Spotlight on...Apparel and textiles split on new US FTAs
The drafting of new Free Trade Agreements (FTAs) is a tricky balancing act at the best of times; but these are not, for the US and indeed the world at large, the best of times. As such, perhaps it’s little wonder that the long-awaited passage this week of legislation implementing no fewer than three FTAs – between the US and Panama, Colombia and South Korea – has divided opinion among the US retail, apparel and textile industries.
Congress approved the FTAs yesterday (12 October), leaving President Obama to add his signature and make them law. But the arguments rage on as to whether this will give a much-needed boost to the ailing US economy – or simply kick it when it’s down.
Loosely speaking, the dividing lines are drawn up depending on how international your industry’s interests are. So retailers and the apparel and footwear sectors are broadly positive, salivating at the prospect of increased trade opportunities in areas with huge growth potential like south-east Asia and Latin America.
“This is a major step toward free and open trade and the creation of jobs for American workers,” said National Retail Federation (NRF) president and CEO Matthew Shay.
“Limits on international trade have been allowed to hold back our nation’s economy for far too long, and tearing down those barriers is one of the keys to economic recovery.”
Similarly, American Apparel & Footwear Association (AAFA) president and CEO Kevin Burke claimed the passing of the FTAs “reaffirms our competitiveness in the global marketplace”.
He added: “The benefits these agreements have for more than 4m US apparel and footwear workers and our consumers are quite clear.
“By opening these three important markets to two-way permanent trade flows, we gain access to more than 100m new consumers while continuing to deliver quality and affordable product right here at home.”
That’s the case in favour, and the AAFA backs it up with figures. Since 2002, it says, US cotton exports to Colombia have more than quintupled, while yarn and fabric exports have doubled, creating a market worth about US$300m.
Similarly, US apparel exports to Korea have also increased by five times over the past decade, making the country the fourth largest market for US-made finished apparel behind Canada, the UK and Japan.
Textile workers, however, are less than convinced. Nearly 27,000 worker petitions were delivered to Members of Congress in the run-up to the FTA vote, calling for the Korea FTA to be scrapped.
The reason, said the National Council of Textile Organisations (NCTO), was the removal of “critical” enforcement measures, creating an “easy gateway” for low-priced Chinese goods to be illegally shipped through Korea and on to the US.
Furthermore, NCTO president Cass Johnson argued that the phase-out schedule provided Korean exporters with greater access to the US, while domestic textile companies would have to wait years for equal access in Korea.
“We want to ensure that free trade agreements actually support increasing exports and increasing textile jobs in this country,” said Johnson. “We will strongly support agreements that provide an equal playing field for the beneficiary country, but will strongly oppose those that don’t.”
US manufacturing jobs
Meanwhile, the American Manufacturing Trade Action Coalition (AMTAC) is concerned about the direct impact of the Korean FTA on US manufacturing jobs, pointing out that textile production is likely to drop as a result of it.
“A likely decline in textile output almost certainly means the loss of US textile jobs,” said AMTAC executive director Auggie Tantillo.
“If the US wants to create more jobs through trade, we should be negotiating free trade agreements with countries like Britain, Italy or Germany.
“These countries not only have large populations with the financial capability to buy US-made goods in significant quantities, but they also have a recent historical track record of not raising non-tariff barriers to buying US exports.”
To which the hard-headed economic response would be that strong long-term growth is not likely to come from the stuttering economies of the UK or the euro zone, but from Latin America and Asia Pacific.
That, at least, will be the hope of the Obama administration as these FTAs are enacted.
They will also want to believe that Tantillo’s closing words are mistaken: “As the high US trade deficit in manufacturing shows, deals like approving China’s accession to the World Trade Organization, the Korean FTA, and the proposed TPP (Trans-Pacific Partnership) with Vietnam are almost all about producing in Asia and selling to the Carolinas or the Midwest, rather than the other way around.”
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