Apparel and Business and Market and Finance

							                  Testimony Before the Senate Finance Committee
                                  Hearing on the
                  United States-Peru Trade Promotion Agreement
                                              By Kevin M. Burke
            President & Chief Executive Officer, American Apparel & Footwear Association (AAFA)
                                              September 11, 2007

    Thank you for the opportunity to submit testimony on this important issue. The American Apparel &
    Footwear Association (AAFA) strongly supports swift approval and implementation of the U.S./Peru
    Trade Promotion Agreement (TPA).

    Why? U.S. apparel imports from and, in turn, U.S. cotton and textile (yarn and fabric) exports to Peru
    have thrived since Congressional passage in 2002 of the Andean Trade Promotion & Drug Eradication
    Act (ATPDEA). The United States imported $844 million worth of apparel from Peru in 2006. To
    supply this thriving apparel business, U.S. cotton growers and textile manufacturers sold over $55
    million worth of cotton, yarn and fabric to Peru that same year. U.S. cotton exports alone to Peru have
    doubled over the past year, making Peru the 11th largest customer of U.S. cotton today.

    Regrettably, the continued uncertainty over Congressional approval of the U.S./Peru Trade Promotion
    Agreement (TPA), combined with constant threat of expiration of the ATPDEA program, has caused a
    number of U.S. apparel firms to pull business from Peru and move that business to Asia. U.S. apparel
    imports from Peru in the first half of 2007 are already starting to reflect this move.

    This decline in U.S. apparel imports from Peru has, in turn, jeopardized U.S. cotton and textile exports
    to Colombia and Peru. Over 500,000 jobs (100,000 direct workers and another 400,000 indirect
    workers) in Peru – approximately 20 percent of the entire Peruvian manufacturing workforce – and
    thousands of jobs in the United States are at risk.

    The U.S./Peru TPA would make the current partnership between the United States and Peru: 1)
    permanent; 2) reciprocal; and 3) comprehensive.

    No longer would this important relationship be threatened by the uncertainty caused by last minute
    renewals of ATPDEA – the last renewal of ATPDEA, which extended ATPDEA for only 8 months to
    February 29, 2008, was signed into law by President George W. Bush only minutes before the program
    was set to expire. Further, even though duty-free access for U.S. imports of apparel from Peru under
    ATPDEA requires the use of U.S. cotton, yarn and fabric, exports of U.S. cotton, yarn and fabric to Peru
    are today subject to duties averaging 12-16 percent. Those duties would disappear immediately upon
    implementation of the U.S./Peru TPA. Finally, ATPDEA benefits only extend to U.S. imports of
    apparel from Peru, while the U.S./Peru TPA would allow duty-free access for all types of textile
    products from Peru – sheets, towels, draperies and other home furnishings and textile products – as long
    as they are made from U.S. cotton, yarn and fabric.



1601 North Kent Street, Suite 1200, Arlington, VA 22209   www.apparelandfootwear.org   p (703) 524-1864 (800) 520-2262 f (703) 522-6741
In fact, The U.S./Peru TPA contains ALL of the provisions requested by the U.S. textile industry:
    1. A strict yarn-forward rule of origin for all apparel and textiles and
    2. No exceptions to the yarn-forward rule, except for bras (single transformation).

As a result, the entire U.S. textile and apparel supply chain – from cotton growers and fiber/yarn
producers to importers and retailers – sent letters May 11, 2007 to Chairman Baucus and Ranking
Member Grassley STRONGLY SUPPORTING the U.S./Peru TPA and NO INTERRUPTION in
benefits between ATPDEA expiring and implementation of the U.S./Peru TPA. Such a letter is
unprecedented. Never before have these groups come together on any issue, much less a free trade
agreement. A copy of the letter is attached to my testimony.

Therefore, I urge you, on behalf of our members and the entire U.S. textile and apparel supply chain, to
approve the U.S./Peru TPA as soon as possible. By approving the U.S./Peru TPA, and guaranteeing its
quick implementation, Congress would ensure that the strong partnership that exists today between the
textile and apparel industries in the United States and Peru would not only continue, but grow.

