The U.S. trade deficit, China’s fixed exchange rate, fraudulent import practices and unleveled playing fields caused by unfair tariffs – all are genuine concerns for what remains of the state’s jewelry manufacturing industry.
But what is the U.S. government doing to alleviate these problems?
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Pushing for zero-for-zero tariffs in the jewelry industry is one example, said Christopher A. Padilla, U.S. assistant secretary of commerce for export administration. But India, which imposes a 15- to 30-percent tariff on jewelry coming from the United States, is fighting the push for more balanced trade practices.
And it’s causing quite a stir in Washington, said Padilla, who visited Rhode Island recently to present an Export Achievement Certificate to the Manufacturing Jewelers & Suppliers of America in Providence.
Legislators are discussing the possibility of not giving duty-free access to countries such as India, he said. They are rethinking which nations should be included on the list for the U.S. Generalized System of Preferences program, which was designed to promote developing countries’ economic growth by giving them preferential duty-free entry to the U.S. market.
Padilla’s example and other answers to questions during a roundtable discussion that followed the award ceremony gave MJSA members a generally positive outlook on the government’s dealings with important trade issues.
“I thought this was very encouraging,” said Edwin “Ted” Leach II, president and CEO of Leach & Garner, a North Attleboro-based manufacturer of findings and raw materials for jewelry manufacturers. “It’s exciting to see they are looking at trade issues in a much more sophisticated way.”
Leach said his company had to expand into foreign markets in order to survive, and as a result, export sales have accounted for 22 percent of its total sales this fiscal year.
Providence Chain Co. also had to start exporting aggressively in order to survive, said Tim Ouhrabka, executive vice president of the 135-employee jewelry chain manufacturer. The company exports about 40 percent of its product.
Padilla said expanding into foreign markets is essential for manufacturers. It means the industry is not giving up. That’s why the U.S. Department of Commerce recognized the MJSA with an Export Achievement Certificate, he said.
The award recognized the trade association’s efforts to establish a U.S. pavilion at JOYA – one of the largest jewelry trade shows in Latin America. The trade show drew 15,000 in Guadalajara, Mexico, this year. Five MJSA member companies attended the trade show, said Frank Dallahan, president and CEO of MJSA. Three were from Rhode Island.
Providence Chain has seen firsthand the kind of revenue growth that can come from entering foreign markets via trade shows and trade missions, Ouhrabka said.
“American manufacturers should take time to research these markets,” he said. “You can really sell based on quality.”
Still, some manufactures say there’s much to be done to make fair trade fairer.
Michael Akkaoui, chairman of MJSA’s board of directors, asked Padilla why the United States won’t impose higher tariffs on Chinese goods, to make the playing field more level.
He asked whether it had to do with needing China on our side, where North Korea is concerned.
Padilla said no. There is no correlation. “We have a big, multifaceted relationship with China,” he said. “We can walk and chew gum at the same time.”
Legislators have looked at imposing a 28-percent tariff on all Chinese goods, he said. But President George W. Bush’s administration is against the idea, contending that it would increase the price of everyday goods and have a negative overall economic impact.
Akkaoui then asked why the same consideration wasn’t given to consumers in regard to gas prices, which have risen to record levels in recent years.
“To protect the price of a flashlight at Wal-Mart, that’s not consistent,” said Akkaoui, who is also the president and CEO of Tanury Industries, a metal finishing company employing 150 people in Lincoln.
“[China] needs to have a more flexible, market-based exchange rate,” Padilla said. “I think we’re making progress convincing them it’s for their own good.” If China had a market-based exchange rate, it would have a positive impact on the U.S. trade deficit, he said.
On a separate topic, Leach told Padilla that foreign jewelry exporters sometimes deceive U.S. port authorities to get lower tariffs. Jewelry exporters might link bracelets together, for example, to give the illusion they are of higher value and deserving of lower tariffs, he said.
Padilla’s advice: Alert customs inspectors at the port. “Our duties collectors want to get as much as possible,” he said. “They might want to hear about that.”
Padilla added: “Your industry is one on the front lines of globalization and facing tremendous import competition from China and Thailand.” There are two ways to respond, he said. One is to sit back and hope it goes away. The other is to fight back by expanding into foreign markets.
“I applaud the industry for its strategy,” Padilla said. “For not just wishing it will go away.”
