Gov. Shutdown, What's Open, What's Not

Consumer Product Safety Commission:

During the lapse in federal appropriations, CPSC will continue its critical work to protect the public from imminent threats to human life and property. This work includes screening hazardous products at ports, monitoring injury reports, and taking urgent enforcement actions such as product recalls. CPSC reminds firms that their legal obligation to submit section 15 reports is still in effect.

Government Procurement and News:

Procurement List: The Committee for Purchases from People Who Are Blind or Severely Disabled CLOSED.

Department of War News: U.S. Army News continues to be updated. Other War Department news, including contract awards SUSPENDED AFTER SEPTEMBER 30, 2025.

Pause on Federal Funding and Clarifying Defense Contracting.

January, 28, 2025, Clarifying Defense Contracting.

The Department is currently reviewing the OMB Memorandum, Temporary Pause of Agency Grant, Loan, and Other Financial Assistance.

• The scope of the OMB M-25-13 memo on financial assistance instruments does not include contracts.
• Contrary to certain media accounts, the Department of Defense has not paused contract awards.

FTC Care Labeling Roundtable

Due to the government shutdown, the FTC postponed its planned October 1 roundtable. Commission staff tentatively plans to hold the roundtable on Friday, March 28, 2014, subject to Commission approval. The roundtable, which is free and open to the public, will examine the Commission’s proposed amendments to the Rule set forth in its Notice of Proposed Rulemaking (NPRM) published on September 20, 2012.

The roundtable will focus on the proposed amendment permitting a wetcleaning instruction and comments urging the Commission to require a wetcleaning instruction. The wetcleaning discussion also will address: (1) the cost of substantiating wetcleaning instructions; (2) the availability of wetcleaning services; (3) consumer awareness of wetcleaning; and (4) the content of labels providing a wetcleaning instruction (e.g., instructing “professionally wetclean” versus “wetclean”).

The roundtable also will explore issues relating to the use of care symbols and the Commission’s proposal to clarify the Rule’s reasonable basis requirements. These discussions will address: (1) the differences between ASTM and ISO symbols and between the 2005 and 2012 ISO symbols; (2) whether to require that labels identify ISO symbols if used to comply with the Rule; (3) the change in the meaning of the circle P symbol in the ASTM system; (4) the absence of ASTM and ISO symbols for solvents other than perchloroethylene (perc) and petroleum; (5) consumer understanding of symbols; and (6) how to clarify the Rule’s reasonable basis requirements.

In addition, the roundtable will provide participants with an opportunity to discuss other issues raised by comments filed in response to the NPRM.

The roundtable will be held from 9:15 a.m. to 3:45 p.m. at the FTC’s satellite building conference center, located at 601 New Jersey Avenue, N.W., Washington, DC. The roundtable is open to the public, and there is no fee for attendance. For admittance to the Conference Center, all attendees must show valid government-issued photo identification, such as a driver’s license. Pre-registration is not necessary to attend, but is encouraged so that staff may better plan this event. To pre-register, please e-mail your name and affiliation to carelabelingroundtable@ftc.gov.

Announcement of Next Round of Transatlantic Trade and Investment Partnership Negotiations

The United States and European Union will hold the second round of Transatlantic Trade and Investment Partnership (T-TIP) negotiations with meetings and digital video-conferences scheduled to take place over the next several weeks. From November 11-15, negotiators will meet in Brussels to cover services, investment, energy and raw materials, and regulatory issues. U.S. and EU teams will conduct negotiations on other areas of T-TIP negotiations by digital video-conference throughout November.

These negotiating sessions replace those originally scheduled for October 7-11, which were postponed due to the shutdown of the U.S. government. A negotiating session on government procurement took place in October, just prior to the shutdown.

The third round of negotiations will be held December 16-20 in Washington D.C.

If Baby Makes Her Blue Jeans Talk, What Do They Say About Trade and American Manufacturing?

Next week I'll be in Washington for the SPESA 2013 Executive Conference, where much of the talk will be of "reshoring," that is manufacturing jobs coming back to the U.S. Equally interesting is the concept of "near-shoring," that is manufacturing returning to the Americas, under a hybrid, U.S.-F.T.A. partner, model. A few days before the partial government shutdown, when trade data were still available from the Department of Commerce and the International Trade Commission, I pulled together some numbers to illustrate, for a CNCB reporter (see story here), how near-shoring works. The example I use is blue jeans, an iconic, American-invented product, but which has little current U.S.A. production.

In 2012, the total value (landed, duty-paid) of all U.S. imports of denim trousers was $4.4 billion. That equates to 41,1 million dozen pair of trousers. The bulk of those were subject to the full 16.6 percent rate of duty and were mostly imported from Asia, in particular, China. However, 36 percent of all imports were duty-free under the provisions of a free trade agreement or trade preference program. Two programs in particular are of interest: the North American Free Trade Agreement ("NAFTA") and the Dominican Republic-Central America Free Trade Agreement ("DR-CAFTA").

Combined NAFTA (Canada and Mexico) and DR-CAFTA (Costa Rica, Dominican Republic, El Salvador, Gautemala, Honduras, and Nicaragua) accounted for over a quarter of all U.S. imports of denim trousers. Both agreements have what is called a "yarn forward" rule of origin, which means that jeans imported into the U.S. duty free under the terms of the agreement must be made of fabrics woven in one or more of the partner countries of yarn spun in one or more of the partner countries. Each agreement has loop-holes that allow some use of third country fabric, but a look at the trade data suggests that they are using a substantial amount of regional fabric, and that is helping U.S. denim fabric makers.

