility surrounded by her employees and other invited guests.

“Like here at Auburn Manufacturing, now, you heard Kathie talk about starting this company 40 years ago making advanced textiles that are fire and heat resistant.  They weathered decades of economic storms.  Now with the help of the American Rescue Plan, they’re having their biggest export year ever.  The company is growing, and their products are made in America.”

You can view a full transcript of President Biden’s remarks here.

To listen to the full White House Clip of the event please click here.


NCTO Celebrates American Independence, Innovation & Textiles

The 4th of July is an American holiday unlike any other, complete with backyard BBQs, parades, national concerts, and, of course, fireworks. At the height of summer, Americans across the country gather to celebrate our unique history and the values that define the American spirit of independence.

In that same spirit, the National Council of Textile Organizations celebrates Independence Day this year with a look at the history of the U.S. textile industry, which has played a remarkable role in America’s industrial and economic independence through a history of significant investment, employment, and technological development and innovation.

The birth of the textile industry in the U.S. coincides with our independence from England. Despite England’s best attempts to monopolize textile production by forbidding the exportation of textile technology and intellectual property, creative minds found their path to the States not long after the U.S. gained its independence in 1776 (2020, Frederic Magazine, Innovation or Bust! The Surprising Story of New England’s Textile Heyday).

In 1789, Samuel Slater, who would come to be known as the father of American Manufacturing, immigrated to the U.S. with the goal of establishing the country’s first textile mill. He did just that in 1791 by establishing the first yarn mill through his partnership with American entrepreneur and abolitionist Moses Brown. Shortly after, in 1793, American inventor Eli Whitney developed the cotton gin, rapidly increasing the efficiency of sorting cotton seed from cotton fiber. These two critical innovations paved the way for Francis Cabot Lowell, an American merchant, to build the first integrated textile factory in the United States, capable of converting raw cotton into finished cloth in one mill. The ingenuity and efforts of these pioneers in the textile sector marked the start of the Industrial Revolution in America, which allowed the U.S. to establish the economic freedom and security it needed to grow as a young nation. (ibid.)

Now, more than 200 years later, America still boasts a vibrant, multifaceted textile industry that employs 538,067 workers nationwide. From textile fibers to apparel and other sewn products, the industry excels at producing high-tech, innovative solutions for both the American and global market alike. In fact, the United States is the world leader in textile research and development, with the U.S. textile complex developing next generation textile materials such as conductive fabric with anti-static properties, electronic textiles that can monitor heart rate and other vital signs, antimicrobial fibers, and new fabrics capable of adapting to the climate to make the wearer warmer or cooler. These developments make the U.S. textile industry, along with its suppliers and customers, an important component of the U.S. economy. The industry also provides much needed jobs in rural areas and has functioned as a springboard for workers out of poverty into good paying jobs for generations.

Despite these successes, the industry has faced extreme competition from overseas producers for more than 40 years. While such competition helps to foster incredible innovation amongst American textile companies to remain viable, the U.S. textile industry has consistently dealt with an uneven global playing field due to rampant foreign subsidies, closed offshore markets, and substandard environmental and human labor conditions.  These varying standards result in a global sourcing entities seeking lowest-cost products often of poor quality and built on massive carbon emissions from distant supply chains and even forced labor (2023 Sourcing Journal, Forced Labor and the De Minimis Loophole: Two Sides of the Same Coin)

Further, the offshoring of such a critical industry, responsible for manufacturing products of key importance to our national health and defense, poses national security risks. This risk was made fully apparent at the onset of the COVID-19 pandemic, when American citizens, hospitals and frontline workers found themselves unable to access critical personal protective equipment (PPE) due to the complete offshoring of supply chains to low-cost overseas’ competitors. In response, the American textile industry made heroic efforts to retool production and operations virtually overnight, producing millions of face masks, isolation gowns, testing swabs and other critical medical textiles when our country needed it most.

Despite these heroic actions and the coinciding investments that were made by American business owners, these critical supply chains are already at risk of being offshored again. To ensure that they do not, it is critical that the federal government expeditiously implement recently adopted legislation governing domestic procurement, such as the Make PPE in America Act. This legislation, which resulted from the harsh lessons learned during the supply chain crises of COVID-19, is designed to reshore and maintain a strategic PPE production chain in the United States by requiring that the Departments of Health and Human Services, Homeland Security, and Veterans Affairs procure only PPE that is wholly made (i.e., 100 percent made in the USA, from the production of the fiber to the yarn, fabric, and finished product) and assembled in the U.S. This important legislation also requires a contract duration for federally procured PPE of no less than two years. Such long-term commitments provide domestic manufacturers with a consistent demand signal that allows them to invest, plan, develop and deliver the medical protective goods our government and nation depend on for safety and security.

At the same time, the research and development needed to produce such innovations requires significant financial commitments. From 2012 to 2021, the U.S. textile industry invested $20.9 billion in new plants and equipment. During this time, U.S. manufacturers opened new facilities throughout the textile production chain, including recycling facilities to convert textile and other waste to new textile uses and resins. These advancements reveal the direct relationship between investment, innovation, and long-term competitiveness. To survive in the constantly evolving and increasingly competitive landscape that dictates textile and apparel production, companies must constantly develop new ways to manufacture inputs and goods more efficiently.

It does not take much to see why U.S. textiles are a quintessential story of American spirit and industry. So, as we take this holiday to pause and celebrate the individual and economic freedoms we enjoy daily, let us also celebrate the rich history of American textiles as a critical part of industrial importance. Thanks to manufacturing efforts such as theirs, American citizens can access everything from high-quality everyday textile items to sophisticated textile technologies. By keeping critical supply chains and their research close to home, Americans are guaranteed more sustainable and reliable access to essential products when we need them most.

As we celebrate the 4th of July and American independence, we recognize that many of our forefathers took sizable business and investment risks that has helped foster our modern economy from which we all benefit today. And a strong economy allows us to safeguard our independence.

American manufacturing needs Congress and the Administration’s continued support to help shape trade and economic policies that provide a level-playing field for the U.S. industry. Please contact the National Council of Textile Organizations to discuss how you can support the domestic textile and apparel industries in their efforts to reshore and regionalize supply chains and strengthen U.S. manufacturing.