US proposes textile flexibility in TPP trade pact
Textiles are a contentious issue in the Trans-Pacific Partnership (TPP) trade talks
The United States government has unveiled details of proposed flexibilities it wants to introduce into the planned Trans-Pacific Partnership (TPP) trade agreement which will allow importers to buy scarce clothing, textiles and yarns from outside the bloc.
Speaking at a New York conference this week, Kim Glas, deputy assistant secretary for textiles and apparels at the US Department of Commerce, suggested proposals that may appease concerns of US garment and clothing importers concerned about restrictive 'yarn forward' rules in the draft TPP.
Glas told the United States Association of Importers of Textiles and Apparel (USA-ITA) event that the US has recommended creating a 'short supply' list of yarns, fabrics, and textiles that cannot be sourced or manufactured from any of the member TPP countries.
These products would still be eligible for TPP duty privileges, she added, but - crucially - could be freely imported from other countries.
Once the agreement is finalised, TPP nations should include the US, Vietnam, Brunei, Chile, New Zealand, Singapore, Australia, Malaysia and Peru, plus new members Canada and Mexico.
Washington is looking for support from TPP partners, given a range of the textile and clothing products may not be available in the bloc. For instance, Vietnam, the second largest textile and apparel manufacturer within the TPP region, mainly sources its yarn and fabrics from China and other Asian nations.
Short supply mechanism
Under the American proposals, Glas said, there would be a permanent 'short supply' list, which includes textile products that are specifically sourced and manufactured outside the TPP region - for instance, products such as certain types of tweeds that exclusively come from Britain.
There would also be a temporary 'short supply' list effective for three years. These products include those that may not be immediately available within the TPP region, but can be manufactured in those countries in the future with the right type of technology and investment.
And to maximise the eligibility of certain textiles and apparel products for duty preferences and other trading rights, dynamic flexibilities taking account of market and production shifts will have to be considered, Glas said.
"For the TPP, this last round of talks in Auckland was the very first time that we presented fully the 'short supply' concept to all the parties to include the three-year list and the permanent short supply list that will actually give flexibilities on day one of the TPP implementation," Glas told just-style.
The TPP's rule of origin provisions are based on the 'yarn forward' concept, which basically states that all products in a garment, from the yarn, fabric, sewing thread and the final garment itself, must be made within the TPP region, in order to qualify for duty preference.
The yarn forward rule means that TPP member countries would benefit from the trade agreement, not outside players such as China.
"We got a lot of good engagement in the Auckland round of talks on the short supply list," Glas said. "We had a lot of member countries asking questions about the short supply mechanism. We had some good energy at the table. We hope to make good progress on this in March."
Putting together a 'short supply' list will likely be completed by June this year, Glas said, with TPP negotiations expected to close by the end of 2013. She urged US textile importers to suggest products that should be included.
Bumpy ride ahead
However, David Spooner, the Washington-based counsel of the US Association of Importers of Textiles and Apparel, said he expects negotiations on the TPP to be far from smooth.
"There's a great disconnect between the rhetoric pushing hard to close the TPP agreement and the need to grant President Obama the trade negotiating authority to close the TPP," Spooner said during a panel discussion.
He believes that without Congress granting that trade authority for the president (allowing him to present a completed text for a straight up-or-down vote by representatives and senators), it "would be impossible" to complete the TPP.
And the problem is that the 'yarn forward' rule has bred disagreements between groups such as the National Council of Textile Organizations (NCTO), which support this provision, and major US retailers.
This reflects American textile manufacturers' support for such provisions in other trade agreements (such as the Dominican Republic-Central America-United States Free Trade Agreement - DR-CAFTA) because it has kept, and even expanded, export markets for the country's textile products and maintained US textile worker jobs.
American retailers have, of course, taken a different view, wanting a free hand to import products.
Maureen Gray, vice president of international trade for Ralph Lauren and chairman of the USA-ITA, said at the event that the importer group will work with US negotiators over the next few weeks to "hopefully place less restrictive provisions" into the apparel section of the TPP.
She said the USA-ITA will be engaged in TPP negotiations "until there is an apparel provision that works for our industry."
The 15th round of talks on the TPP trade pact ended in December last year in New Zealand. Another round of talks is scheduled in March in Singapore.
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