How so? Well, to start off, our DR-CAFTA partners have little if any local production of denim. Mexico produces denim, as does the U.S. Therefore, not counting the loopholes that let some third-country fabric to be used, free trade in jeans under the NAFTA or DR-CAFTA must use fabric made in the U.S. or Mexico (Canada is not a significant producer of denim).

So what do the data show?

Free Trade Agreement	U.S. Imports of Denim Trousers (in Dozens)	U.S. Exports of Denim Fabric (Square Meters Converted to Dozens at a Rate of 14.9 m2 = 1 Dozen)
NAFTA	9,305,616	3,898,212
DR-CAFTA	1,495,106	1,413,205
Combined	10,800,722	5,311,417

What jumps out is that the amount of denim fabric the U.S. makes and exports to our DR-CAFTA is sufficient to account for 95% of the jeans we import from those partners. In the case of NAFTA, U.S. fabric can account for 42% of the jeans we import duty-free under that trade agreement, which is rather high considering that Mexico has its own denim production. We must be careful with these numbers. The commodity codes for exports and imports are not precisely the same, and there is a single conversion number for all "trousers" which could encompass everything from the skimpiest "Daisy Dukes" to the largest plus-size trousers. However, when you see, in the case of DR-CAFTA, nearly 100% alignment of U.S. fabric exports and U.S. trouser imports, you know the true correlation, while perhaps not 94.5 percent, must be very high.

The Government: What's Open, What's Closed, and What It Tells You About Our Priorities

Unless you work for the United States government a shutdown of a few days, or even weeks, is unlikely to affect you. Retirees and the disabled with still get their Social Security checks. The Department of Defense will remain in readiness whenever and wherever needed. Air traffic controllers are on the job facilitating travel. It has been said that if the radio, television, and newspapers closed down along with the government, most Americans wouldn't even know there was a government shutdown. Oh, yes, and one other thing, the Internal Revenue Service cannot audit you during the shutdown.

I'm one of the small number of non-government employees affected by the shutdown. I have scheduled meetings in Washington with the Federal Trade Commission on behalf of a client. Those meetings are canceled.

The Federal Trade Commission protects American consumers from fraud in many forms. Of interest to my clients in the textile and apparel industries is protection from apparel with misleading labeling. In my two decades' experience handling FTC apparel labeling issues, I have seen that mislabeling which defrauds America consumers is more likely in the case of imported apparel. The FTC is closed for the shutdown.

The Consumer Product Safety Commission protects consumers from unsafe products. A quick perusal of CPSC's database of unsafe product recalls reveals that the bulk of unsafe products are imported. CPSC is closed for the shutdown.

The United States International Trade Commission investigates allegations of unfair trade practices relating to imports and maintains an online database of imports so that trends in imports can be followed. The USITC is closed for the shutdown and even access to the online database has been blocked.

The Department of Commerce, which includes the Office of Textiles and Apparel, assists U.S. manufactures to be competitive in the world market. According to the Washington Post, "Of the Commerce Department’s 46,420 employees, 40,234 will be furloughed. The bulk of the non-furloughed employees are at the National Oceanic and Atmospheric Administration, where 5,368 of the agency’s 12,001 workers will remain on the job preparing weather, shipping and other reports important for public safety and the economy." Apparently the offices at Commerce with assist U.S. industry are closed.

Customs and Border Protection facilitates imports of foreign-origin merchandise. As of July 31, 2013, CBP had 59,561 on-board employees. CBP estimates 52,673 employees as the total number to be retained during the shutdown. CBP will continue passenger processing and cargo inspection functions at ports of entry.

There you have it! The agencies that assist America consumers and manufacturers are closed. The agency which facilitates foreign competitors to get into the U.S. market is open for business and nearly fully staffed. Such are the priorities in Washington.

How Will the Government Shutdown Affect Your Business

The clients of Agathon Associates interact with several U.S. Government offices that will may be affected by the current partial government shutdown. Here's a listing of some of the offices that may be of interest:

• Consumer Product Safety Commission. CPSC will update with information about imminent risks only during the government shutdown. Read CSPC Shutdown Plan here.

• Department of Commerce, which includes the Office of Textiles and Apparel. According to the Washington Post, "Of the Commerce Department’s 46,420 employees, 40,234 will be furloughed. The bulk of the non-furloughed employees are at the National Oceanic and Atmospheric Administration, where 5,368 of the agency’s 12,001 workers will remain on the job preparing weather, shipping and other reports important for public safety and the economy. The Patent and Trademark Office, because of the fees it collects, has enough independent funding to remain open for four weeks – but would close as well in any extended government shutdown. The Bureau of Industry and Security, responsible for reviewing exports under U.S. national security laws, will keep 150 employees – nearly half its workforce – on duty."

• Department of Defense. According the Washington Post, "The Defense Department will continue to conduct military operations and training exercises. The roughly 1.4 million active-duty uniformed military personnel will stay on the job. Of the department’s 800,000 civilian workers, about half will be furloughed. Those deemed essential because they are critical to safety missions, or are actively participating in or supporting a military operation, will continue to work."

• Department of Homeland Security, which includes Customs and Border Protection. As of July 31, 2013, CBP had 59,561 on-board employees. CBP estimates 52,673 employees as the total number exempt and estimated to be retained during a federal funding hiatus. These employees are exempt since they are Presidential appointees, law enforcement officers, funded by other than annual appropriations, or necessary for the protection of life and property. CBP will continue passenger processing and cargo inspection functions at ports of entry. Read the DHS Shutdown Plan here.

• Federal Trade Commission. FTC is closed due to the government shutdown. Read the FTC Shutdown Plan here.

• Executive Office of the President, which includes the Office of the United States Trade Representative. USTR will furlough about 75% of its employees during the shutdown. Read the EOP Shutdown Plan here.