International Trade Flap Focuses On Alabama Company

Exxel Outdoors says it operates the last U.S. factory producing synthetic-filled sleeping bags, and the plant's future is threatened by what it calls cut-rate, unfair competition from overseas.

HALEYVILLE, Ala. (AP) -- When it comes to naming places associated with specialized matters of international trade and tariffs, Haleyville is usually not on the top of the list, minutes away as it is from the natural paradise of the Bankhead Forest and abundant hunting and fishing lands.

But ground zero it is in the latest flap over international trade and what one company is calling cut-rate, unfair competition from overseas that is being ignored by the federal government.

Haleyville, with a population of about 4,300, is home to Exxel Outdoors, which says it operates the last U.S. factory producing synthetic-filled sleeping bags, the mass-market type for family camping and sleepovers.

The company makes about 2 million of them a year, found on the shelves of Walmart and other mass retailers, sometimes for little more than $10 when on sale. Those inexpensive bags have been providing a good living for more than 10 years for about 65 workers in Winston County, where unemployment has been hovering at about 15 percent in recent months.

But the good times at the bag plant are in danger, according to the company. Exxel, owned by California textile industry veteran Harry Kazazian and partners, says competitors from Bangladesh are using an international-trade exemption in a way it was never supposed to be used to flood the United States with cut-rate bags. Efforts to gain intervention from the federal government have been fruitless.

"It is simply not fair," Kazazian said from his Los Angeles office, where the company has design and distribution centers. "And I am tired of this constant tide of decisions made against American businesses."

At the heart of the dispute is a trade policy called the Generalized System of Preferences. It is a program, last authorized by Congress in 2006, by which members of the World Trade Organization have agreed to allow certain products to be imported from developing nations free of tariffs.

The idea is to stimulate their economies and promote global economic growth. Certain import-sensitive products, such as textiles, traditionally have been exempted from GSP, meaning they can't come into the United States without paying a tariff to equalize their product input costs with the product input costs incurred by domestic manufacturers.

But Exxel was shocked, Kazazian said, to find that sleeping bags don't qualify as a textile or related product. Companies in Bangladesh, he said, discovered the loophole, and their sudden tariff-free imports puts U.S. jobs in danger.

"A sleeping bag isn't a textile?" Kazazian said. "It's made of fabric and fiber and has a zipper, for crying out loud."

For now, growth plans at Exxel are on hold; the company had planned to add a shift and hire another 50 workers. Kazazian and partners already have invested millions in the plant, which was slated for closure when they bought it about 10 years ago. Orders, placed by retailers up to nine months in advance, are falling fast.

It is no secret why, Kazazian said: Bangladesh-made bags account for 7 percent of total sleeping bag imports so far this year, up from less than 1 percent in 2009. China is the largest sleeping bag importer, but Chinese manufacturers pay a tariff, as their country does not qualify for the GSP booster seat that Bangladesh companies get.

"My monthly health care costs for our workers is five times their entire monthly labor cost," Kazazian said. "The playing field is not level."

While no one in Haleyville is going to say it, there are objections from the field of economics to Kazazian's position. The "free trade" theory advocates open market competition where companies and prices find their own levels across borders, independent of any intervention by any government on either end. That, of course, is a very hard situation to police, as many governments around the world themselves own factories, or subsidize them, which puts private companies in other countries at a stark disadvantage.

Others call free trade a historical myth invented by financial speculators late in the game. Author Ha-Joon Chang argued in his 2008 book "Bad Samaritans:The Myth of Free Trade and the Secret History of Capitalism" that the nations which in recent years have been the biggest proponents of free trade — the United States and the United Kingdom — rose to power, prosperity and prominence precisely by severely limiting access to their markets.

No matter the intellectual arguments, Exxel has found plenty of sympathetic ears among Alabama's congressional delegation. Sen. Jeff Sessions, R-Mobile, and Rep. Robert Aderholt, R-Haleyville, have both attempted to intervene with the U.S. Trade Representative, the official foreign trade adviser to the president. A formal petition for urgent relief was filed in January, but was rejected without comment or explanation by the White House.

Now, the nation's mass retailers are preparing their orders for the millions of inexpensive sleeping bags they will need to have on the shelves for next spring, when shopping for the upcoming camping season usually begins. And those orders, Kazazian said, aren't coming his way in the usual volume.

"They keep saying, 'Jobs, jobs, jobs,'" Kazazian said, speaking of President Barack Obama and other government officials. "But then they go and act in a way completely contrary to what they say."

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