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SAVE for Philippine fails to deliver for textile industry, NTA

03
Oct '09
NTA's David Trumbull attended a luncheon meeting on the "Save our Industry (SAVE) Act" (H.R.3039) in New York City at which he met with several representatives of the Philippine government and apparel industry as well as American proponents of the bill.

The bill provides for trade benefits under three scenarios

1. 809 Program
Apparel assembled in the Philippines of fabric wholly formed and finished in the United States, of yarn wholly formed in the U.S. Under this provision, sometimes called an "809 program" several types of garments would be eligible for duty-free treatment. Under this "809 program" the U.S. fabric and yarn requirement will apply to only the single fabric component in the garment that determines the tariff classification of the garment.

Due to this rule, sometimes known as "essential character" other textile components of the garments, such as linings, narrow elastic fabrics, sewing thread, and pocketing, could come from any source. The essential character rule renders the program of no benefit to significant sectors of the U.S. textile industry. There is also a de minimis provision for up to to ten percent of the fiber or yarn (except for elastomeric yarn) in the fabric to be foreign.

2. Local Philippine Fabric Program
The second major provision grants a reduced rate of duty for apparel assembled in the Philippines from fabric wholly formed in the United States or the Philippines, or both, from yarns wholly formed in the United States. The reduced rate of duty would be either 50 percent of the column 1 rate of duty (the normal rate) that applies to the apparel article or the column 1 rate of duty that applies to the article, assessed upon the value of the article, less the cost or value of yarns in the article that are wholly formed in the United States. This provision applies to the same types of garments as the 809 provision and with the same essential character and de minimis provisions.

3. Single Transformation
The final provision, and by far the most controversial allows for duty-free treatment of certain apparel assembled in the Philippines without regard to the origin of the fabric or yarn. The list of eligible garments is lengthy and in many cases fails to include the tariff classification or import category number, making it impossible to know precisely what are the covered products. However, it is clear that some of the products eligible under this provision, such as brassieres, women's wool apparel, men's wool coats, and several types of cotton and man-made fiber apparel, will attract opposition from domestic U.S. manufacturers of the fabrics used in such apparel.

Supporters of the bill indicated that it may be possible to remove brassieres from the single transformation list. However, the remaining list would pose huge problems for U.S. manufacturers of wool fabrics, knit fleece, and a wide range of cotton and man-made fiber fabrics. Supporters also indicated an openness to negotions over the treatment of various products and NTA will continue to be engaged in this dialogue.

National Textile Association


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