Textile and apparel importers said this week they’re heading for a mess of new quota problems with the new year.
The problem, according to the importers, is the government’s decision to implement a new textile category system even though Congress has failed to authorize the Harmonized System, the new tariff schedule to which the category changes were tied.
The long-awaited shift by the United States to the Harmonized System, scheduled for Jan. 1, has been put on hold until Congress either passes the dormant omnibus trade bill or authorizes the new international tariff schedule via independent legislation.
In the meantime, the government is going ahead with plans to introduce a revised textile category system on Jan. 1. The category system determines the quotas and visas for textile and apparelimports.
For importers and brokers, the immediate effect will be felt at U.S. ports in the next few weeks, when goods categorized under one system will be examined by Customs agents interpreting a different set of rules. In addition, the shift in category descriptions will make it difficult for importers to determine when quotas have been filled.
“Textile and apparel importers will have major problems,” said Robert Leo, a staff attorney with the American Association of Exporters and Importers. “They will have to deal with the current system until Friday, and the interim system after that. Some present entries will switch to new categories under the new system, but the description of the item will not change until the Harmonized System is implemented. Importers will have to keep multiple sets of books.”
An importer of children’s wear, one of the areas where categories will be substantially changed, predicted “tremendous problems.”
“I see double migration,” he said. “What I buy on Jan. 1 may be one item, but considered something else later.”
Clint Stack, who runs a private importmonitoring service in Washington, D.C., complained that only a few weeks ago did the government publish forms explaining the correlation of the new category system with the existing tariff schedule. “It also needs some revisions. It isn’t consistent with the tariff schedule,” he said.
Stack suggested it would have been more logical to hold off on the new category system until the Harmonized System is in place. He charged that the government was buckling to pressure from the domestic textile industry to implement the changes.
The Harmonized System, which attempts to standardize tariff systems throughout the world, will be adopted by most of U.S. trading partners on Jan. 1. Authorization is included in the omnibus trade bill, which is mired in a House-Senate conference committee that won’t meet until Congress returns from recess in late January. The bill, which includes controversial measures opposed by the Reagan administration, could take weeks or months to reach the President’s desk.
Moves to authorize the Harmonized System in a separate piece of legislation fell short in both houses in the days before Congress adjourned for Christmas recess. Insiders said Democratic leadership in the Senate blocked the move in order to retain leverage over the administration, which wants to see the new schedule adopted.
But Carl K. Davis, East Coast counsel to Nike, Inc., argued that the Democrats have misplayed their hand.
“I think Sen. Lloyd Bentsen misjudged the importance of the Harmonized System to the administration. It won’t make or break the trade bill. All he’s done is irritate a lot of business people.”
Bentsen (D., Tex.), chairman of the Senate Finance Committee, reportedly blocked a Senate move to attach authorization to the spending bill recently passed by Congress.
A quota management specialist at the Customs Service predicted problems with the switch to the new category system. “We’ll have to charge quotas set up in 1987 for merchandise entered in 1988,” she said. “Goods coming in under the interim system will show a category that may not have existed. We’ll have to convert back to the 1987 system until that quota is filled.”