The latest monthly round-up of updates to key free trade agreements and trade preference programmes involving the US and EU covers developments in December 2019.

UNITED STATES

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US Section 301 Actions against China Updates
On 13 December 2019, the Trump administration announced a “Phase One” trade deal had been reached with China. While the text of the agreement is yet to be released, the announcement says the United States will maintain 25% punitive tariffs on around $250bn of Chinese imports (Tranches 1-3), along with 7.5% punitive tariffs on approximately $120bn of Chinese imports (Tranche 4A). The punitive tariffs that had been set to take effect on 15 December 2019 (Tranche 4B) were suspended.

The Office of the US Trade Representative (USTR) also said the trade deal will: 1) require structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange; 2) include a commitment by China that it will make substantial additional purchases of US goods and services in the coming years; and 3) establish a strong dispute resolution system that ensures prompt and effective implementation and enforcement. On the same day, China said it would suspend the 5% or 10% punitive tariff on around 3,361 tariff lines of US products previously scheduled to take effect on 15 December 2019.

Further, on 1 January 2020, President Trump tweeted that the US and China would sign the “Phase One” trade deal on 15 January 2020 in Washington DC, and he would also visit Beijing to kick off negotiations for a “Phase Two” US-China trade deal.

See Also:

United States-Mexico-Canada Free Trade Agreement (USMCA)
On 10 December 2019, the United States, Mexico, and Canada reached an updated version of the US-Mexico-Canada Free Trade Agreement (USMCA). Compared with the version signed in September 2018, the new USMCA includes even higher labour and environmental standards, and stronger enforcement mechanisms for these rules.

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Before taking effect, the renegotiated USMCA needs to be ratified by all the three parties. On 19 December 2019, the US House of Representatives voted in favour of the agreement. However, when the US Senate will vote on it remains uncertain because of the impeachment process against President Trump. Meanwhile, Canada and Mexico will also have to go through their ratification process again for the new USMCA.

USMCA is an update to the North American Free Trade Agreement (NAFTA) implemented in 1994. Similar to NAFTA, USMCA will offer qualifying textiles and apparel, travel goods and footwear originating from the USMCA region duty-free access to the US and Canadian markets. USMCA also includes new provisions on textiles that incentivise greater North American production in textiles and apparel trade, strengthen customs enforcement, and facilitate broader consultation and cooperation among the Parties.

US-Japan Free Trade Agreement (USJTA)
According to a presidential proclamation on 26 December 2019, the US-Japan Trade Agreement and the US-Japan Digital Trade Agreement will officially take effect on 1 January 2020. While the trade agreement will enhance market access for sectors such as autos and agriculture, its tariff elimination schedule does NOT include textile and apparel products.

On 16 October 2018, the Trump Administration notified US Congress of its intention to negotiate the US-Japan Free Trade Agreement. The Office of the US Trade Representative (USTR) released the negotiation objectives on 21 December 2018. Overall, USJTA aims to address both tariff and non-tariff barriers to achieve fairer and more balanced trade between the two countries. Regarding textiles and apparel, USTR said it would “secure duty-free access for US textile and apparel products and seek to improve competitive opportunities for exports of US textile and apparel products while taking into account US import sensitivities” during the negotiation. USJTA would also “establish origin procedures for the certification and verification of rules of origin that promote strong enforcement, including with respect to textiles.”

Data shows that in 2018 the US imported US$656m of textiles and US$88m of apparel from Japan, accounting for 2.1% and 0.1% of total US textile and apparel imports that year.

The two countries will begin consultations on reaching a broader trade agreement in early 2020.

African Growth and Opportunity Act (AGOA)
According to a presidential proclamation released on 26 December 2019, several countries will lose their benefits under the African Growth and Opportunity Act (AGOA) starting from 1 January 2020. Specifically:

  • Cameroon will lose all its AGOA benefits because of “persistent gross violations of internationally recognised human rights.”
  • Textile and apparel exports from the Central African Republic, Niger, and the Gambia will no longer be eligible for preferential treatment because these countries “have not established an effective visa system and related customs procedures.”

US Punitive Tariffs on Imports from the EU
On 2 December 2019, the Office of the US Trade Representative (USTR) proposed an increase to punitive tariffs on imports from the EU after the World Trade Organization rejected the EU’s claim that it had ended subsidies to Airbus. While the US had already imposed retaliatory tariffs ranging from 10% to 25% on certain EU agricultural and industrial products, effective October 2019, the new proposal would increase these tariff rates to up to 100% and levy further tariffs on new EU products, including textiles and apparel in HS Chapters 52, 54-59 and 61. Specifically:

USTR plans to impose an 25% additional tariffs on the following apparel products, if they are produced by the UK:

