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US Appeals Cotton Subsidies Dispute
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Countries Oppose Duty Free Trade Bill
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Brazil's National Underwear Day 
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  March 1, 2008                                        Issue #212


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US Appeals Cotton 
   Subsidies Dispute
The US has appealed a World Trade Organization ruling last year that accused it of failing to comply with earlier recommendations to axe illegal subsidies paid to its cotton farmers. 
Gretchen Hamel, a spokesperson for the US trade representative's office, said the US has decided to appeal because it had brought its cotton programs "into full compliance with the WTO's recommendations and rulings in the original cotton case."
If it loses the appeal, the US could face billions of dollars worth of retaliatory sanctions against US products.
The dispute, which dates back to 2002, was brought about by Brazil after it accused the US of paying out $12.5bn in subsidies and export credit guarantees to its farmers.
Moreover, Brazil alleged that the US kept its position as the world's second-biggest cotton producer because of the subsidies.
The US, however, maintains it has made the changes necessary and that it has been complying with all WTO rules - including eliminating the so-called Step 2 program which meant US exporters and manufacturers would no longer receive an incentive for buying higher-priced cotton from US cotton growers.          

Countries Oppose Duty-Free
           Trade Bill
Fifteen textile and apparel trade groups from Africa and the western hemisphere are calling for changes to a trade bill they believe would cause massive job losses in the textile industries of least developed and developing countries.
The New Partnership for Development Act (NPDA), which has been proposed by Congressman Jim McDermott (D-WA), plans to give duty-free access to the US for imports of apparel and footwear from most least developed countries (LDCs) and African Growth and Opportunity Act (AGOA) countries.
However, in a letter sent to House Ways and Means Chairman Charles Rangel, the trade groups argue the bill would "result in hundreds of thousands of job losses in our textile and apparel sectors while increasing poverty in the African, Andean, CAFTA and NAFTA countries."
The main area of contention is the NPDA proposal to give new benefits to Bangladesh and Cambodia - which have seen their exports grow by 60% during the last three years. 
The groups argue that these exports gains have come largely at the expense of struggling textile and apparel sectors in African and western hemisphere countries. 
They call the Bangladesh and Cambodia proposals "anti-development trade measures" which would transfer trade away from the poorest countries to Bangladesh and Cambodia. 
"We fully expect that our sectors would quickly collapse as importers re-allocate their sourcing to four or five major countries," they said.
The bill is aimed at helping the world's poorest countries, and also provides capacity-building resources and incentives for market-based and sustainable economic growth.
But while most least developed countries already get duty-free access for their exports of apparel, concern focuses on plans to give Bangladesh and Cambodia duty free access to the US market for the first time in most apparel categories. 
China is also feared to be a major beneficiary as it supplies almost all the yarns and fabrics used in Bangladeshi and Cambodian apparel exports.
The McDermott bill does include a cap on exports of certain apparel categories from Bangladesh and Cambodia, but even so, the annual available growth rate is 15%. 
Importers and retailers, however, stand to gain from the duty savings which will average around 17%.
Textile and apparel trade groups from Colombia, the Dominican Republic, Ecuador, El Salvador, Guatemala, Honduras, Kenya, Lesotho, Madagascar, Mexico, Nicaragua, Peru, South Africa and the United States signed the letter.

8/24              Photographed by Lawrence O. Brown

Andean Trade Pact 
The US House of Representatives approved a 10-month extension of the Andean Trade Preference Act (ATPA) on February 27, just days before the existing trade pact is due to expire. 
The US Senate must now approve the companion bill before the ATPA ends on February 29 to avoid any lapse in trade benefits on imports from four Andean nations. 
The vote would mean goods made in Bolivia, Colombia, Ecuador and Peru from US cotton, yarn and fabric inputs would continue to be shipped tariff-free to the US until the end of this year.
And it would avoid considerable disruption for US cotton, textile and apparel firms that do business with the Andean countries.
About $250m worth of US cotton and textiles were exported to the four Andean countries in 2007. 
The finished products - made with these US yarns, fabrics, fibers, cotton and other textile inputs - are then brought back to the US duty-free under the ATPA.
Renewal of the ATPA will also provide extra time to enable full implementation of the recently approved US/Peru Trade Promotion Agreement (TPA) and speedy approval of the pending US/Colombia TPA. 
These two TPAs are seen as key to transforming the current one-way, temporary program into a permanent, comprehensive and reciprocal partnership.
US Congress first authorized duty-free benefits for Bolivia, Colombia, Ecuador and Peru in 1991 to help in their fight against illegal drug production and trafficking. 
The trade preferences were renewed and enhanced under the Andean Trade Promotion and Drug Eradication Act (ATPDEA), which expired on December 31, 2006. 
A further six-month period was then added, followed by an additional eight-month extension in July last year. 

Brazil's National Underwear
Twenty seven half-naked models took over the streets of Brazil on February 27 to celebrate the second annual National Underwear Day, organized by fashion website, Finissimo. 
Twelve men and fifteen women were hired to model Calvin Klein, Scala, and Foch along with other brands during the fashion show.
The even attracted a lot more attention than last years. 
The US version is held in New York City every August since 2003. 


Lejaby Sold for $66M
The Warnaco Group has agreed to sell its Lejaby intimate apparel brand to Palmers Textil AG, valuing the business at a total of EUR45m. 
Austria-based Palmers is paying an initial cash sum of EUR32.5m, plus another EUR12.5m in an interest-free note due by the end of 2013. 
The sale is subject to normal closing conditions and should be concluded during the first quarter of fiscal 2008. 
The deal is the latest part of Warnaco's restructuring program, under which it is moving to focus on expanding the company's direct-to-consumer and international businesses. 
In January, it sold the Anne Cole, Cole of California and Catalina swimwear brands for $26m to In Mocean Group as part of the same process. 
Helen McCluskey, Warnaco's group president of intimate apparel and swimwear, said "Today's announcement completes the strategic realignment we announced in November, including the company's exit from all owned manufacturing," she added. 
"We believe Warnaco is now well-positioned to focus our efforts on our brands and businesses with the greatest long-term potential for Warnaco and its stakeholders." 
Palmers Textil CEO Thomas Weber said the company was "thrilled" with the deal. 
"We believe adding Lejaby, an iconic and well-established brand, to our portfolio will surely enhance our future growth opportunities," he said. 
Warnaco launched the restructuring program in November after reporting a 70% slump in third quarter earnings.

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