CBP could take action against Xinjiang cotton products


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U.S. apparel groups are bracing for a Trump administration decision as early as this week that could block the importation of Chinese-made textile and apparel products on the grounds that they are the products of forced labor in the Uighur region of China.

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The race to see who becomes the World Trade Organization’s next director general has moved one step closer to conclusion, following the end of the summer campaign stage on Monday.

U.S. apparel groups are pressing for quick renewal of legislation allowing Haiti and other Caribbean countries to export clothing and certain other items to the U.S. without paying duties. The program will expire on Sept. 30, unless lawmakers renew it.

IT’S TUESDAY SEPTEMBER 8! Welcome to Weekly Trade, where we believe nobody captures the melancholy side of the ninth month of the year better than Willie Nelson singing this Kurt Weill classic tune. Got a cure for September sadness, or even a news tip to share? Let us know [email protected], [email protected] and [email protected].

CBP COULD TAKE ACTION AGAINST XINJIANG COTTON PRODUCTS: In a new petition filed with U.S. Customs and Border Protection, the AFL-CIO and allied groups pushed for a regional “withhold release order” on cotton and cotton-containing products from Xinjiang, which they said would force China to choose “between continuing the persecution of the Uighur people or face the exodus of billions of dollars in business contracts and investments from U.S. companies and others.”

But apparel industry groups already have been increasingly concerned about the potential for CBP to take action, even before the new petition was filed. “I would say most companies and trade associations paying attention to this issue have known that [U.S. Customs and Border Protection] could issue an order like this since probably late 2018,” John Foote, a trade attorney at Baker McKenzie who has been tracking the issue, said in an email.

A withhold release order, or WRO, is not an actual import ban. But goods subject to a WRO have to be re-exported or destroyed if CBP determines they were made with forced labor.

A regional WRO has the potential to affect tens of billions of dollars of U.S. textile and clothing imports that contain cotton, yarn or fabric produced in the Xinjiang Uighur Autonomous Region. It also could boomerang back on U.S. cotton producers if Beijing is provoked into retaliation.

Big producer: Xinjiang accounts for 85 percent of Chinese cotton production. The U.S. imported about $50 billion worth of textiles and clothing from China last year, and Uighur cotton, yarn and fabric is used by other countries such as Vietnam, Indonesia, Cambodia, Bangladesh and Sri Lanka to make clothing.

Policing that volume of imports would be a massive CBP undertaking, raising questions about whether the agency would take on a project that big or decide on a more targeted approach.

“When a WRO is issued, it takes immediate effect,” Foote said in a Q&A with POLITICO. “Shipments in transit will be affected, and many such shipments will be detained. In theory, every shipment of goods described by the WRO should be detained pursuant to the WRO.”

WTO RACE MOVES INTO NEXT STAGE: Who could be first on the WTO candidate chopping block? To answer that question, a trio of top officials have started consultations with WTO members to winnow down the eight current contenders to just five by the end of next week.

Four candidates were seen by several Washington trade professionals as most vulnerable: Abdel-Hamid Mamdouh from Egypt, Tudor Ulianovschi from Moldova, Mohammad Maziad Al-Tuwaijri of Saudi Arabia and Liam Fox from the U.K.

Out front: The three female candidates — Ngozi Okonjo-Iweala of Nigeria, Yoo Myung-hee of South Korea and Amina Mohamed of Kenya — are expected to survive the first round, along with Jesús Seade Kuri of Mexico. The two African women are still seen as leading the pack, setting the stage for a potential impasse if they end up being the last candidates. But news that Okonjo-Iweala holds an American passport could hurt her chances with some delegations.

Each WTO member can state up to four preferences in the first round of consultations, which wrap up Sept. 16. After the final five are selected, there will be two more rounds of campaigning and consultations to winnow the list down to two individuals and then to the winner, according to the WTO website.

The U.S. view: USTR declined to say who it is supporting in the first round. But one former trade official expected the U.S. to line up behind the Mexican, South Korean and U.K. candidates.

U.S.-U.K. TALKS RESUME TODAY: U.S. and U.K. trade negotiators begin their virtual fourth round of talks today on a free trade agreement, which are slated to last through Sept. 18. The two sides were scheduled to exchange market access offers for the first time ahead of this round.

In the face of uncertainty over when a final deal will be reached, some British businesses are pushing for a smaller agreement that would remove U.S. retaliatory tariffs on dozens of U.K. goods, including single-malt Scottish whiskey and a variety of cheeses.