  • 6110.11.00 (Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted, of wool)
  • 6110.12.10 (Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted, of Kashmir goats, wholly of cashmere)
  • 6110.20.20 (Sweaters, pullovers and similar articles, knitted or crocheted, of cotton, nesoi)
  • 6110.30.30 (Sweaters, pullovers and similar articles, knitted or crocheted, of manmade fibres, nesoi)
  • 6202.99.15 (Rec perf outwear, women’s/girls’ anoraks, wind-breakers & similar articles, not k/c, tex mats (not wool, cotton or mmf), cont < 70% by wt of silk)
  • 6202.99.80 (Women’s/girls’ anoraks, wind-breakers & similar articles, not k/c, of tex mats (not wool, cotton or mmf), cont < 70% by wt of silk)
  • 6203.11.60 (Men’s or boys’ suits of wool, not knitted or crocheted, nesoi, of wool yarn with average fibre diameter of 18.5 micron or less)
  • 6203.11.90 (Men’s or boys’ suits of wool or fine animal hair, not knitted or crocheted, nesoi)
  • 6203.19.30 (Men’s or boys’ suits, of artificial fibres, nesoi, not knitted or crocheted)
  • 6203.19.90 (Men’s or boys’ suits, of textile mats, except wool, cotton or mmf, containing under 70% by weight of silk or silk waste, not knit or croch)
  • 6208.21.00 (Women’s or girls’ nightdresses and pyjamas, not knitted or crocheted, of cotton)
  • 6211.12.40 (Women’s or girls’ swimwear, of textile materials, except mmf, containing 70% or more by weight of silk or silk waste, not knit or crocheted)
  • 6211.12.80 (Women’s or girls’ swimwear, of textile materials, except mmf, containing under 70% by weight of silk or silk waste, not knit or crocheted)

USTR also proposed additional punitive tariffs on the following apparel products, if they are made by any of the 28 EU members:

  • 6112.20.20 (Ski-suits, knitted or crocheted, of textile materials other than man-made fibres)
  • 6110.11.00 (Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted, of wool)
  • 6110.12.10 (Sweaters, pullovers, sweatshirts, waistcoats (vests) and similar articles, knitted or crocheted, of Kashmir goats, wholly of cashmere)
  • 6110.20.20 (Sweaters, pullovers and similar articles, knitted or crocheted, of cotton, nesoi)
  • 6110.30.30 (Sweaters, pullovers and similar articles, knitted or crocheted, of manmade fibres, nesoi)
  • 6202.99.15 (Rec perf outwear, women’s/girls’ anoraks, wind-breakers & similar articles, not k/c, tex mats, not wool, cotton or mmf, cont <70% by wt of silk)
  • 6202.99.80 (Women’s/girls’ anoraks, wind-breakers & similar articles, not k/c, of tex mats (not wool, cotton or mmf), cont <70% by wt of silk)
  • 6203.11.60 (Men’s or boys’ suits of wool, not knitted or crocheted, nesoi, of wool yarn with average fiber diameter of 18.5 micron or less)
  • 6203.11.90 (Men’s or boys’ suits of wool or fine animal hair, not knitted or crocheted, nesoi)
  • 6203.19.30 (Men’s or boys’ suits, of artificial fibres, nesoi, not knitted or crocheted)
  • 6203.19.90 (Men’s or boys’ suits, of textile mats (except wool, cotton or mmf), containing under 70% by weight of silk or silk waste, not knit or croch)
  • 6208.21.00 (Women’s or girls’ nightdresses and pyjamas, not knitted or crocheted, of cotton)
  • 6211.12.40 (Women’s or girls’ swimwear, of textile materials(except mmf), containing 70% or more by weight of silk or silk waste, not knit or crocheted)
  • 6211.12.80 (Women’s or girls’ swimwear, of textile materials (except mmf), containing under 70% by weight of silk or silk waste, not knit or crocheted)

In addition, USTR is seeking comments on whether any of the current tariffs on EU products should be removed or if the duties should be increased, as well as whether new products should be hit with tariffs and at what duty rate. Comments are due by 13 January 2020.

EUROPEAN UNION

EU-Ghana Economic Partnership Agreement (EPA)
The second meeting of the EU-Ghana Economic Partnership Agreement (EPA) committee was held in Brussels on 29 November 2019. As agreed at the meeting, Ghana will start to liberalise its market for EU products by the first quarter of 2020, according to the EPA. The liberalisation schedule will be concluded by 2029.

The EU-Ghana EPA was signed on 28 July 2016, ratified on 3 August 2016 by the Ghanaian Parliament, and approved by the European Parliament on 1 December 2016. It entered provisional application on 15 December 2016. The EPA provides duty-free and quota-free access to all Ghana’s exports – including textiles and apparel – to the EU market, while Ghana will gradually and partially liberalise imports from the EU.

Ghana is a minor apparel supplier to the EU, which imported US$0.23m apparel (HS Chapters 61 and 62) from the country in 2018 – less than 1% of the EU’s total apparel imports that year.