Apparel exports under the TPP agreement would exceed US$34bn annually

Apparel exports under the TPP agreement would exceed US$34bn annually

Hot topics under discussion at the annual meeting of the rebranded United States Fashion Industry Association (USFIA) included major trade negotiations, and the changing concerns of the US apparel industry. 

The recently rebranded United States Fashion Industry Association (USFIA) has re-launched itself at its annual meeting in New York, amidst predictions that the Trans-Pacific Partnership (TPP) free trade agreement should be completed in early 2014.

Julia Hughes, the president of USFIA, and head of its predecessor the United States Association of Importers of Textiles and Apparel (USA-ITA), told the Textile & Apparel Importer Trade & Transportation Conference last week: "We are definitely much further along in the TPP negotiations, but we think it's likely to take into next year to really wrap it all up."

"We're very supportive, but we have been working closely with the [Obama] administration and coordinating with other negotiators, that this 21st century high-standard agreement needs to include greater liberalisations for textile and apparel. There no longer is a need for textiles and apparel to be treated separately as they were in the old quota days."

Kim Glas, deputy assistant secretary for textiles and apparel at the US commerce department, said negotiators and regulators still needed help in working on a list of textiles that all agree are in short supply and hence encounter fewer trade barriers under the TPP. It currently contains some 217 products.

"We don't know how to construct something that's fair and constructive and will be helpful to the industry. We did not want to build a short-supply list that no one can use," she told the meeting.

She predicted that the probable outcome of TPP will involve a "temporary short-supply list, with the permanent items being geographically limited to certain parts of the world."

Glas stressed: "The US remains the fourth-largest exporter and largest importer of apparel", noting that apparel exports for the 12 Pacific Rim countries who would be part of an expanded TPP agreement exceeds US$34bn annually.

US-EU free-trade deal
Meeting participants also discussed the other current major trade negotiation involving the USA - the planned Transatlantic Trade and Investment Partnership (TTIP) with the European Union (EU), for which talks will be held in Brussels this coming week.

Jon Fee, a partner at international law firm Alston & Bird LLC, who moderated the meeting's panel discussion on the outlook for trade policy in 2014, stressed that the EU talks were "not nearly as far along" as the TPP negotiations.

Given the size of the two economies involved, if a deal is ever reached, it "would be the biggest free-trade agreement in the history of the galaxy," he noted, without too much irony.

He said a possible US-EU free-trade deal is hitting snags in part because many Europeans, notably German Chancellor Angela Merkel, continue to insist on very high standards for consumer and data protection, an insistence that has grown in the wake of disclosures about spying activity on the part of the US National Security Administration (NSA).

But, as Dr Robert MacLean, partner and head of the EU international trade and export controls practice for law firm Squire Sanders, in Brussels, points out, these snags may in fact be overcome due to the incentives on both sides of the pond.

Politicians "see it as a way of cheap stimulus for both countries", he said, "because it will generate employment for 2 million people."

In addition, both sides have something specific to gain from the outcome to these talks, with the "Europeans looking for improved market access to the US, with its customs rate at about 12% for apparel, while the US is looking to improve its global marketing through regulatory convergence."

Alston & Bird's Fee, for his part points to one more obstacle to cementing the two trade deals any time soon.

With Congress (notably a hostile Republican-controlled House of Representatives) so far unwilling to concede fast-track trade negotiation authority to President Barack Obama, the deals face a likely grilling in the highly charged US legislature. "Your guess is as good as mine whether you can even get past that step," he said.

Bangladesh labour standards
Another hot topic was labour standards in Bangladesh. Nancy Donaldson, who directs the International Labour Organization's (ILO) Washington DC office, may or may not have been preaching to the choir when she appealed to members of the garment trade to support better conditions for workers in places like Cambodia and Bangladesh.

"A government-appointed panel in Bangladesh has just recommended raising the minimum wage for garment workers by 77%, from US$38 per month to US$67 per month," she told the meeting, which was co-hosted by the American Import Shippers Association.

"This would add maybe about 25 cents to the price of a T-shirt," she suggested.

USFIA rebranding
Such a discussion may have seemed off-topic 25 years ago, when the Washington DC-based trade and lobbying group was founded as the USA-ITA, then representing a fairly homogenous group with one stated focus: tearing down trade barriers, particularly quotas, and opening new markets.

In rebranding itself this week as the USFIA, the group said in a note: "We're still the same organisation you know and trust, but in a better outfit", acknowledging that the change is - of course - at least one part image makeover.

But it also a case of image catching up with reality, with the group now representing about 200 retailers, brands and service providers, each with its own set of concerns about both trade policy and public relations.

Maureen Gray, vice president of international trade at the Ralph Lauren Corporation, currently chairs the association, which also includes on its board executives from Macy's Inc, The Jones Group Inc, Kohl's Corp, Pacific Sunwear of California Inc, Warnaco Inc, Levi Strauss & Co, JC Penney Co Inc, American Eagle Outfitters and Urban Outfitters Inc.

In addition to image concerns, the US apparel industry has a much different set of trade concerns than it did 25 years ago, when quotas on apparel and textile imports controlled trade flows and China had barely surpassed Taiwan on its way to become the top apparel supplier to the US, said Hughes.

Today, America has signed 14 free-trade deals and global quotas have been eliminated, but the USFIA is still working hard on trade issues such as the TTIP and the TPP.

"We have totally succeeded in our initial focus," she said. "There are no quotas in place on textiles and apparel anymore in place anywhere in the world. That was a great, great success."

"As an organisation, we are committed to eliminating the remaining barriers, whether they are tariff barriers or whether they are non-tariff barriers, like dumping cases and unrestrictive labeling or investment schemes in other countries," she said.

"And that's global: we're not just importing into the US. Apparel brands, even retailers, are global today, so they're selling in the US, but also in Europe. In Asia, they might manufacture products that never even touch the US, but were designed in the United States. We are broader than just looking at the imports and that's what led to the rebranding," she said.