Monday, 10 May 2010
A tale of two kinds of duty concession
The HELP Act, trebling the amount of garments made from Asian fabric Haiti can export duty-free to the US, has received an easy and rapid passage through the US Congress. But this is no indication other trade preference Bills under discussion will get anything like the same benign reception.
HELP was supported by both political parties, got enthusiastic endorsement from ex-Presidents Bush and Clinton, received no opposition from America's textile lobby and was widely supported by most US businesses involved in the industry. This is simply not true of the other trade preference Bills tabled earlier, but still awaiting serious discussion.
US Trade Representative Ron Kirk recently pointed out the lack of appetite among US politicians at present for making imports easier. Haiti is a special case: a close neighbour of the US, it is agreed by almost anyone to need a stronger garment industry to help rebuild its shattered economy. But other contenders for better access to the US market enjoy no such consensus.
Bangladesh and Cambodia are pitching for similar access – and are getting almost no support, with US fabric and yarn makers rightly pointing out that those two countries are trying to gain duty-free access for Chinese raw materials denied to any other serious garment-making nation. The Philippines have had a Bill (the so-called SAVE Act) tabled that claims to allow duty-free access for garments made in the Philippines from US fabric – but, in the small print of the Bill, lie dozens of special exemptions for garments made from Asian fabric which America's textile lobby is opposing. Pakistan still seriously believes a bizarre Bill, allowing duty free access for garments made in parts of the country practically inaccessible by road and currently closed to civil war, will be extended to places it's actually possible to make garments in – but no-one in the US gives that proposal any chance of acceptance. Proposals to extend African countries' ability to export garments made from Asian fabric beyond the 2012 deadline in current legislation are going nowhere. And the Administration's desire to introduce the Free Trade Area with Colombia agreed by the Bush administration is stuck in deep opposition from Obama's own party: unsurprisingly since the President was a vocal opponent of the deal when he was a Senator.
Rightly or wrongly, public opinion in the West is increasingly concerned with preserving local jobs. Though ill-informed commentators still go on about increased protectionism since the recession began, the garment industry has seen almost no new protectionist activity by rich countries since early 2008. But this rigid adherence to trading rules is no indication Western politicians are any happier about making it easier to export jobs: merely that they, on balance, recognise that banning some imports can damage their economy by making it more difficult to export other products.
That insight does not lead to an enthusiasm for inviting more imports. The "US fabric" parts of the Philippines SAVE Act might go through Congress: in our view the other trade preference bills seeking to help other countries export to the US face a long, and probably unsuccessful, slog to get approval