Speaking with style: Francisco Sánchez, US Department of Commerce
Francisco Sánchez, US Under-Secretary of Commerce for International Trade
New bilateral trade deals struck by the Obama administration with South Korea, Panama and Columbia should have a positive impact on the US textile and clothing sector, Francisco Sánchez, Under-Secretary of Commerce for International Trade, tells just-style.
These deals were approved by the US Congress in October, with the South Korea deal coming into force on 15 March and the Latin American agreements expected to start operating by October this year.
In an exclusive interview with just-style, Sánchez predicts the deals will appreciably boost American textile and apparel exports, spurring on growth in the sector: "I think that [the FTAs] will have a significant impact."
Upon implementation of the Colombia and Panama agreement, 99% of qualifying textile apparel products will enter duty-free. And Colombia is already one of the faster growing export markets for textile products with a 34% growth rate in 2011 compared to the previous year. "This is pretty significant," Sánchez says.
Looking at the health of the American textile and apparel industry in general, while he admits he cannot predict the future, he is very happy with the growth experienced by the sector in the last two years. Sánchez says that in 2011, US exports of apparel and footwear were worth US$5.7bn, an increase of 14% on 2010.
"In the last two years, US exports of textiles and apparel grew by 35%, which is just a phenomenal growth [and] one that we are very happy with.
"These are important numbers and are contributing significantly to the President's National Export Initiative," he says, referring to a plan aimed at boosting US exports from all industrial sectors by 15% before 2014.
In order to reach these export goals, the Obama administration has encouraged US businesses to reach out to both foreign governments and international buyers for new export contracts, and developed additional assistance for small and medium-sized businesses to expand their exports worldwide.
Sánchez argues there is room for improvement on these figures and, as the world's fourth largest exporter of textiles and apparel, the US textile industry could help push exports over this target. This would especially be the case following the implementation of the three new free trade agreements, and if negotiations for the Trans-Pacific Partnership (TPP) multilateral free trade agreement are successful.
Counterfeit clothing and textiles
One area of concern, however, is the growth in counterfeiting of clothing and textile products worldwide. As Latin America's third largest economy, Colombia could help by implementing strategies to prevent counterfeiting written into the free trade deal with the US, Sánchez says, which would better protect American textile manufacturers and owners of brands and trademarks.
"Counterfeiting is something that is a huge concern for us in a whole range of sectors, not just the textile [and] apparel industry," he notes. "It is an area that we have worked on closely with our trading partners.
"Specifically, we are working with the government of Colombia to ensure that Colombian trademark laws meet the high standards that were set in the FTA. And strong trademark laws are going to mean that US trademark owners are going to obtain strong protection for their mark in Colombia."
Under the terms of its FTA, Colombia must develop an on-line system for the registration and maintenance of trademarks. The agreement also reinforces US policy within both jurisdictions that the first party to acquire the right to a trademark is also responsible for its use.
Elusive universal trade deal
While such progress is useful, Sánchez admits that the failure of the international community to strike an almost universal trade deal at the World Trade Organization's (WTO) Doha Development Round remains a frustration for not only the US but all participating members.
"The Doha Round offered a tremendous opportunity to liberalise trade across the globe and I would say that it is disappointing that members have not been able to bridge their differences and deliver on this opportunity," he tells just-style.
Initiated in 2001, the talks have effectively been stalled since 2007 following a deadlock over agriculture concerns, including cotton subsidies, over which the American government has been accused of intransigence - sub-Saharan African cotton exporters complain they face unfair competition in world markets from subsidised US cotton.
Sánchez says the US is keen to solve the problem, but denies the solution is a unilateral abolition of US payments: "The US has been an active participant in all respects of the Round, but the truth is a comprehensive cotton initiative requires full engagement and quite frankly, transparency on the part of all players. It is not just the responsibility of the United States."
Opportunities for the sector overall
Meanwhile, the administration continues to try and ensure trade policy takes into account the differing interests of retailers and clothing importers, textile and clothing manufacturers and cotton producers - a task that has proven in the past to be difficult.
"There is no question that there are different interests here," Sánchez explains. "But that is why it is so important to do the outreach that we do [with] the [textile and apparel] industry so that we can strike the right balance that maximises the opportunities for the sector overall.
"And I am very pleased with the balance that we have struck over the years and what we are striving for now with the current trade policy initiatives, including the TPP (Trans-Pacific Partnership)."
In November 2011, US with Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam agreed to an outline of an expanded TPP that would reduce trade barriers in participating countries and boost investments between the nine countries. Their governments also pledged to finalise the deal by 2012.
Indeed, Sánchez says the US wants to structure the agreement so that it helps all arms of the sector succeed.
He wants it to "offer additional sourcing opportunities for a brand and retailers, but we are going to do it in a way that can provide opportunities for US textile and apparel manufacturers. We are going to work on flexibility that will accommodate regional integration and expanded flexibilities where inputs are not available."
An interactive databank with intelligence on the major apparel sourcing countries
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