KOTRA president Kim Jae-hong, and Samil Bam CEO Hee-chan Roh, Noh Hyun-ho

KOTRA president Kim Jae-hong, and Samil Bam CEO Hee-chan Roh, Noh Hyun-ho

South Korean textile firm Samil Spinning has signed a deal to acquire US speciality yarn maker Buhler Quality Yarns amid fears of trade protectionism in America.

The announcement, made yesterday (22 March) by the Korea Trade-Investment Promotion Agency (KOTRA), will enable Samil Spinning to avoid tariffs of 32% currently incurred on yarn imports into the US. 

The decision by Samil to acquire a 100% stake in Buhler Quality Yarns, the US subsidiary of Switzerland-based Hermann Bühler AG, came after the US earlier this year withdrew from the Trans-Pacific Partnership (TPP) agreement, which would have involved eliminating and reducing tariffs between 12 countries, including South Korea.

KOTRA, which acted as consultant for the deal, said the company had initially mulled acquiring a production facility in Vietnam as it had expected the current 17.5% tariff imposed to textiles and garment produced in the South East Asian country to be lowered under the TPP.

However, it decided to buy the US-based firm amid fears of growing protectionism on the trade front under the Trump administration. Samil Spinning will now be able to sell to the US market directly without tariff restrictions through its local spinning in the country.

The deal also means the South Korean textile company will benefit from the Dominican Republic-Central America FTA (DR-CAFTA) free trade agreement between the US and Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic.

Clothing produced in DR-CAFTA countries using US yarn is treated the same as products produced in the US.