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RE:SOURCE MONTHLY TRADE PROGRAMME ROUNDUP - MARCH 2019

By Dr Sheng Lu | 23 May 2019

The latest monthly round-up of updates to key free trade agreements and trade preference programmes involving the US, EU and Japan covers developments in March 2019. Trade agreements, rules of origin, tariffs and schedules are all covered in depth in the re:source by just-style strategic planning tool.

UNITED STATES

US-Morocco Free Trade Agreement

The Trump Administration approved the request made by the government of Morocco to add some products to the short supply list (commercial availability) of the US-Morocco Free Trade Agreement, from 1 April 2019. These products include:

  • Women's or girls' cotton corduroy skirts and divided skirts classified in subheading 6204.52, of cotton corduroy fabrics classified in subheading 5801.22;

  • Women's or girls' man-made fibre blouses, shirts and shirt-blouses classified in subheading 6206.40, of polyester corduroy fabrics classified in subheading 5801.32;

  • Women's trousers classified in subheading 6204, of synthetic bi-stretch fabric containing 45 to 52 percent by weight of polyester, 45 to 52 percent by weight of rayonand 1 to 7 percent by weight of spandex, classified in subheading 5515.11;

  • Women's trousers classified in subheading 6204, of woven fabric containing 60 to 68 percent by weight of polyester, 29 to 37 percent by weight of rayonand 1 to 7 percent by weight of spandex, classified in subheading 5515.11;

  • Women's trousers classified in subheading 6204, of woven herringbone fabric containing 31 to 37 percent by weight of viscose rayon, 17 to 23 percent by weight of polyester, 17 to 23 percent by weight of cotton, 13 to 19 percent by weight of wool, 5 to 11 percent by weight of nylon and 1 to 6 percent by weight of spandex, classified in subheading 5408.33.

While the general rules of origin for apparel items remains "yarn-forward" under the US-Morocco Free Trade Agreement, textile inputs on the short supply list can be sourced from anywhere in the world, and the finished apparel can still enjoy the preferential duty treatment provided by the free trade agreement.

US-South Korea Free Trade Agreement (KORUS)

The United States and South Korea reached a preliminary agreement to modify the rules of origin in the US-South Korea Free Trade Agreement (KORUS) for a few textile and apparel products. These products include:

  • Cotton yarns (under HTSUS heading 5206) with viscose rayon staple fibres (under subheadings 5504.10 or 5507.00);

  • Woven fabrics (under heading 5408) with cuprammonium rayon yarns (under heading5403.39);

  • Apparel (under heading 6110), accessories and parts (under heading 6117) of certain cashmere yarns (under heading 5108).

The US International Trade Commission (USITC) has begun an investigation into the probable economic effect of these changes, and the report is expected to be completed by 24 June 2019. The proposed modification will be reviewed by the Congressional committee before it formally takes effect.

EUROPEAN UNION

UK import tariff rates for apparel products under a no-deal Brexit scenario

The UK government on 13 March released the temporary rates of customs duty on imports if the country leaves the European Union with no deal. In the case of a no-deal Brexit, these tariff rates will take effect for up to 12 months. According to the announced plan, around 87% of UK's imports by value would be eligible for zero-tariff in the no-deal Brexit scenario.

Specifically for apparel products, 113 out of the total 148 tariff lines (8-digit HS code) in Chapter 61 (knitted apparel) and 145 out of the total 194 tariff lines (8-digit HS code) in Chapter 62 (woven apparel) will be duty-free. However, other apparel products will be subject to a Most-Favoured-Nation (MFN) tariff rate ranging from 6.5% to 12%.

Meanwhile, the UK will offer preferential tariff duty rates for apparel exports from a few countries/programmes, including Chile (zero tariff), EAS countries (zero tariff), Faroe Islands (zero tariff), GSP scheme (reduced tariff rate), Israel (zero tariff), Least Developed Countries (LDC) (zero tariff), Palestinian Authority (zero tariff), and Switzerland (zero tariff).

On the other hand, rather than reciprocate, the European Commission said it would apply Most-Favoured-Nation (MFN) tariff rates on products imported from the UK under a no-deal Brexit scenario.  

JAPAN

Regional Comprehensive and Economic Partnership (RCEP)

The seventh Regional Comprehensive Economic Partnership (RCEP) Ministerial Meeting was held in Cambodia on 2 March. At the meeting, the 16 members of RCEP agreed to intensify the ongoing negotiations for the proposed trade agreement and aim to conclude the trade negotiation in 2019.

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