The Ways and Means Hearing Shows Divided Views on US Trade Policy for Textiles and Apparel

ways&means

US Trade Representative Michael Froman testified on Obama’s 2014 trade policy agenda before the House Ways and Means Committee on April 3. Issues concerning the textile, apparel and the footwear industry were raised three times during the 3-hour hearing. However, it seems the Congress is much divided on how to deal with the T&A sector deemed as “sensitive” in the FTA talks.

(1h:42’)Mike Thompson (D-CA) asked Froman to reevaluate the value of including the “yarn-forward” rules of origin (RoO) in the TPP. Thompson suggested that this rule only affects a small proportion of the US apparel imports nowadays (Note: according to Froman, it was $13 billion annually or 17% of the total US apparel imports) and no longer meets the needs of the US outdoor apparel industry which demands more flexible RoO in supporting of their business model. In response, Forman said that “the USTR’s approach to T&A is always being to ensure to strike a balance that helps the domestic producers continue to produce while allowing importers to import products that serve customers…”

(2h:06’) Earl Blumenauer (D-OR) asked Froman to reduce the trade barriers (tariff and NTB) on footwear imports, arguing that less than 1% of the footwear consumed in the US nowadays is domestically produced. He said that the high tariff rates both retard the ability of the US footwear industry to concentrate on those parts of the value chain that it enjoys competitive advantages and hurt the interests of the US consumers. In response, Forman said that footwear has been a sensitive and key issue to the US and among other TPP members. According to Forman, USTR has been working both with the domestic producers and the importers to develop an approach hoping to achieve the right balance that the domestic producers can continue to compete and also the importers can bring in high quality products (from overseas) for the US consumers. Additionally, Forman referred to the footwear industry an “outstanding area” in the TPP negotiation and said that discussion among all partners will continue.

Last but not least, (2h:30’) Bill Pascrell(D-NJ), also the chair of the house textile caucus, reiterated the importance of the yarn-forward RoO to the US textile industry and asked Froman to ensure that the USTR will “seek the longest possible duty phrase out for the most sensitive textile items” in the TPP negotiation. In his reply to Pascrell, Forman said that his team will work with all stakeholders of the US T&A industry to fully understand what these “sensitive textile items” are and will use tools like the “phrase out period” and “short supply list” to strike a right balance. Pascrell also expressed the concerns of the US textile industry about Vietnam’s wanting of immediate access to the US apparel market after the implementation of the TPP. However, Forman declined to give any concrete promise, just saying the USTR commits to create the “maximum number of jobs in the US” through the trade talks[Note: textile industry jobs? Apparel retail jobs?].

In addition to the T&A, other issues mentioned in the hearing include TPA, GSP, TAA, IPR, SPS & TBT, TTIP, SOE, TiSA, ITA and WTO.

Full hearing can be viewed here

Sheng Lu

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Author: Sheng Lu

Professor @ University of Delaware

4 thoughts on “The Ways and Means Hearing Shows Divided Views on US Trade Policy for Textiles and Apparel”

  1. I find it very interesting that less than 1% of the footwear consumed in the U.S. is domestically produced, yet we continue to implement high trade barriers on footwear imports. As Earl Blumenauer mentioned, the high tariffs hurt U.S. consumers and create an additional burden on the supply chain. It is very evident that these trade barriers are not preventing U.S. retail companies and consumers from importing footwear. Removing or loosening these barriers will reduce the retail price of the shoes, saving consumers money. The barriers could be better placed on industries in which the United States enjoys competitive advantage.

  2. I agree with the post above me that it is very interesting that such a low percentage of the footwear consumed in the US is produced domestically. High tariffs can hurt the US consumers and make more problems for the supply chain, but none of this is stopping US retail companies from importing footwear. Even though less than 1% of the footwear consumed in the US is produced domestically, we still have such high trade barriers for importing.

  3. I found it very interesting that Thompson asked Froman to reevaluate the “yarn-forward” RoO claiming that it would not play a very significant role. There are many supporters for the “yarn-forward” RoO because it could potentially help the U.S. Textile industry. It is obvious to me that Thompson is in the apparel industry because he would like to see more flexibility concerning imports. I believe Thompson is viewing this issue with a closed mind, only open to what concerns him. The “yarn-forward” RoO would create a few restrictions for apparel companies by limiting their resources; however, this would help the textile industry. Furthermore, the “yarn-forward” RoO would still be more beneficial to the apparel industry than the restrictions that are currently in place. As Froman remarked, it is important to achieve balance. I completely agree with Froman in this statement, balance and fairness are key in a democratic country like our own. Additionally, if the goal is balance I believe Vietnam should not be allowed in the TPP negotiation. Vietnam would benefit the apparel industry with low prices; albeit, Vietnam could create a huge trade deficit because they do not import any of the U.S.’s textiles.
    I was also shocked to hear that only 1% of the footwear consumed in the U.S. is domestically produced. From a consumers point of view, I would love to see less restrictions on trade in order to bring costs down. From a more professional point of view, I have to agree with comment one (taylamac) that barriers would be more valuable on industries that the U.S. enjoys a competitive advantage.

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