Ray of hope shines on RP garments with US House bill

The US Congress now holds the key for the eventual revival of the country’s garments and textile industry after a US representative filed a bill that would provide preferential treatment to the local exports using American raw materials that was introduced under Save Our Industries Act of 2009.

Rep. Jim McDermott, a member of the House ways and means subcommittee on trade has filed for legislation in this 111th Congress House Resolution 3039 that would provide zero duty on apparel products generally not produced in the United States but assembled in the Philippines using US-made fabric and yarn.

Board of Investments (BoI) managing head and Trade Undersecretary Elmer Hernandez told reporters in an interview over the weekend that once the bill is approved by the US Congress, major investors are expected to come in right away to build their factories here, these are on top of the existing companies who have already expressed serious intentions to expand their operations.

“This will provide us additional market access to the US and beneficial to the local garments and textile sector which is already a very distress industry,” Hernandez said.

It will also provide opportunity to US fabric to be exported to other countries using Philippine-based manufacturers.

Once passed, types of Philippine made items that would be allowed preferential tariff treatment include cotton and man-made fiber (CMMF) knit shirts, CMMF trousers, CMMF underware limited to men and boys only, MMF brassiers, MMF woven men’s shirts, and MMF swimware among others.

The essential character of the garment will be its US-made fabric and yarn and 100 percent assembled in the Philippines to qualify to enter the US free of duty.

While if the garments’ essential character is composed of US yarn and formed in the Philippines, it may qualify to enjoy reduced tariff rate of 50 percent.

This type of preferential tariff treatment from the US is also being enjoyed by the Caribbean under the Caribbean Basin Trade Partnership Agreement.

If passed, the Philippines, being a former colony of the US, is the second country to allow zero duty after the Caribbean.

The US textile manufacturers, are also expected to benefit from the mutual cooperation because it will have the opportunity to compete in Asia, in addition to its presence in other countries.

The government is optimistic of getting the proposed arrangement with the US. We are being supported by the US textile manufacturers represented by the American Apparel and Footware Association.

“This will encourage investors who wish to gain foothold of the US market and have a manufacturing facility in the Philippines,” he added.

Total exports of apparel from the Philippines to the US in 2008 amounted to $1.4 billion. A performance that was steadily declining since 2000 with total exports reaching $2.3 billion, and down to $1.9 billion in 2004. –Ayen Infante, Daily Tribune