A successful trade preference program must be stable and predictable over a long term, the chief supply officer for Levi Strauss & Co. told the House Ways and Means Trade Subcommittee on Tuesday.
It should also have liberal rules of origin for raw materials, and once put in place, be allowed to continue unchanged, said Levi Strauss Senior Vice President David Love.
Love was the only importer among 18 government, trade, labor and humanitarian groups called to testify by Chairman Sander Levin, D-Mich., in the first step of a review of trade preference policy. The Senate Finance Committee will hold its own hearing on the subject on Thursday.
Love said that Levi Strauss had imported some 60 million units from Colombia under the Andean Trade Preference Act. The program was due to expire in 2006, and since then Congress has renewed it for only short intervals. As a result, Colombian imports have dropped to one or two million units.
“We cannot make commercial decisions based on three to six month timeframes,” Love said, “especially when orders are placed a year in advance.”
Levin said that the lengthy hearing was the first step in a comprehensive review of trade preference programs and how they should fit into U.S. trade policy. He noted that ATPA and the General System of Preferences, two of the biggest programs, were due to expire at the end of the year but recommended extensions as the committee considers the programs as a whole.
“These issues relate to the … challenge that we face in this century: How do we craft sound trade policies that reflect the need for expanding trade and shape its course,” Levin said. “There has been an increasing effort to shape the terms of trade, based on the principles that it’s not enough to expand trade. You have to expand it in ways that are mutually beneficial.”
Committee members also said the trade preference programs should support international labor standards.
“Effective trade preferences are one stop on a country’s journey to becoming a full player in the international market,” said Rep. Kevin Brady, R-Texas, senior Republican on the subcommittee. “Trade preferences cannot be an end unto themselves. In fact a truly successful trade preference program is one that makes itself obsolete.”
Other Republicans spoke up for trade agreements that assured unrestricted access to foreign markets for U.S. exports.
Rep. Jim McDermott, D-Wash., told the committee that there is broad agreement that U.S. trade programs need to be stable, simplified, “and they need to help more people.”
“Our programs are too complicated and too hard to use,” McDermott said. “Our rules of origin prevent common sense business from happening. … Simplifying our programs and doing more to help our partners meet the important standards we set are keys to their success.”
McDermott also called for infrastructure capacity building programs to improve logistics in developing countries.
Contact R.G. Edmonson at firstname.lastname@example.org.