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AAFA Welcomes New Member

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In this issue...
Legislative, Trade & Regulatory News
  • House/Senate Committees Approve Pending FTAs, Retroactive Renewal of Andean Preferences & GSP in So-Called "Mock Mark-Up," Obama Could Send FTAs to Congress This Week
  • Footwear — Textile Outsole Rules Changes Could Go Into Effect as Early as September 1, 2011
  • Product Safety — Twelve Retailers Notified of Violations of Lead in Jewelry Under California Proposition 65 Consent Decree
  • Macy's Fined by CPSC for Failing to Report Drawstrings
  • Cotton Fees — CPSC Issues Flammability Recall on Women's Dresses
  • AAFA Urges Congress to Make Travel Goods/Fashion Accessories Eligible for GSP Benefits
  • Uzbeck Cotton — AAFA Expresses Disappointment with U.S. Government Report/Decision on Uzbeckistan
  • EU/South Korea FTA Went Into Effect July 1
  • Apparel, Footwear & Textile Manufacturers/Wholesalers Continue to Shed More Workers
  • House Approves Defense Spending Bill
  • U.S. Mexico Cross-Border Trucking Resolution
  • Uncle Sam Wants You...To Comment!
    Member News
  • AAFA Welcomes New Member: Academy, LTD.
    In the Press
  • President's Focus: $4 Trillion
  • US Trade Deficit Unexpectedly Surges on Oil
  • China Premier Signals Pressure on Prices

  • Legislative, Trade & Regulatory News

    Both the House Ways and Means Committee and the Senate Finance Committee each conducted their "mock" mark-ups on July 7 of the draft implementing bills for the three AAFA-supported pending Free Trade Agreements (FTA) with Colombia, Korea, and Panama. AAFA applauded each Committee for approving all three FTAs without amendment. Both Committees approved the retroactive renewal of the Generalized System of Preferences (GSP) and the Andean trade preference programs as part of the draft implementing bill for Colombia. In the Senate Finance Committee, the now controversial Trade Adjustment Assistance (TAA) program was paired with the Korea FTA. The House version of the Korea FTA did not include TAA provisions. It remains to be seen exactly how the FTAs will move forward at this point. As noted before, the Committee actions are mostly advisory since they are being conducted pursuant to so-called fast track trade authority — a procedural move that expedites consideration of the FTAs in a manner that they can't be amended. The "mock" mark-up gives Congress a chance to make last minute recommendations on what should be included in the draft implementing bills. Because there are no amendments, the President doesn't have to address thorny issues of how to reconcile amendments that would have been accepted in one Committee or another. However, he still has to address the thorny issue of how to advance the TAA program, which seems critical to securing sufficient support for the underlying FTAs from many Democrats. AAFA understands several scenarios are being explored and will report as events merit. President Barack Obama could submit each implementing bill as early as this week to start the formal Congressional consideration process. (Nate Herman)

    The U.S. government's planned changes to the way textile outsoles can be used on footwear to lower duty-rates could be implemented as early as September 1, 2011. Based on a series of Customs rulings from 2001-2003, U.S. Customs and Border Protection (Customs) has allowed importers to attach fabric to the outer soles of shoes in order to reclassify those shoes as textile outsole shoes classified under Heading 6405 of the Harmonized Tariff Schedule of the United States (HTSUS). As a result, many types of normally rubber-soled shoes with textile or plastic uppers normally subject to duty-rates ranging from 20% - 48% could instead enter the United States classified as textile outsoled shoes with duty-rates ranging from 7.5% - 12.5%. Today, it is estimated that over 500 million pairs of shoes enter the United States every year using these textile outsoles. The new rules will legitimize the use of textile outsoles to lower duty-rates for certain footwear, including most of the footwear currently utilizing textiles outsoles today. The recommendations will create new 8-digit breakouts under HTS Headings 6402 and 6404, the HTS headings where the footwear would have originally been classified if it did not have the textile outsole. Those new 8-digit HTS breakouts would have 7.5% or 12.5% duties (depending on the material in the upper) for footwear that utilizes textile outsoles. Further, the new tariff breakouts legitimize the use of all types of textile outsoles for the affected footwear, no matter how they are adhered to the outer sole of the shoe — from embedded to various types of flocking (slapped on and glued on) — in order to achieve the lower duty-rates. However, for footwear not covered by the new HTS classifications, the new rules would create a new as yet undefined "durability and strength" standard. While some believe certain types of textile outsoles can meet this new standard, others believe NO textile outsole can meet this new standard. Consequently, at least for a significant period after the new rules go into effect, the new rule eliminates the ability to use textile outsoles to lower duty-rates on any footwear not otherwise classified in the new 8-digit HTS breakouts contained in the new rules. Therefore, after the new rules are implemented, Customs will likely no longer allow the use of textile outsoles to lower duty-rates for any footwear under HTS Heading 6401 nor for many types of footwear classified under HTS Headings 6402 and 6404. The primary impact of this change would be to eliminate the use of textile outsoles to lower duty-rates on the increasingly popular all-rubber rain boots, normally classified under HTS 6401.92.90. AAFA has created a primer that provides a detailed overview of the new rules and how they can affect your company. (Nate Herman)

