US: Continues to back yarn-forward in TPP pact
US negotiators in the Trans-Pacific Partnership (TPP) trade talks say they continue to back the yarn-forward rule of origin in textiles and apparel, despite noting this is one of the "most sensitive" issues in the discussions.
Speaking at the end of the 19th round of talks that took place last week in Brunei, US Trade Representative Michael Froman said: "We have made clear that the yarn-forward rule is at the centre of our proposal, and we are working with the other countries, negotiating with them, to allow that principle.
"There is still of course progress and more work to do."
Textiles are a major issue in the talks because the negotiating parties include Vietnam, a major apparel producer that mainly sources yarns and fabrics from China and other Asian nations.
Under the "yarn-forward" rule, all the materials that go into a garment must originate and be assembled in one of the trade agreement's partner countries if it is to enter the US tariff-free.
Without this rule, the US textile industry is concerned that China would be able to export apparel more cheaply by routing its textile products through Vietnam for cutting and sewing, exploiting its favoured-trade status.
However, US apparel importers and retailers argue the rule as it stands is too restrictive, hinders new trade and investment in the sector, and renders most existing trade ineligible for preferential tariff treatment.
Instead, they want to be able to have the freedom to source materials and component products from the best suppliers, regardless of whether textiles from the US or partner countries are used.
The Vietnamese garment industry is also campaigning to be able to use materials from outside countries yet still qualify for duty-free access to the US.
Negotiators from 12 countries are involved in the discussions, including the US, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and Japan.
Talks have been ongoing since 2009, and the hope is they can conclude later this year, in Bali in October or in the same location in December.
Froman said on Friday (23 August) that the October meeting "is an important milestone" and an opportunity to address any outstanding issues." But he added: "There is a lot of work to be done still, every country has sensitive products.
"We're beginning to consult with our stakeholders...as we figure out how to address sensitive issues, and not surprisingly, sensitive issues tend to be dealt with closer to the end of negotiations."
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