From the Sector

NCTO Supports Administration’s Proposals on Economic Stimulus in Coronavirus Response; Rejects Importer Attempts to Remove China 301 Tariffs on Finished Products

The National Council of Textile Organizations (NCTO), representing the full spectrum U.S. textiles from fiber through finished sewn products, issued a statement today welcoming the Trump administration’s proposals on an economic stimulus package to gird the economy against the impact of the coronavirus outbreak. But the organization urged officials to reject any attempts by importers to remove China 301 tariffs on finished products as part of any relief package.

“The president has outlined the need for a broad economic stimulus package that would include various tax incentives to help impacted industries and workers. We support the administration’s efforts to bolster the economy as a response to the coronavirus outbreak, while opposing add-ons to any stimulus package designed to exploit the crisis,” said NCTO President and CEO Kim Glas.

As part of a Phase One deal with China, the administration reduced duties on finished apparel and textile products implemented on Sept.1 from 15 percent to 7.5 percent.

Finished apparel, home furnishings and other made-up textile goods equate to 93.5 percent of U.S. imports from China in the sector; while fiber, yarn, and fabric imports from China only represent 6.5 percent, according to government data.

The National Council of Textile Organizations (NCTO), representing the full spectrum of U.S. textiles from fiber though finished sewn products, provides initial comments on the Phase One deal on 301 tariffs reached between the United States and China today.

“We look forward to reviewing the details of the agreement as it becomes available, including the intellectual property enforcement mechanisms agreed to by both countries.  We have long supported the administration’s efforts to re-balance our trade relationship with China that has significantly eroded our U.S. manufacturing base for decades,” Kim Glas, President and CEO of the National Council of Textile Organizations said.

The proposed announcement means that 301 duties on textile inputs will remain at a 25 percent tariff. Meanwhile, penalty duties on finished apparel and textile products implemented on Sept. 1st will be reduced from 15 percent to 7.5 percent, and proposed duties on finished products set to be put in place on Dec. 15th will no longer go into effect.

“NCTO has strongly supported applying tariffs on finished products as key negotiating leverage since textile and apparel production is a key pillar of the Chinese manufacturing economy.  Finished apparel, home furnishings and other made-up textile goods equate to 93.5 percent of U.S imports from China in our sector, while fiber, yarn and fabric imports from China only represents 6.5 percent, according to government data.  Today’s announcement reduces tariffs on finished products at the same time it keeps tariffs in place on key inputs that aren’t made in the U.S. such as certain dyes, chemicals, and textile machinery. We believe a wiser approach would be to maintain penalty duties on finished Chinese products while reducing 301 duties on key inputs that are used by U.S. manufacturers. Doing so will maintain maximum leverage on China to reach a more comprehensive and enforceable intellectual property agreement, while reducing input costs for U.S. manufacturers.  As domestic textile companies fight to compete with China and their illegal trade practices, it is important that U.S. manufacturers should be the first to see penalty duties removed on inputs not made in the United States.

As we review this Phase One agreement, it is important that the administration strike the proper balance of maintaining its leverage with China by keeping duties on finished product until a final strong and enforceable deal with China is completed.  We look forward to reviewing and analyzing the deal in more detail.”