Status check on pending policy matters: several issues impacting nonwovens still under microscope as Bush administration prepares to leave the White House

Nonwovens Industry, June, 2008 by Peter Mayberry, Jessica Franken

Now that the Bush administration is approaching its final six months and with the upcoming election season getting underway, it is a good time to take stock of various policy issues that are on the agenda for INDA, Association of the Nonwoven Fabrics Industry. In this article, therefore, we offer our readers and update on several matters of interest to our industry.

"First Sale" Rule

In March 2008 we reported that the U.S. Customs and Border Protection agency (CBP) had announced a proposal to eliminate its 20-year old practice of basing import value on the first price paid by the buyer. Known as "first sale" valuation, CBP historically calculated import value based on the price paid to the manufacturer in the exporting country but has now proposed to calculate value based on the last sale of goods before they are imported to the U.S. (e.g. the importer's price). The distinction is important because import value determines customs duties and other fees and taxes, and the "first sale" typically does not include things like mark-up, costs, overhead, and profits often found in the intermediate price. Not surprisingly, U.S. importers and retailers favor the "first sale" method and argue the proposed changes would increase duties by 8-15%.

UPDATE: When we last reported on this issue, INDA was polling members of its International Trade Advisory Board (ITAB) about the possibility of joining an industry coalition of importers, retailers, trade associations and others who oppose the proposed change. Based on input from the ITAB, INDA did join this coalition which, to date, has managed to generate significant press attention as well as strong bipartisan support in Congress. Indeed, 17 Senators and 51 Members of the U.S. House of Representatives have already sent letters to CBP opposing the proposal. More than 100 submissions have been filed in response to the CBP comment request, with opponents outnumbering supporters by 8-to-1. More recently, lawmakers included a provision in the recently passed Farm Bill (H.R. 2419, the Food, Conservation, and Energy Act of 2008) expressing the "sense of Congress" that first-sale valuation should remain in place until 2011 and, after that, CBP could only implement the proposed change after consulting with Congress and the business community, and then gaining approval from the Treasury Department.

CPSC Upholstered Furniture Flammability Standard

In December 2007, we reported that U.S. Consumer Product Safety Commission (CPSC) staff was seeking approval from the agency's commissioners to publish as a proposed rule a new draft national flammability standard for upholstered furniture. The staff's latest version contains performance, labeling and certification requirements and would place all upholstered furniture offered for sale in the U.S. into one of two categories: Type I or Type II. Type I would include furniture made with cover fabrics able to pass a smoldering ignition test, while furniture whose cover fabrics either cannot pass the test, cannot be treated with FR chemicals or if manufacturers do not want to use FR-treated cover fabrics would receive the Type II designation. This furniture would have to incorporate a barrier material able to pass a smolder-resistant test and a small open-flame ignition test.

UPDATE: Since we last reported on this matter, the CPSC unanimously voted to approve the draft, and it was published as a proposed rule in the March 4 Federal Register. At press time, CPSC was accepting public comment on the proposal until May 19, 2008. To view the CPSC's proposed furniture flammability standard online, visit: http://edocket.access.gpo.gov/2008/p df/08-768.pdf.

CPSC Reform Legislation

In November 2007 we reported that Sen. Mark Pryor (D-AR) had introduced legislation calling for major changes at CPSC in the wake of testimony regarding the Commission's limited ability to prevent dangerous and contaminated imports from entering the U.S. In addition to increasing CPSC funding and staffing, the CPSC Reform Act of 2007 (S 2045) looked to dramatically lower allowable lead thresholds in consumer products, require product labeling and independent third party safety certification, increase civil and criminal penalties for violations, give state Attorney Generals increased civil enforcement authority, limit federal preemption of state and local product safety laws and more. Of particular interest to our industry, the Pryor bill would have also specifically reversed federal preemption language included in the preamble of CPSC's 2006 Mattress Flammability Standard (an obstacle that has prevented states from setting different mattress flammability rules).

UPDATE: In December 2007, the House passed 407-0, its own version of CPSC reform legislation, the Consumer Product Safety Commission Modernization Act (HR 4040). Meanwhile, after S 2045 failed to move to the Senate floor for a vote, Sen. Pryor joined with Sen. Ted Stevens (R-AK) in introducing S 2663, a modified version of his original measure. This bill passed the Senate by a veto-proof margin this March.