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U.S. trade benefit renewal snagged on sleeping bags

By Doug Palmer

WASHINGTON (Reuters) - Valuable U.S. trade benefits for about 130 developing countries could expire at the end of the year because of a Republican senator's objection to duty-free treatment for sleeping bags from Bangladesh.

With Congress hoping to finish its work this week, Alabama Senator Jeff Sessions is blocking a vote on a bill to renew the Generalized System of Preferences program, or GSP, already approved by the House of Representatives.

GSP provides duty-free treatment for about 4,800 goods produced in developing countries to help them create jobs.

The House bill also renews trade benefits for Colombia, Peru and Ecuador under the Andean Trade Preferences Act and extends the Trade Adjustment Assistance program, which helps retrain workers who have lost their job because of import competition or a factory moving overseas.

"I'm not going to stand by and allow nations to cheat on their trade agreements and manipulate trade agreements that in effect destroy our industry," Sessions said last week in a speech on the Senate floor.

Supporters of Bangladesh say the country is not cheating, but only taking advantage of a provision in the GSP program that allows poor countries to export sleeping bags to the United States without paying a 9 percent import duty.

Earlier this year, President Barack Obama turned down a request to end the benefit for Bangladesh.

Sleeping bags have been in GSP since 1992, when U.S. policymakers determined they are not import sensitive.

Sessions says the sleeping bag exemption is a "loophole" that threatens jobs at Exxel Outdoors, a sporting goods manufacturer with a plant in his state.

China, which is not a GSP beneficiary, accounted for about 98 percent of all U.S. sleeping bag imports in 2009. But Bangladesh's shipments have risen this year.

The Obama administration, in response to concerns raised by Sessions and Exxel, conducted an "expedited review" of whether to revoke GSP benefits for sleeping bags.

Obama, upon the recommendation of U.S. Trade Representative Ron Kirk, decided against that. But at Exxel's request, the administration is considering the issue again as part of its regular annual review of the GSP program.

CellCorp Global, a Kentucky-based camping products designer that makes sleeping bags in Bangladesh, is fighting Exxel's request, which it says would raise prices for U.S. consumers and hurt employment at its own U.S. operations.

(Reporting by Doug Palmer; editing by Vicki Allen)

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