Thank you again for the opportunity to provide testimony on this important matter.

Attachment
   - May 11, 2007 letter from entire textile and apparel supply chain to Senator Max Baucus




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NCMA




May 11, 2007



The Hon. Max Baucus
Chairman
Committee on Finance
U.S. Senate
Washington, DC 20510

Dear Mr. Chairman:

On behalf of the U.S. textile and apparel supply chain, the undersigned
organizations are writing to ask your assistance in ensuring that the U.S./Peru
Trade Promotion Agreement and that the U.S./Colombia Trade Promotion
Agreement are approved and enacted into law before June 30, 2007. We
understand that consideration of these agreements has been delayed pending
trade/labor negotiations between the Administration and the Congress. In light
of the agreement on those trade policy talks, it is our hope that the Colombia and
Peru agreements can be considered and approved before the end of June.
As you know, on December 20, 2006, President Bush signed into law a provision
that establishes a two-part extension of the Andean Trade Promotion and Drug
Eradication Act (ATPDEA). That provision automatically extended the ATPDEA
until June 30, 2007, with a second extension, contingent partly on Congressional
passage of the Trade Promotion Agreements, possible until December 31, 2007.
To ensure there is no gap in duty free access for garments made in these
countries – made primarily with U.S. textiles – we need the Trade Promotion
Agreements (TPAs) approved by June 30, 2007 and implemented by December
31, 2007.

As you may know, the textile and apparel sector is one of the largest
manufacturing and wholesale employers in the United States - and still employs
more than 500,000 U.S. workers.

Increasingly, those jobs are dependent upon exports. About $16.7 billion worth
of textile and apparel products were exported in 2006. About 50 percent of
those exports are destined for Mexico, Central America, and the Andean region,
where many of these products are incorporated into finished garments and
brought back to the United States.

These export markets function primarily because we provide duty free access for
their textile and apparel products that incorporate U.S. yarns, fabrics, fibers, and
other textile inputs.

The Andean region remains an important and growing market for U.S. textile
exports. Unfortunately, the overall prospects of this market remain troubled.
Because of recurring threats over the loss of duty free access for that region,
many U.S. apparel importers have begun to shift their business elsewhere. Over
the last 12 months, U.S. apparel imports from the region have dropped by about
11 percent.

Although U.S. textile exports to this region are still up during the last 12 months,
this success cannot be sustained if the overall market is contracting.

The long term solution lies in the U.S./Peru and U.S./Colombia TPAs, which
provide a permanent two-way duty free partnership between the U.S. and
Andean textile and apparel producers. But this long term stability cannot be
realized if the U.S does not quickly approve these agreements. Moreover, we face
a short term crisis with the imminent expiration of the existing preference
programs, on which much of the current partnership is presently based.

Time is of the essence if we hope to retain a strong and economically vibrant
textile and apparel industry in this country by ensuring a strong trade
relationship with our partners in Peru and Colombia. Please help us by ensuring
approval of the U.S./Peru and the U.S./Colombia Trade Promotion Agreements
before the end of June 2007.



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We also support extension of the current Andean Trade Promotion and Drug
Eradication Act (APTDEA), which is currently set to expire in a little less than 60
days. Such extension is needed to eliminate any potential disruption or actual
duty free gap that might occur before full entry into force of the Trade Promotion
Agreements.

Thank you for your time and consideration in this matter.

Sincerely,

American Apparel & Footwear Association (AAFA)
American Fiber Manufacturers Association (AFMA)
Carpet and Rug Institute (CRI)
INDA, Association of the Nonwoven Fabrics Industry
National Cotton Council (NCC)
National Council of Textile Organizations (NCTO)
National Retail Federation (NRF)
North Carolina Manufacturers Association (NCMA)
Retail Industry Leaders Association (RILA)
Sewn Products Equipment & Suppliers of the Americas (SPESA)
South Carolina Manufacturers Alliance (SCMA)
Textile Distributors Association (TDA)
The Association of Georgia's Textile, Carpet & Consumer Products Manufacturers
(GTMA)




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