If ever there was an issue set to divide apparel brands, retailers and textile companies, the Trans-Pacific Partnership trade pact is surely it. Described as the most significant negotiation for the US and its regional trade partners since the NAFTA agreement, the “yarn forward” rule of origin has emerged as one of the most divisive issues.
They also have an issue with the inclusion of Vietnam in the talks, which they believe will flood American markets with Vietnamese clothing made from Chinese yarns and fabrics. With shipments valued at $ 6.3bn, Vietnam is already the second largest exporter of apparel of the US and is also one of the fastest growing exporters, doubling its exports to the US over the last five years.
As the eighth round of the talks on the Trans-Pacific Partnership (TPP) concluded in Chicago last week, textile, apparel and footwear industry stakeholders all pitched in on how they believe the best interests of their sectors should be treated in any resulting trade deal.
While a campaign has been underway for some months now to negotiate strong textile and apparel rules into the pact, the past week has seen regional textile groups from Africa, South America and Central America also stepping into the fray.
The groups, who between them represent 25 countries and more than $ 30bn in textile trade with the US, are siding with their North American textile counterparts to call for a yarn-forward rule of origin in the textile chapter of the trade deal.
“If there is to be a TPP, the benefits accrued should go to the signatories rather than to countries that are not part of the agreement,” claims Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition (AMTAC).
In contrast, a “single transformation” rule would not only drain potential jobs and investment from the TPP but it also would “cause the catastrophic loss of textile and apparel jobs in the United States and in its free trade partner countries,” adds Cass Johnson, president of the National Council of Textile Organizations (NCTO).
As the name implies, the yarn-forward rule means that all stages of production, starting with yarn spinning, moving to fabric formation and the final garment assembly, must be done either in the United States or in a free-trade agreement (FTA) partner country to qualify for duty preferences.
If high value-added elements of the production chain take place outside of the FTA countries, textile groups claim, this lets third parties such as China take advantage of the agreement.
Trade Associations from 25 Countries Urge Strict Textile Rules in TPP Talks, Sep 9, 2011: African, Andean, Central American, Haitian, Mexican and U.S. Groups Issue Joint Appeal. Trade groups from 25 countries in Africa, South America, Central America and North America have issued a joint appeal to the US government to proceed cautiously in textile talks concerning the TransPacific Partnership (TPP) trade pact, citing nearly $ 30 billion in existing textile and apparel trade and over two million textile and apparel workers that could be put at risk by an unbalanced agreement.
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