‘Yarn forward’ delegation take a stand on Capitol Hill
13/06/2014
The group – which included trade associations for US, Mexican, and Central American textile and apparel producers, CEOs of regional manufacturers, and trade representatives of CAFTA-DR governments – met with House and Senate leadership offices to discuss a ‘yarn forward’ rule of origin, robust customs enforcement, and reasonable tariff phase-outs for sensitive products in TPP.
The ‘yarn forward’ rule – where the whole process including yarn manufacture would have to take place in the TPP zone to qualify for the tariff reductions – is being pushed by US yarn and textile manufacturers who feel they will be less competitive in the market if material from Asia effectively becomes cheaper. Vietnam is seen as the greatest ‘threat’ – duty-free access could also make it more attractive to countries in the North American Free Trade Agreement or the Central American-Dominican Republic Free Trade Agreement, such as Mexico and Canada, where the bulk of US-made textiles [one third of total production] is exported.
However, many US brands and apparel importers are campaigning for the ‘cut and sew’ rule to apply. This would mean the yarn and textiles could be made anywhere, and the apparel is merely put together in the TPP zone. This would make sourcing destinations within the TPP cheaper as import tariffs would be eliminated. The TPP Apparel Coalition, which includes the AAFA and the Outdoor Industry Association, is pushing for this reform.
“Mexico is a key textile and apparel producer in the Western Hemisphere and is a critical part of the supply chain for many American textile and apparel companies,” said Nora Ambriz, executive director of Mexico’s CANAINTEX. “Ninety-six percent of Mexican apparel exports are shipped to the United States each year and Mexico is the leading export destination for US textiles and apparel. NAFTA has created this dynamic and integral relationship between the US and Mexico’s textile and apparel sectors and it is critically important that TPP does not damage the Western Hemisphere supply chain in this sector.”
“A final TPP must contain provisions that have been the foundation of US trade agreements over the past 25 years: fair rules of origin, common sense market access rules, and strong customs enforcement provisions,” said Jay Self, CEO of Greenwood Mills in the US. “The NAFTA and CAFTA-DR free trade agreements have created a sustainable and competitive manufacturing platform for US textile and apparel companies which allows us to compete in the global market. It is imperative that US trade policy continues to foster the economic growth seen under these agreements by building on the successful rules they contain.”
The TPP aims to lift barriers to doing business overseas and boost economic growth by eliminating tariffs on goods and services, removing non-tariff barriers and harmonizing regulations.
It includes the US, Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, Japan and potentially South Korea.
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