Issues to Watch in 2021

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Like so many industries in the US, the fashion and retail sector has been severely impacted by the pandemic.

Non-essential retail was shuttered by mandatory stay-at-home orders and unprecedented levels of unemployment resulted in drastic cuts in consumer spending.  But, despite this devastating economic situation, many in the fashion community have risen to the challenge and pivoted production from mini-skirts to masks and from evening gowns to hospital gowns.  

While the increased access to the vaccine, proper social distancing and other precautions are helping to turn the tide, the industry is still in desperate need of relief.  

The New York City Bar Fashion Law Committee, https://www.nycbar.org/member-and-career-services/committees/fashion-law-committee, wrote to the New York Congressional Delegation early in the pandemic to propose targeted relief provisions for the fashion and retail industry.  https://s3.amazonaws.com/documents.nycbar.org/files/2020708-FashionStimulusReliefCOVID.pdf  Recommendations included: 

·  A Modification to the Paycheck Protection Program (PPP) to extend time limitations for the use of PPP funds for a period of 6  months.

·  Acceleration of the Net Operating Loss (NOL) Carryback. 

·  The creation of a stability fund – a federal direct assistance program to provide much needed liquidity to the industry to pay rent, taxes, vendors and current and new staff.

·  Grants or tax incentives to cover the increased cost of compliance with the new Occupational Safety and Health Administration (OSHA) requirements, along with a free compliance training program could alleviate the financial burden on the retail establishment. 

The need has not diminished in the new year. The American Apparel and Footwear Association (AAFA) https://www.aafaglobal.org, along with the Accessories Council https://accessoriescouncil.org, the Council of Fashion Designers of America (CFDA) https://cfda.com, and the Travel Goods Association https://travel-goods.org,  wrote to Congressional leadership to ask for additional relief on the next stimulus package.  Recommendations included: 

·  A federal, short-term backstop for credit insurance

·  Limited legal liability protection 

·  Return to workplace incentives

·  Healthy Workplaces Tax Credit – for businesses that retrofitted facilities and purchased personal protective equipment (PPE) to protect employees and customers

·  A duty drawback for charitable donations to fix a problem in current law that disincentivizes donations of imported excess inventory.

https://www.aafaglobal.org/AAFA/AAFA_News/2021_Press_Releases/Fashion_Industry_Highlights_Stimulus_Needs_Letter_to_Congress.aspx

In one of the first policy tests of the new Biden Administration, the President will be negotiating with Congress to pass a new stimulus bill.  PoliticallyInFashion will be watching and encourages the fashion and retail industry to continue to let your elected leaders know why this relief is crucial for your busines – and your customers – their constituents.  

The United States is a country of immigrants – from the Mayflower to today. But, the mechanics and legality of immigration remains a top public policy issue, while also a deeply personal issue for so many.  

Immigration laws and regulations impact the fashion industry in many ways, including access and retention of top talent and the cost of navigating a broken system.   Designers often rely on H1B visas and the H-1B program allows companies in the United States to temporarily employ foreign workers in occupations that require the theoretical and practical application of a body of highly specialized knowledge and a bachelor’s degree or higher in the specific specialty, or its equivalent. Congress sets the cap each year for the allotment of H1B Visas.  However, in June, President Trump signed an executive order to suspend new H-1B through this calendar year.   Joe Biden has vowed to lift these restrictions when in office.  In addition, models and designers often rely on 01 nonimmigrant visas, a specialized program for an “individual who possesses extraordinary ability in the sciences, arts, education, business, or athletics, or who has a demonstrated record of extraordinary achievement in the motion picture or television industry and has been recognized nationally or internationally for those achievements.” 

After being sworn-in as the 46th President of the United States, Joe Biden signed several Executive Orders and memorandum during that first evening.  Amongst these was a directive to the Secretary of Homeland Security, in consultation with the Attorney General, to take all appropriate actions consistent with applicable law, to preserve and fortify DACA, the Deferred Action for Childhood Arrivals program.  DACA guidance originated in the Obama Administration, and was designed to defer the removal of certain undocumented immigrants who were brought to the United States as children, obeyed the law, and stayed in school or enlisted in the military.  DACA and associated regulations permit eligible individuals who pass a background check to request temporary relief from removal and to apply for temporary work permits. 

On February 2nd, President Biden signed three additional Executive Orders to strengthen the US immigration system:

(1)  Establishing an Interagency Task Force on the Reunification of Families

(2)  Creating a Comprehensive Regional Framework to Address the Causes of Migration, to Manage Migration Throughout North and Central America, and to Provide Safe and Orderly Processing of Asylum Seekers at the United States Border

(3)  Restoring Faith in Our Legal Immigration Systems and Strengthening Integration and Inclusion Efforts for New Americans

This early action by the new Biden Administration is expected to be the first in many immigration related policy developments.  During his campaign, President Biden vowed to address immigration issues in a comprehensive manner.  A broad immigration bill is expected in the next few weeks.  It will then be up to Congress to act.  

PoliticallyInFashion will be watching and encourages the fashion and retail industry to reach out to your elected leaders and let them know why immigration is important to you, your business, and your employees – their constituents.  

