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National Council of Textile Organizations Letter to Chairman Issa - January 20 2011

National Council of Textile Organizations Letter to Chairman Issa - January 20 2011

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Published by CREW
In December 2010, Representative Darrell Issa, Chairman of the U.S. House Committee on Oversight and Government Reform, sent a letter to over 150 companies, trade groups, and research organizations asking them to identify federal regulations that adversely affect job growth. This letter is one of the many responses that CREW has collected and posted for public review.
In December 2010, Representative Darrell Issa, Chairman of the U.S. House Committee on Oversight and Government Reform, sent a letter to over 150 companies, trade groups, and research organizations asking them to identify federal regulations that adversely affect job growth. This letter is one of the many responses that CREW has collected and posted for public review.

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Published by: CREW on Feb 02, 2011
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910 17th St., NW
Suite 1020
Washington, DC 20006202-822-8028
fax: 202-822-8029
January 20, 2011Chairman Darrell IssaOversight and Government Reform CommitteeWashington, D.C. 20515Dear Chairman Issa:On behalf of the domestic textile industry, I would like to congratulate you on your recentappointment to the Chairmanship of the Oversight and Government Reform Committee. Onbehalf of the domestic industry, the National Council of Textile Organizations (NCTO)appreciates the opportunity to provide information to the committee regarding costly governmentregulations.NCTO is extremely concerned with the scope and impact of the volume of regulations that arebeing proposed or are under review by the federal government. NCTO is carefully assessing theimpact of excessive regulations on the U.S. textile industry as a whole. We are concerned thatAdministrative agencies are working on two separate but important fronts, to create newregulatory burdens through implementing legislation recently passed by Congress or toreinterpret existing regulations in a manner that increases employer cost and reducescompetitiveness. These recent actions are causing enormous concern and are creating atremendous amount of uncertainty among U.S. textile manufacturers. Both aforementionedscenarios have the potential to increase significantly the cost of manufacturing in the UnitedStates. As the cost of manufacturing increases, our member companies are forced to reduce oreliminate operations and cut their workforce. Mr. Chairman, we do not believe that a textile millshould close nor should its workers lose their jobs due to government regulation that is overburdensome. Following is an initial list of the major regulatory issues that concern the industryat the current time; we will keep you updated as we obtain additional information about otherproposed regulations from our member companies.
NCTO has outlined the Top Five Regulatory Burdens to the U.S. Textile Industry
Customs and Border Protection
Textile and Apparel Fraud
The Customs and Border Protection (CBP) agency estimates that $1 billion in duties goesuncollected by the general Treasury each year due to illegal entry of textile and apparel itemsinto the United States.
Over the past several years, the U.S. textile and apparel industry has been plagued by high levelsof fraudulent activity by an increasing number of importers. This has included duty evasion intrade preference areas, undervaluation of apparel from China and front companies posing as U.S.manufacturers. These schemes have had a damaging effect on the domestic textile industrywhile also cheating the U.S. Treasury out of an estimated $1 billion or more in uncollected dutiesand penalties in textiles and apparel.A recent analysis of Mexican denim figures showed that as many as one-third of all denimtrousers imported from Mexico were illegally made with Chinese fabric. This single instancecost the U.S. Treasury approximately $50 million in uncollected duties. Mexican Customsreports that billions of dollars worth of Chinese yarns and fabrics are suspected of using the inbond system to bring Chinese yarns, fabrics and apparel into Mexico where it is thenrepackaged as Made in Mexico and sent to the U.S. duty free.In addition, U.S. Customs and Border Protection (CBP) textile verification teams are routinelyreporting non-compliance rates averaging 40 percent during plant visits to the CAFTA andAndean countries.These non-compliance rates are occurring while U.S. Customs and Border Protection (CBP) hassteadily moved resources and attention away from commercial textile enforcement. In theTextile/Apparel Policy & Programs Division at the national headquarters staffing is down 40percent, compared to five years ago, despite an increase in imports and the removal of quotas.While our national security must always be the top priority, our economic security is alsoimportant. We urge you to investigate whether U.S. Customs textile and apparel enforcementfocus and capabilities have been allowed to erode to the point that they have damaged ourindustries economic competiveness and are causing enormous revenue losses to the U.S.Treasury.
Consumer Product Safety Commission
Consumer Product Safety ImprovementAct
The Consumer Product Safety Commission has issued regulations to implement theConsumerProduct Safety Improvement Act (CPSIA)passed by Congress in 2008. The original intent of the statute was to address lead in toys imported to the U.S. from China. However, the lawapplies to all items, including textiles and apparel, for children up to age 12. In 2010, thecommission issued a stay of enforcement on the testing and certification rule for one year afterfiber, yarn, fabric, apparel, and retail companies provided the agency extensive testingdocumentation proving that textiles and apparel do not contain lead regardless of whether theproducts were made of natural or manmade fibers. Unless the stay of enforcement is renewed,testing and certification will be required beginning in February 2011. Testing and certification
costs for companies are staggering, totaling tens of millions of dollars each year. Such tests willbe required for every type of product, in every color and style. Companies at each stage of thesupply chain will have to conduct the necessary testing to document that their products are leadfree.Even if the stay of enforcement is extended for testing, the law requires that companies mustpermanently affix tracking labels to every product sold to consumers. The tracking label mustinclude the source of the product, the date of manufacture, and other information such as a batchor run number. Adding tracking labels will cost industry millions of dollars each year ascompanies are forced to adapt manufacturing and recordkeeping processes to comply with thelaw.
Environmental Protection Agency
Greenhouse Gases
In 2010, the U.S. House of Representatives passed the controversial American Clean Energy andSecurity Act, which would have put our domestic manufacturing sector at a significantcompetitive disadvantage in the growing global economy. The legislation would have increasedthe industrys energy costs dramatically, while providing China and our other principal overseascompetitors with new competitive advantages.The House of Representatives did pass a comprehensive energy bill that the Administrationbolstered as a priority yet in the absence of Senate approval, the Environmental ProtectionAgency has begun implementing regulations based on the Administrations energy policy. InDecember, the EPA announced that it plans to begin regulating emissions from power plants andoil refineries. NCTO is deeply concerned that the EPA will use this recent regulatory action asprecedent for regulating industrial sources in the future. In addition, these regulations woulddirectly impact our business costs and ability to remain competitive globally.The new Congress, not the EPA, should develop energy policies that have a business-mindedapproach that achieves the goal of substantially reducing greenhouse gases and carbonemissions. Because of the issues complexity, Congress should legislate a solution thatsimultaneously supports economic growth while making U.S. manufacturing more competitiveglobally.In addition, the EPA is also considering regulations to limit greenhouse gas emissions fromindustrial boilers, which would have a direct impact on textile companies. Boilers are costly andvital components in the production of textile and fabric products. The proposed EPA regulationswould force companies to spend time and money to prove to regulators that the facility is belowthe standards set in the proposed regulation. Regulations are in place already that requirecompanies to meet strict standards, but the new rules would expand coverage of the regulationsto minor sources and require extensive testing to verify compliance. Companies have three years

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