July 17, 2012 – 10:46 p.m.

Senators Seek Outsourcing Truce to Extend African Trade Law

Sens. Chris Coons of Delaware and Johnny Isakson of Georgia are working with Finance Chairman Max Baucus of Montana to avoid a fight over imported shirts with Robert Menendez of New Jersey and ensure quick action on renewal of a 12-year-old African trade law.

The decline of the domestic clothing industry has been part of the recent debate over outsourcing. Senators in both parties have criticized the U.S. Olympic team’s use of attire made in China. And the Senate will debate a proposal (S 3364) by Michigan Democrat Debbie Stabenow that would provide tax breaks to companies that bring back jobs from overseas while taking writeoffs away from job exporters.

Democrats Coons and Baucus, along with Isakson, a Republican, are trying to engineer a short truce in the outsourcing wars that would allow action on a draft bipartisan bill to extend through fiscal 2015 the African Growth and Opportunity Act (PL 106-200). Supporters say the measure is needed to help poor countries and ensure a broader American business presence on a continent with strategic importance. Isakson said the legislation has growing support in both parties.

Coons said the law’s third-country fabric provision must be extended before it expires Sept. 30 to prevent companies from moving production of sports shirts and other items from Africa to Asia and Latin America. The law allows for duty-free exports to the United States of garments made in Lesotho, Kenya and other qualifying African nations from fabric produced in third countries.

But Menendez, a Democrat, is insisting on fast Senate action on his legislation (S 529) to renew incentive payments to manufacturers of pima cotton dress shirts from a federal Pima Cotton Trust Fund that lapsed in 2009. The trust fund was created by a 2006 tax cut extension law (PL 109-432) and was financed by payments from the Treasury equal to the amount of tariff revenue collected on pima cotton products.

The potential beneficiaries of the program’s renewal include custom shirt makers such as Individualized Shirt Co. of Perth Amboy, N.J.

“We are decimating the U.S. manufacturing base,” Menendez said. “I have no problem with [the African Growth and Opportunity Act], but I have to have the cotton trust fund as part of the deal,” he said Tuesday.

The Finance Committee likely will try to satisfy Menendez by adding language from his bill to an unrelated trade measure the panel is scheduled to mark up on Wednesday.

Colleagues and lobbyists have urged the New Jersey senator to let the African exports bill advance.

“Literally thousands of women in African countries are losing their jobs,” Coons said.

“We were very upset about this,” said Julia K. Hughes, president of the U.S. Association of Importers of Textiles and Apparel. She said members of her group have tried to contact Menendez to express their concern.

Coons said it is essential to keep the African trade issue and pima cotton payments separate in order to expedite action on his bill in the Senate and avoid trouble with the Republican majority in the House.

Similar legislation has been backed in principle by House Ways and Means Chairman Dave Camp, R-Mich. But House tax writers have insisted that unrelated provisions be kept out of an extension of the African measure.