    The California Attorney General (AG) on July 13 sent Notices of Violation to twelve retailers alleging violations of each retailer's commitments under the consent decree listed in the Settlement for People v. Burlington in 2006. Under the decree when a retailer is served with a violation notice it has thirty days in which to contest the violation. If it does contest, the parties must "meet and confer" and try to work out an informal settlement. The original settlement included total lead content for a range of product categories introducing anywhere from 600ppm to 200ppm lead limit for most product types. (Michael McDonald)

    Macy's Inc. has agreed to pay a $750,000 civil penalty for failing to report that it had sold children's upper outerwear with drawstrings at the neck, including sweatshirts, sweaters and jackets between April 2006 and October 2010. These products pose a strangulation and entanglement hazard to children that can result in serious injury or death. The settlement resolves CPSC staff allegations that Macy's knowingly failed to report to CPSC immediately, as required by federal law. On June 29, 2011, the Commission approved a final rule that designates children's upper outerwear in sizes 2T through 12 with neck or hood drawstrings, and children's upper outerwear in sizes 2T through 16 with certain waist or bottom drawstrings, as substantial product hazards. In agreeing to the settlement, Macy's denies CPSC staff allegations that it knowingly violated the law. (Melissa Jacobs/Michael McDonald)

    AAFA submitted comments July 5 to the U.S. Department of Agriculture strongly opposing the Cotton Board's proposed increase in the cotton fee. While AAFA applauds the continued efforts to promote the use of cotton, increasing the amount and coverage of the cotton fee at the same time as the U.S. apparel industry is facing record cotton prices and unprecedented volatility in the cotton market not only hurts U.S. apparel manufacturers and importers, but actually encourages people to move away from the use of cotton, exactly opposite the purported goal of the Cotton promotion funds. (Nate Herman)

    As Congress considers renewal of the Generalized System of Preferences (GSP) program (See Related Article), AAFA joined with other organizations in sending a July 6 letter to Congress urging them to make luggage, briefcases, computer bags, handbags, backpacks, wallets, PDA cases and other travel goods eligible for benefits under GSP. GSP allows most products from least-developed countries to enter the United States duty-free. Travel goods, like apparel and footwear, are statutorily barred from benefits under GSP because, when GSP was created in the 1970s, travel goods was considered an "import-sensitive" industry. (Nate Herman)

    AAFA joined with other stakeholders in sending a letter June 28 to Secretary of State Hillary Clinton expressing strong disappointment with the U.S. government for not downgrading the status of Uzbekistan over the Uzbek cotton issue in the July 27 release of its annual Trafficking in Persons report. Despite the report providing overwhelming and irrefutable evidence that the government of Uzbekistan sanctions the widespread use of forced child labor during its cotton harvest, the U.S. government chose not to downgrade the status of Uzbekistan to Tier III, the lowest level. Instead, the U.S. government provided Uzbekistan with a waiver to stay on the Tier II watch list for a fourth straight year. (Nate Herman)

    As Congress continues to debate whether to approve the long-pending U.S./South Korea Free Trade Agreement (FTA) (See Related Article), the European Union (EU) and South Korea implemented their Free Trade Agreement on July 1. The EU/South Korea FTA reduces and eliminates tariffs and other trade barriers in manufactured goods, agricultural products, and services between the two economies, including apparel and footwear. (Aneesa Brown/Nate Herman)

    According the U.S. Department of Labor's Bureau of Labor Statistics July 8 release of June 2011 (May 2011 not seasonally adjusted figures for wholesale apparel trade and footwear) seasonally-adjusted employment figures, U.S. total apparel manufacturing employment decreased by 0.6 percent to 155,300 employees in June, following a 0.5 decline in May. For the year, apparel manufacturing employment slightly decreased by 0.8 percent, losing 1,200 jobs in 2011. May U.S. apparel wholesale trade employment decreased 0.5 percent to 140,800 employees after a 1.0 percent drop in April. However, May experienced a 1.4 percent rise in employment from May 2010. U.S. footwear manufacturing employment modestly slipped in May to 12,100 employees, a 0.1 percent decline from April. For the year, footwear manufacturing employment fell 6.2 percent from May 2010. U.S. textile mill (yarn, fabric, etc.) employment rose to 122,800 employees in June. Textile mill employment also experienced a 2.5 percent increase since June 2011. For its part, U.S. textile product mill (sheets, blankets, towels, curtains, auto/furniture upholstery, etc.) employment reduced 0.3 percent to 115,800 employees in June. Since June 2010, the U.S. textile product mills has lost 4,100 jobs, a 3.4 percent decrease. Nonfarm payroll employment was essentially unchanged in June, adding only 18,000 jobs, much less than the 125,000 new jobs predicted by most economists. The unemployment rate was little changed at 9.2 percent. Employment in most major private-sector industries changed little over the month. Government employment, however, continued to trend down. (Jeanene Medley/Nate Herman)