A substantive plank in Joe Biden’s presidential platform was a plan to strengthen American manufacturing and American workers and increasing provisions for domestic production and supply chains.  Specifically, he called for providing incentives and financing tools to assist smaller US manufacturers, particularly ones owned by women and people of color.  In addition, he wants to on-shore the components of critical supply chains, including the raw materials, the production and the transportation.

In one of his early actions as President, Joe Biden signed an Executive Order (EO) declaring it to be the policy of his Administration that, “the United States Government should whenever possible, procure goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive.”  While this EO only applies to government procurement, and not private sector policies, it does send a strong message of the importance of shoring up US production, and will increase physical operations which will in turn benefit private sector manufacturing, including for fashion and retail.  For example, if the US government needs to buy products made on US soil, then there will need to be factories in the US to complete the production.  These factories can also be utilized for production of items bought and sold by the private sector.  Unfortunately, over the past 50 years, the US has ceded much of its manufacturing infrastructure – both mechanical and human – to countries overseas.  While we cannot flip a switch and re-shore all our production capabilities, the commitment to US production cannot begin soon enough.  

Congress has also been looking at means to increase onshore production.  New York Congresswoman Carolyn Maloney, whose district includes much of the fashion industry in New York City, introduced legislation last Congress requiring domestic production of Personal Protective Equipment (PPE).  Her bill, the Made in America: Preparation for a Pandemic Act has three main components:

1)  Require the Strategic National Stockpile maintain at least enough PPE to sustain the US through a year of a global pandemic

2)  Require 25% of the PPE be produced in the US

3)  Create a tax credit to assist manufacturers with the cost of developing  or expanding domestic sources for PPE production within the US. 

When the health crisis was cresting in NYC, there was a dearth of PPE for frontline workers.  In a testament to New York spirit, ingenuity, creativity and compassion, many brands, such as Cristian Siriano and organizations like Fashion for the Front Lines, sprung into action and developed production systems to create life-saving PPE.  But, as a nation, we should not have to be dependent on the generosity of individuals to protect us.  The federal government should be responsible for the health and safety of its citizens.  To learn more about this legislation, go to: https://maloney.house.gov/media-center/press-releases/rep-maloney-unveils-new-legislation-requiring-domestic-production-of-ppe

But, what does “Made in America” really mean? As we have all been confined to our homes these past year, we have begun to think more about where the products we use everyday would call home.  Where were they made?  Across the globe, across the country, or across town?  The answer is not always straightforward.  

The Federal Trade Commission (FTC) is responsible for, among many other things, enforcing the prohibition on unfair or deceptive acts which affect commerce.  

Under current law, an item can be labeled as Made in the USA if it is, “all or virtually all” made in the United States.  The FTC provides guidance here: https://www.ftc.gov/system/files/documents/plain-language/bus03-complying-made-usa-standard.pdf

On September 19, 2019, the FTC held a Made in the USA Workshop.  Trade, consumer and business groups, as well as manufacturers and elected representatives participated in the event.  Topics discussed included: consumer perception of Made in the USA claims, factors the FTC should consider in enforcement and what changes should be made to the enforcement regime.  Although the FTC requested input on how to handle the issue of questionable overseas marketers that make deceptive claims to US consumers, they did not receive any comments.  The FTC staff report which was issued on June 19, 2020  can be found here: https://www.ftc.gov/system/files/documents/reports/made-usa-ftc-workshop/p074204_-_musa_workshop_report_-_final.pdf.

The FTC has also announced a proposed rule on Made in the USA claims.  Specifically, it, “will apply to product labels making Made in USA and other unqualified U.S.-origin claims.”  The proposed rule will, “prohibit marketers from including unqualified Made in USA claims on labels unless: 1) final assembly or processing of the product occurs in the United States; 2) all significant processing that goes into the product occurs in the United States; and 3) all or virtually all ingredients or components of the product are made and sourced in the United States.” A final rule has not yet be issued. 

Be sure to check back here for more information on Made in the US as policies develop...

President Biden has long been an outspoken advocate of returning the US to the Paris Accord.  Signed by nearly every nation on the globe in 2015, it creates an international framework for addressing greenhouse gas emissions to limit the rise in global temperatures along with support for developing nations and transparent and robust climate goals.

In one of hist first actions as President, Trump announced his intention to remove the US from this agreement.  

By contrast, in one of President Biden’s first actions as President, he signed an Executive Order in which he accepted the Paris Agreement of December 12. 2015 on behalf of the US.  

This is just one of the initiatives we can expect to see coming out of the new Administration.  On January 27, he announced a sweeping initiative to tackle climate issues at home and abroad. Included are provisions to establish senior advisors, interagency working groups and mechanisms for input from the private sector on a broad array of environmental issues.

The Administration has created the Civilian Climate Corps Initiative, “to mobilize the next generation of conservation and resilience workers and maximize the creation of accessible training opportunities and good jobs.” In addition, it has established the White House Environmental Justice Advisory Council, which will be comprised of individuals, “with knowledge about or experience in environmental justice, climate change, disaster preparedness, [or] racial inequality…”

Environmental issues are of great importance to the fashion industry.  Often cited as one of the major polluters in the world, the fashion industry has been taking concrete steps to change this pattern of behavior from cleaner factories, reduced water consumption and decreased waste. Fashion should have a seat at the table in climate and environmental discussions in the US and on the world stage. 

Check back at here for information on how you can involved…

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