Originally: House Leaders Pull Thomas Bill From Schedule After Textile Opposition

House leadership has pulled a bill extending U.S. trade preferences for certain countries from the Sept. 26 suspension calendar because of opposition from members with textile constituencies, according to congressional sources.

“It think it’s unlikely that it will come up this week,” a senior congressional aide said of the bill introduced last week by Ways and Means Committee Chairman Bill Thomas (R-CA). “It’s highly likely it won’t get done this week.”

House leadership pulled the bill at the request of GOP House members with textile constituencies. In a Sept. 25 letter to GOP leaders, the GOP House members said the bill at a minimum should be “vetted through the normal committee and floor process” and “not be rushed to the House Floor for consideration under the Suspension Calendar.”

The letter was signed by GOP Reps. Robin Hayes (NC), Charles Taylor (NC), Walter Jones (NC), Virginia Foxx (NC), Patrick McHenry (NC), Robert Aderhold (AL), J. Gresham Barrett (SC), Virgil Goode (VA), Charlie Norwood (GA) and Howard Coble (NC). One House source said other members might also sign on to the final version of the letter sent to leadership. 

This source said members had questioned why GOP leaders would schedule a vote on a trade measure that could increase apparel exports to the U.S. just a little more than a month before the Nov. 7 mid-term election.

Under suspension of the House rules, the bill would have had to win a two-thirds majority of the House vote to be approved. The bill seemed likely to meet this threshold, as a Democratic aide said it would have been expected to win majority support from House Democrats. While Ways and Means Committee Ranking Member Charles Rangel (D-NY) would have criticized the fact that the bill was not considered in committee, the aide said Rangel and other Democrats saw the bill as an emergency stop-gap measure to keep trade preferences in place.

The letter from textile Republicans, which was expected to be delivered to House Republican leaders at mid-day on Sept. 25, criticized the bill for not allowing the U.S. textile industry any opportunity to provide input or feedback. Specifically, H.R. 6142 would extend until September 2008 a provision in the African Growth and Opportunity Act (AGOA) that allows duty-free access for AGOA apparel made with fabric from anywhere in the world up to a limit amounting to 3.5 percent of all U.S. apparel imports. It would then introduce a new AGOA “value-added” rule of origin in which a good would receive duty-free access if 50 percent of its value were added either in AGOA or another U.S. FTA partners.

The Republican letter described this part of the bill as a “dramatic deviation” from the yarn-forward rule of origin, under which yarn in a garment must be of either U.S. origin or of the country producing the product to get preferential access to the U.S. market.

The bill also would grant trade preferences for Haiti, and use the same value-added rule introduced for AGOA so that 50 percent of the value added to a finished product would have to be from Haiti or a U.S. FTA partner. This percentage would grow to 55 percent of the value in year four of the agreement, and 60 percent in year five.

Finally, the bill would extend the Generalized System of Preferences (GSP) for two years, but change rules allowing the administration to grant waivers so that countries can continue to receive GSP benefits on certain products. These changes seemed targeted at Brazil and India, the two biggest beneficiaries of GSP, and would prevent the U.S. from granting the waivers necessary to allow certain imports to enter the U.S. duty free for advanced developing countries.

The National Council of Textile Organizations announced its opposition to the textile provisions of the bill in a Sept. 24 press release that suggested the bill would primarily benefit China. NCTO President Cass Johnson charged it would increase exports of apparel from AGOA and Haiti that included Chinese fabric at the expense of apparel from Central American countries that includes U.S. yarn and fabric.

The GSP portion of the Thomas bill would make it more difficult for countries to obtain competitive need limit waivers by eliminating waivers for countries with per capita incomes above $3,400. This would prevent Brazil, which currently has 19 waivers, from keeping those or obtaining new waivers in the future.

A private-sector source said this would affect about $300 million in annual Brazilian exports under GSP of various auto parts, as well as $53 million in the raw material ferroniobium.

The Thomas bill also would not allow GSP waivers on an individual product from a country if U.S. imports of that product were more than $1.5 billion in the previous year. This provision seems tailored to end a waiver for a single tariff line covering exports of Indian precious metal articles of jewelry, which two private-sector sources account for about 40 percent of all Indian exports under GSP.

They saidIndia in 2005 exported about $1.59 billion in goods under the gems and jewelry tariff line, which is far and away the greatest single GSP export of any individual country. Only one other tariff line accounted for more than $500 million in exports, one of these sources said.