By Alyssa Aquino

Law360 (May 1, 2020, 7:01 PM EDT) -- The fashion industry, which contributes nearly half a trillion dollars to annual domestic retail sales, urged Congress to loosen trade restrictions in the next COVID-19 relief bill, saying existing measures are insufficient to soften damage from the pandemic.

The American Apparel and Footwear Association, the Council of Fashion Designers of America and the Travel Goods Association told Senate Majority Leader Mitch McConnell, R-Ky., and Speaker of the House Nancy Pelosi, D-Calif., that they need flexibility to store unsellable merchandise without triggering trade duties and that their dwindling financial reserves are better spent covering employees' paychecks than paying tariffs.

"Deferring these tariffs — which will ultimately be repaid — gives employees access to critical resources they can use to support payroll and pay other critical business expenses," the organizations said in a letter Thursday.

The groups asked the lawmakers to broaden President Donald Trump's reprieve allowing hard-hit importers to put off paying standard U.S. tariffs for 90 days. They asked for that deferment to include imports made in the upcoming months as well as anti-dumping and countervailing tariffs and national security duties. 

The groups also asked Congress to temporarily allow products to maintain their tariff-free designation when transferred from storage warehouses in free trade zones to off-site facilities.

The mandatory closure of physical stores has forced businesses either to destroy or store their surplus products. However, there are not enough storage facilities in free-trade zones to accommodate the unsold wares, and businesses that transfer those products to off-site storage facilities will face a "cash flow crisis" if they're required to pay tariffs on those goods, the organizations said.

Allowing businesses to shuffle around their goods without immediately having to pay duties "will significantly ease cash flow concerns and provide retailers the opportunity to salvage goods to sell next year," the organizations said.

Congress should also lower the required collateral businesses must offer to obtain a customs bond with U.S. Customs and Border Protection in order to free up member businesses' cash, the organizations said.

"We are providing congressional leadership with an overview of what is on our industry's mind and what our members need to retain and reactivate as many Americans as possible in the workforce, so that we can recover quickly," American Apparel and Footwear Association President and CEO Steve Lamar said in an accompanying statement.

Michele Marini Pittenger, the president and CEO of the Travel Goods Association, said businesses within the travel goods sector are particularly vulnerable as the ongoing health crisis freezes travel and destroys the demand for suitcases. 

"This letter includes practical measures that can help our industry to survive now and assist us to get to the other side of this crisis. Now is the time to leave any tools in the toolbox, especially when so many jobs are at stake," she said.

Over the past few weeks, U.S. importers have petitioned the Trump administration to ease trade restrictions in light of a supply chain battered by the COVID-19 emergency. 

Trump bowed to some of the calls in mid-April, when he offered a 90-day extension on tariff payments to importers affected by COVID-19 lockdown orders. However, the reprieve was limited to imports made in March and April, and it did not put off the payment of anti-dumping and countervailing duties, national security duties on steel and aluminum or the scores of levies put on Chinese products over the last two years.

--Additional reporting by Alex Lawson. Editing by Stephen Berg.

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