1. © Copyright AAFA. All rights reserved. 2007 SCLC/ECC Spring 2007 Meeting International Trade Update Stephen Lamar Exec. Vice President American Apparel & Footwear Association

2. © Copyright AAFA. All rights reserved. 2007 Elections Elections were NOT about Trade –General dissatisfaction on economy (incl. trade) –Trade dominant in several elections But Trade very much affected by Elections –New Congress MUCH more protectionist Freshmen Dems GOP no longer whipping from leadership –Trade not a priority –Pro Trade Democrats (New Dem, Blue Dog) –Chairmen Rangel and Baucus will be key

3. © Copyright AAFA. All rights reserved. 2007 How did we fare in 2006? Two FTAs – Oman and Bahrain Staggered CAFTA-DR Implementation Trade Preference Programs Haiti AGOA Andean GSP Vietnam WTO Accession Misc. Tariff Bills Port Security No Schumer/Graham Burma Sanctions Renewal (3-year)

4. © Copyright AAFA. All rights reserved. 2007 Trade Agenda for 2007 Trade/Labor –Pending FTAs Peru Colombia Korea Panama –Trade Promotion Authority (TPA ) China/Enforcement Preference Programs –Andean –LDC –GSP –CBTPA Doha Round TAA CAFTA-DR Implementation Vietnam Monitoring Preference Program Implementation Affordable Footwear Initiative Pakistan ROZ Annual Burma Sanctions Renewal

5. © Copyright AAFA. All rights reserved. 2007 Trade/Labor Integral part of a Democrat trade agenda –A New Trade Policy For America Three key labor concepts: –Internationally recognized labor rights –No derogation –Equally enforceable Hidden agenda –Will big labor really support trade? –Big issues over whether this changes US labor laws –New Anti-Sweatshop push?

6. © Copyright AAFA. All rights reserved. 2007 Israel NAFTA Jordan Chile Singapore Australia Morocco Current and Future U.S. Free Trade Agreements CAFTA- DR* Bahrain Oman Peru Colombia Panama South Korea Malaysia FTAA ASEAN Middle East In force Under negotiation Stalled/Downgraded Pending Regional Initiatives Potential Ecuador SACU UAE Thailand Japan *El Salvador, Honduras, Nicaragua, Guatemala, and DR only. Note: Peru, Colombia and Ecuador may be merged. Note: Oman approved by Congress but not yet entered into force.

7. © Copyright AAFA. All rights reserved. 2007 FTA Issues Peru and Colombia –Labor rights concerns –Environmental concerns in Peru –Human Rights concerns in Colombia –Andean expiration Panama –Labor rights –Canal project South Korea –Big agreement; huge priority –Controversy Beef Autos

8. © Copyright AAFA. All rights reserved. 2007 Doha Round Launched Nov 2002 –Development agenda Faltered July 2006 Key issues –Agricultural issues Subsidies Market Access –Developing countries –NAMA Textile mischief

9. © Copyright AAFA. All rights reserved. 2007 Trade Promotion Authority Ability of President to negotiate trade agreements –Congressional power of attorney Up or Down Vote Consultation Expires June 30, 2007 No more FTAs or Doha Round until renewed.

10. © Copyright AAFA. All rights reserved. 2007 CAFTA-DR Status and Issues El Salvador, Honduras, Nicaragua, DR, & Guatemala Have Implemented Costa Rica Joining 1 st Quarter 2008? Cumulation Deal Pocketing Deal DR Trousers Sock Safeguard? Nicaragua TPL Retroactivity Regulations Published

11. © Copyright AAFA. All rights reserved. 2007 U.S. Apparel Imports from DR-CAFTA Region Source: OTEXA, U.S. Commerce Department.

12. © Copyright AAFA. All rights reserved. 2007 CAFTA-DR: Positive Signs Investments Up Nicaragua Apparel Imports Up CAFTA Apparel Import Decline Flattening US Yarn Exports Up Individual Product Growth –Dresses40 percent –PJs167 percent

13. © Copyright AAFA. All rights reserved. 2007 What to Do About China? - Huge budget deficit - Vocal and active “blame China” crowd - China Concerns: - Labor/human rights - IPR Issues (WTO) - Currency - Subsidies (WTO) -Politically popular to use trade remedies/safeguards - CVD Issues - Expect China legislation - Wrapped up in “enforcement” debate

14. © Copyright AAFA. All rights reserved. 2007 A few words on Vietnam WTO Accession – January 11, 2007 –Quota free on January 11, 2007 Vietnam PNTR Approved Anti Subsidy Safeguard –Expires January 10, 2008 (July 10, 2009) Dole/Graham commitment –Monitoring –Review every 6 months –Earliest liability for AD duties – mid-August 2006 –Expires January 20, 2009 –Electoral Mischief? –Precedent for China?

15. © Copyright AAFA. All rights reserved. 2007 For the rest of the Bush Administration… June 30, 2007 – Expiration of TPA June 30, 2007 – Expiration of ATPDEA December 31, 2007 – Expiration of TAA January 10, 2008 – Expiration of Vietnam safeguard September 30, 2008 – Expiration of CBTPA December 31, 2008 – Expiration of China agreement December 31, 2008 – Expiration of GSP January 20, 2009 – Expiration of Vietnam monitoring

16. © Copyright AAFA. All rights reserved. 2007 Final thought

17. © Copyright AAFA. All rights reserved. 2007 Final thought

18. © Copyright AAFA. All rights reserved. 2007 American Apparel and Footwear Association 1601 N. Kent Street, 12 th Floor Arlington, VA 22209 703-797-9041 slamar@apparelandfootwear.org www.apparelandfootwear.org Thank You