Promoting Trade and Investment Opportunities in the African Apparel and Textiles Industry

Last month, fashion forward and culturally relevant designs were showcased at the 2013 runway shows of Africa Fashion Week here in New York City. 

Having attended the show, I was dazzled and impressed with the creativity and detail of pieces by designers like Aliakim, Demstiks by Reuben Reul, Moroccan Caftan NY, and Ms. Ray Couture, all of whose designs are shown in the images below.

Cotton was present in many of the pieces shown on the runway, and turning to comments made by Rajeev Arora, Executive Director of the African Cotton and Textile Industries Federation (ACTIF), in the recent article “Changing Perceptions Toward Modern Africa,” published in Cotton Africa and found here, offers some perspective into the current state of the African market.

“Currently, the demand for fabric in the Sub-Sahara African market far exceeds the present production and supply. Considering the economic cost in sending African cotton to Asia for processing into fabric before shipping it back to Africa to be cut and sewn into garments, ACTIF is playing a key role in cutting this cost by ensuring that the fabric is fully produced adequately in Africa.

This calls for urgency in exploring the opportunities for investing in weaving, spinning, dyeing, and finishing in the region.  In line with this achievement, African governments should be taking initiatives in creating investment-friendly regimes as currently being witnessed in the case of Ethiopia. Also there has been a remarkable increase in support by international organizations such as Business Advocacy Fund that approved its support to ACTIF in carrying out AGOA [African Growth and Opportunity Act] outreach programs.

 Other international organizations, such as Innovations for Poverty Action (IPA) are also actively conducting studies on how to improve various industrial sectors including the Textile and Garment sector across Africa. 

Given the current stake, I would like to urge all stakeholders in the cotton value chain as well as supporting partners in Africa to support ACTIF’s initiatives as it represents the interests of the CTA value chain of Africa to the international market, as a viable competitor.”

And indeed, rumor has it that already here in the U.S., behind-the-scenes activities are taking place in an effort to have the AGOA agreement extended well before its 2015 expiration.

Have you heard anything about this as well?

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Corporate Officer of Men’s Suit Importer Avoids Joint Payment of $2,392,307 in U.S. Customs Penalties

On July 30, 2013, in Slip. Op. 11-527, U.S. v. Trek Leather, Inc. and Harish Shadadpuri, the Court of Appeals for the Federal Circuit (CAFC) reversed a U.S. Court of International Trade decision to impose penalties on the corporate officer of an “Importer of Record.”

“Trek Leather” (Trek), whose President and sole shareholder is Mr. Shadadpuri, was the Importer of Record for seventy-two (72) entries of men’s suits.  Mr. Shadadpuri is also a 40% shareholder to “Mercantile Electronics,” which was the consignee of these shipments.

Both Trek and Mercantile Electronics provided “assists” (in the form of fabric) to their suit manufacturers and failed to declare their value to US Customs.  Mr. Shadadpuri even admitted that he knew Trek (the Importer of Record) should have included the value of fabric assists in its duties but did not bother to do so.

 US Customs therefore brought a lawsuit claiming that under 19 USC §1592, both Trek and Mr. Shadadpuri, in his personal capacity, were liable for a penalty of $2,393,307 for fraudulently, knowingly, and intentionally understating the dutiable value of the imported men’s suits. 

Since Trek, a corporation, was the Importer of Record, Mr. Shadadpuri argued he could only be personally liable if the government established that he had pierced Trek’s “corporate veil” or established that he had either committed fraud, or aided and abetted Trek’s fraud, making him liable under 19 USC §1592.

 As Trek had conceded during the course of the litigation however, that its activity rose to a level of gross negligence, the government abandoned its fraud claim against Trek and instead proceeded alternatively on a claim of gross negligence.

 

Mr. Shadadpuri in his defense, argued that corporate officers of an Importer of Record are not directly liable for penalties under 19 USC §1592 – and the court agreed. 

 The CAFC’s 1999 decision in United States v. Hitachi America, Ltd., 172 F.3d 1319 (Fed. Cir. 1999), held that because one cannot “aid and abet” negligent conduct, Mr. Shadadpuri could not be liable for Trek’s admitted negligence unless the government could prove he was acting as Trek’s alter ego rather than as an officer of the corporation acting in his capacity as such.

 

The CAFC, agreeing with Mr. Shadadpuri, stated that under the basic principles of corporate law, Mr. Shadadpuri could not be personally charged with a claim of negligence for the actions he took on behalf of the corporation.

In CAFC’s own words:

 
“[T]he government [US Customs] has asked us to adopt a broad legal principle that would expose all corporate officers and shareholders to personal liability for negligent acts they undertake on behalf of their corporation.  Absent an explicit statutory basis for doing so, we decline to believe Congress intended to supplant the common law so completely…”

 To read the full decision, click here.

 

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AFL-CIO Sought Removal of GSP Benefits on Bangladesh Five (5) Years Ago Due to Worker’s Rights Deficiencies

Five (5) years and several high-profiled tragedies later, GSP treatment of all goods of Bangladesh origin will be suspended, effective September 3, 2013.

GSP stands for the Generalized System of Preferences which allows for the duty-free entry of roughly 3,500 GSP eligible products.

The AFL-CIO exists to represent people who work.  Read their mission statement below.

In 2007, the GSP Subcommittee accepted for review a GSP country practice petition submitted by the AFL-CIO seeking the removal of GSP benefits for Bangladesh based on the country's non-compliance with the GSP statutory eligibility criteria related to worker rights.

The GSP Subcommittee held public hearings on the petition in October 2007, April 2009, and January 2012, and also invited public comments on the petition on several occasions.

In 2011, U.S. imports from Bangladesh under GSP totaled $26.3 million. A full list of U.S. imports from Bangladesh under GSP may be found in the www.regulations.gov in docket number  USTR-2012-0036-0001.

While the leading GSP imports from Bangladesh included tobacco products, sports equipment, china kitchenware, and plastic articles, by being a GSP beneficiary country, it also had duty-free treatment on a number of textile accessories and some women’s or girls wearing apparel.

After reviewing the most recently available information, including updated reports from the AFL-CIO, the GSP Subcommittee believed that the lack of progress by the government of Bangladesh in addressing worker rights issues in the country warranted consideration of possible withdrawal, suspension, or limitation of Bangladesh's trade benefits under GSP. 

By statute, i.e., law, however, such change in Bangladesh's trade benefits under GSP required the President to make a determination, which he finally did.

On June 27, 2013, by Proclamation, President Obama revoked Bangladesh’s privilege of receiving treatment as a beneficiary developing country GSP.

As stated in his Proclamation, the reason for the revocation was because Bangladesh “has not taken or is not taking steps to afford internationally recognized worker rights to workers in [its] country."

The original petition and other information related to the review of Bangladesh are available for public viewing on www.regulations.gov in docket USTR-2012-0036.

For more information on GSP and GSP Eligible Products, click here.

AFL-CIO MISSION STATEMENT (as per its website)

The American Federation of Labor and Congress of Industrial Organizations is an expression of the hopes and aspirations of the working people of America.

We resolve to fulfill the yearning of the human spirit for liberty, justice and community; to advance individual and associational freedom; to vanquish ­oppression, privation and cruelty in all their forms; and to join with all persons, of whatever nationality or faith, who cherish the cause of democracy and the call of solidarity, to grace the planet with these achievements.

We dedicate ourselves to improving the lives of working families, bringing fairness and dignity to the workplace and securing social equity in the Nation.

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