July 5, 2006 – Thanks to a decision Friday by the federal government to deny duty-free status to Philippine-made watches that were similar to those manufactured in the Virgin Islands, the V.I. watch industry will maintain its competitive edge.
Petitions for duty-free status were filed last year by the Philippine government and Timex Corp. under the federal government's "Generalized System of Preferences."
However, Brian Modeste, an aide to Delegate Donna M. Christensen, said the problem probably won't go away because countries like India and Thailand, where Timex has a presence, will try for duty-free status for their watches.
"It's likely to come up again," he said. Modeste said Timex left St. Croix several years ago.
He said that the U.S. International Trade Commission and the U.S. Office of Trade Representative made recommendations to President Bush that the petitions be denied.
He said that Christensen and local watch industry officials produced evidence at hearings before those two organizations that the local watch industry would be harmed if the Philippine watches were allowed to enter the United States duty free. He said Gov. Charles Turnbull's administration had its legal counsel send a letter.
Additionally, the officials argued that allowing the Philippine watches into the United States duty free would undermine a 2004 amendment to U.S. trade law aimed at protecting the V.I. watch industry. According to the press release, the federal government is required to increase federal subsidies to the V.I. watch industry in an amount equal to any reduction in watch tariffs.
Gov. Charles Turnbull said in the news release that granting duty-free status to Philippine watches and those from other countries would have affected the territory's economy.
"The watch sector is still our largest manufacturing sector of the territory's economy. It provides good paying jobs to many V.I. workers and supports other jobs throughout our economy," he said.
Turnbull called the decision a major victory.
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