The Airbus factor: The WTO authorized USTR to impose those duties because of the EU’s failure to comply with rulings against subsidies provided by the U.K., Germany, France and Spain for the European aerospace giant Airbus.

Some U.K. food and beverage groups are proposing the U.S. drop those tariffs in exchange for the U.K. dropping the tariffs it has imposed on Kentucky bourbon and other U.S. goods in retaliation for Trump’s tariffs on U.K. steel.

The tariffs are “clearly still a major problem and a real blocker to progress” in the free trade talks with the U.S., Dominic Goudie, head of international trade at the Food and Drink Federation told our colleagues at Morning Trade UK. “While you have these sorts of barriers in place, I don’t think it’s particularly conducive to constructive negotiation.”

CLOTHES IMPORTERS PRESS FOR CARIBBEAN PROGRAM RENEWAL: Apparel groups are pressing for congressional action on the Caribbean Basin Promotion Act before its expiration at the end of the month. First passed in 2000, the CBTPA provides duty- and quota-free access for apparel made in eligible countries, as long as the fabrics are made and cut in the United States. It builds on a larger trade preference program, the Caribbean Basin Economic Recovery Act, which has been in place since 1983 and has no expiration date.

Haiti is the CBTPA’s biggest beneficiary since many other members, such as the Dominican Republic and six countries in Central America, now have free trade agreements with the United States. The fast-approaching expiration means U.S. importers could be forced to pay duties on any clothing from Haiti that arrives after Sep. 30.

Lighthizer’s support sought: The American Apparel and Footwear Association and other apparel groups have urged U.S. Trade Representative Robert Lighthizer to throw his weight behind early renewal of the program. So far, Lighthizer has not spoken on the subject. However, he has expressed reservations about renewal of the largest U.S. trade preference program, known as the Generalized System of Preferences, which expires at the end of the year.

NCTO’s view: The National Council of Textile Organizations, the main U.S. textile industry group, supports CBTPA renewal in its current form, with one important caveat — that it not be “tied to other unrelated trade and tariff provisions that would be detrimental to U.S. and regional manufacturers,” Rebecca Tantillo, a NCTO spokesperson said.

More specifically, NTCO opposes an expansion of GSP benefits to textile and apparel products that “would redirect critical benefits intended for participants in CBTPA … to foreign competitors in Asia that already enjoy considerable and growing U.S. apparel import market share,” she said.

The House Ways and Means Committee’s trade subcommittee will hold a hearing Thursday to examine whether to renew the CBTPA.

MANITOWOC CHANGES TUNE ON SECTION 232 TARIFFS: European and Japanese mobile crane companies can breathe a little easier because of Wisconsin-based Manitowoc’s recent decision to no longer seek import duties on foreign competitors under the national security trade provision known as Section 232.

Manitowoc filed a petition with the Commerce Department this past December asking for the import duties and Secretary Wilbur Ross formally launched an investigation into the matter in May. But in a new set of comments filed in August, the company said it was no longer asking for tariffs to be imposed, thanks to economic changes driven by the coronavirus pandemic.

The company’s new president, Aaron Ravenscroft, sent a letter to customers the next day, saying it wanted Trump instead to take a number of steps to stimulate domestic demand, such as strengthening Buy American provisions and boosting infrastructure spending, American Cranes and Transport reported.

It’s not clear whether Manitowoc plans to formally withdraw its petition. A Commerce official said the department “cannot comment on ongoing investigations.”

— African trio sets out battlelines for decisive phase of WTO leadership contest, POLITICO Pro reports.

— Ireland nominates two very different candidates to replace former EU Trade Commissioner Phil Hogan, POLITICO Pro reports.

— Top U.S. lawmakers press Trump for deal soon in U.S.-Brazil ethanol talks, POLITICO Pro reports.

— China to launch initiative to set global data-security rules, the Wall Street Journal reports.

— China’s exports are surging despite the coronavirus and Trump’s tariffs, The New York Times reports.

The New York Times also examines how Biden’s approach to China trade policy has changed over the past two decades.

— The Financial Times digs into Lighthizer’s big ideas for reforming the WTO.

— Cato analyst Simon Lester looks at whether the interim appeal arbitration process will preserve the WTO dispute settlement system.

— Commerce announces preliminary anti-dumping duties on certain corrosion inhibitors from China.

THAT’S ALL FOR MORNING TRADE! See you again soon! In the meantime, drop the team a line: [email protected]; [email protected]; [email protected]; [email protected] and [email protected]. Follow us @POLITICOPro and @Morning_Trade.



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