    Last week, the House approved the $650 billion 2012 Defense Appropriation bill. Despite much public rhetoric, the bill did not cut significant funding for U.S. operations in Libya, Afghanistan, or Pakistan. Overall, lawmakers voted 336-87 to approve the fiscal 2012 Defense appropriations bill, which contains $530 billion in nonemergency funding-an increase of $17 billion over 2011 spending and a decrease of $9 billion from the president's request. In addition, the bill contains $119 billion in emergency spending for the wars in Afghanistan and Iraq. On Libya, the House voted 199-229 on Thursday to defeat an amendment offered by Reps. Dennis Kucinich (D-OH) and Justin Amash (R-MI) that would have cut off funding for the U.S. military to continue participating in the NATO-led mission in Libya. (Kurt Courtney)

    Two agreements were signed on July 6 resolving the long-standing dispute between the U.S. and Mexico regarding long-haul cross-border trucking. The U.S. Department of State and the Mexican Secretaría de Comunicaciones y Transportes signed a Memorandum of Understanding (MOU), which will implement a new trucking pilot program to facilitate cross-border trade. Following this agreement, Mexico-domiciled carriers will be permitted into the U.S. in accordance to a multi-staged process to establish operating authority, while the Government of Mexico simultaneously permits comparable authority to be granted to U.S.-domiciled motor carriers to transport international cargo in Mexico. The pilot program will last for three years. In addition to the MOU, the U.S. Trade Representative and the Secretaría de Economía of Mexico signed the Agreement on Lifting of Retaliatory Measures. This agreement refers to the retaliatory tariffs placed on U.S. products, including U.S.-made textiles, by Mexico after the U.S. terminated a previous pilot program in 2009. Mexico suspended 50% of the retaliatory tariffs on July 8; the additional 50% will be suspended within five days of the first Mexican trucking company receiving its U.S. operating authority, which is predicted to occur sometime in late August of this year. AAFA is pleased with the results of these agreements as it will remove the retaliatory duties remaining on a few U.S. textiles going into Mexico and facilitate U.S.-Mexico apparel and textile trade. Following the signing of the two agreements, however, new legislation has been introduced and lawsuits filed to prevent the pilot program from going into effect. (Marie D'Avignon)

    Congress and many government agencies are soliciting comments on a range of issues that may affect your business. For a list of upcoming comments, please click here.

    AAFA Member News


    Academy, Ltd.
    Lynne Sprugel, VP Global Sourcing
    1800 N. Mason Road
    Katy, TX 77449
    Phone: 281.646.5200

    Academy Sports + Outdoors is one of the nation's largest sporting goods retailers, operating over 100 stores across the southeastern United States. Their stores offer the sports and outdoor enthusiast a broad selection of equipment, apparel, and footwear at everyday low prices. Their formula of low prices and a large selection has allowed the company to become a leader in the sporting goods industry.

    In the Press

    President's Focus: $4 Trillion
    from The Wall Street Journal
    The White House and congressional leaders made no progress Monday toward reaching a deficit-reduction deal that would clear the way for raising the federal borrowing limit in less than three weeks. More

    US Trade Deficit Unexpectedly Surges on Oil
    from Bloomberg
    The trade deficit in the U.S. widened in May to the highest level in almost three years, reflecting a surge in the cost of imported crude oil. More

    China Premier Signals Pressure on Prices
    from The Wall Street Journal
    Chinese Premier Wen Jiabao sounded a hawkish note on inflation ahead of key data expected to show slowing economic growth, emphasizing that the government will continue to make cooling prices its key priority. More

    AAFA Events & Educational Programs

    July 26-28, 2011
    RFID Item Level Tagging Workshop & Study Tour
    HongKong/Guandong, China

    July 28, 2011
    AAFA Government Relations Committee Meeting
    Washington, DC

    Aug. 3, 2011
    Intimate Apparel Council Meeting
    New York, NY

    Aug. 5, 2011
    West Coast AAFA/Intertek Footwear Technical Road Show
    Salt Lake City, UT

    Aug. 21-24, 2011
    Sourcing in the Americas Summit
    Las Vegas, NV

    Click here for complete schedule of events.

    AAFA Member Partners & Programs

    Attain Academy

    Discounts on webinars and
    on-line discussions for
    reducing & controlling
    chargeback and deductions.

    Freight Savings Plan
    By AAFA partner, Siriani & Associates, Inc.
    Save on shipping costs.

    Footwear Testing Services
    By AAFA partner, Intertek
    Expert resource and preferential testing rates for AAFA members.

    Gemini Shippers Group
    Gemini Shippers Group combines ocean freight volume to negotiate more favorable contracts. (d/b/a for FASA)

    XRF Analyzers
    By new AAFA partners,
    Innov-x and Thermo Scientific.
    Identification and quantification of toxic metals in products.

    AAFA Newsbreaker
    American Apparel & Footwear Association
    1601 N. Kent St., Ste. 1200, Arlington, VA 22209
    Phone: 703-524-1864 Fax: 703-522-6741

    Colby Horton, Vice President of Publishing, Multibriefs 469.420.2601   Download media kit
    Stephanie Studer, Senior Content Editor, Multibriefs 469.420.2655   Contribute news
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