• The US fashion and apparel industry is joining the chorus of US business interests in voicing unease over the course of the NAFTA renegotiations
  • US negotiators are accused of trying to make unacceptable demands upon their Mexican and Canadian counterparts, with US apparel importers and exporters "caught in the middle"
  • The US Generalized System of Preferences (GSP) stands to be renewed – unless it gets tangled up with tax reform
The US is looking increasingly isolated on trade issues

The US is looking increasingly isolated on trade issues

Prospects for trade deals that have underpinned growth in American clothing and textile imports and exports appear increasingly precarious as the Trump administration passes the 300-day mark, participants at a US fashion industry summit have heard.

Concern is especially severe regarding the North American Free Trade Agreement (NAFTA), as indicated by 'SaveNAFTA' being the password to access a mobile app provided to attendees at the 29th annual Apparel Importers Trade & Transportation Conference organised in New York City last week by the American Import Shippers Association (AISA) and the United States Fashion Industry Association (USFIA).

The fifth round of the renegotiations on the 1994 free-trade deal between the United States, Mexico and Canada is now underway, and the import-dependent US fashion and apparel industry is joining the chorus of US business interests in voicing unease over the course of the deal's direction.

"The renegotiation of NAFTA can at best be called posturing," says John Fee, partner at Alston & Bird LLP, a Washington DC law firm that works with the clothing and textile industry. He fears the US administration is trying to derail the talks, which have been downgraded to a staff level, putting the future of the 23 year-old agreement – which Trump has consistently criticised – in jeopardy.

He also echoes the apparent frustration of other business groups in bemoaning their lack of influence on US trade policy.

"I'm particularly frustrated and disappointed with the US Trade Representative [Robert Lighthizer]," he says. "Unless you accept the street-corner activism of Trump's friend Steve Bannon, we are not welcome at the US Trade Representative's office and might as well not call," he adds, referencing the former Trump advisor and current editor of Breitbart News, a conservative website.

Fee also derides the administration's tendency to blame trade deficits on free-trade agreements. "They say that somehow the renegotiation of FTAs will eliminate US trade deficits. But devalue the US currency and they would disappear overnight."

Unacceptable demands

Specific to the NAFTA talks, he accuses US negotiators of trying to make unacceptable demands upon their Mexican and Canadian counterparts. "The madness becomes extreme with the suggestion that they're going to add steel to tracing requirements," he says, pointing out that the suggestion would hurt US automakers and "completely undermine the 'more jobs' appeal that's coming from the Administration."

"There is no way that Canada or Mexico would agree to any such thing," he predicts.

"The Steve Bannon and [assistant to the president, director of trade and industrial policy] Peter Navarro influence is still very much alive and well," he adds, referring also to another member of Trump's trade team. "We who rely on NAFTA and other free-trade agreements are kind of caught in the middle on this."

"If anybody thinks this will bring jobs to America, they're smoking something," says David Spooner, USFIA Washington Counsel and a former chief textile and apparel negotiator at the office of the US Trade Representative.

Trade protectionism

Spooner says he has traced the course of the administration's trade policy so far with increasing concern.

"I would put the first 298 days of the Trump Administration between two bookends, starting with the America First agenda outlined in the January 20th inaugural address and concluding with the president's 12-day Asian trip, which ended on November 14th.

"At the beginning of the Administration, I at least thought that CAFTA (the Central American Free Trade Agreement with Guatemala, El Salvador, Honduras, Costa Rica and Nicaragua) was safe," he says. "Now Trump has said he would go after that trade deal."

Beyond the specifics of particular trade deals and the issues surrounding them, Spooner believes the President "has taken away the political cover for Republicans to support free trade. We started with 'America first' and we are now at 'America alone.'"

Fee, for his part, expresses the worry that Republicans, who control the White House and both chambers of Congress, are fundamentally shifting away from their traditionally pro-trade outlook as mainstream party officeholders fear a backlash on trade deals from anti-trade activists.

"Trump considers it a great accomplishment to have pulled the plug on TPP [the Trans-Pacific Partnership]," which is now being renegotiated by the 11 other TPP countries, he says.

"It's not just Trump. I'm concerned about the Republican leadership. Historically they have been free traders, but they have become invertebrate."

"We've had free-trade agreement champions in Congress for decades, but they have evaporated. Whatever the Administration does with NAFTA, they're going to cave. They're afraid to get primaried," losing their place on the Republican ticket in the mid-term elections to nativist activists supporting Trump.

GSP renewal

On a positive note, Fee says the World Trade Organization and the global deals comprising it have so far escaped the anti-trade political wave hitting US policy.

As Fee says, current Congressional authorisation for the US Generalized System of Preferences (GSP), which allows developed country members to give tariff breaks to 120 designated developing countries and territories, is set to expire at the end of 2017. This programme affects some 5,000 products worldwide and is considered a key component of WTO-based US free trading.

"I think that Congress may actually renew the GSP before it expires," he says, noting the system's major importance, particularly to importers of footwear and travel wear.

The catch to this optimism may prove to be the legislative agenda facing Congress for the remainder of the year. In addition to repeated attempts to roll back the Affordable Care Act passed under former President Barak Obama and his Democratic majority, both houses of Congress have passed new tax bills that would provide for lower corporate tax rates in the hopes of stimulating the economy and creating jobs.

The complexity and potential for political fallout involved with any attempt to rewrite the tax code while at the same time resolving the controversy involving the looming deportations of 'dreamers' who entered the country illegally as children, may leave Congress hamstrung, Fee believes.

"The only real issue with the renewal of GSP is that this time it gets so tangled up with tax reform that it gets sidetracked."