The German Textile and Apparel Industry supports T-TIP?

Discussion:

  • Why do you think the German textile and apparel (T&A) industry supports the Trans-Atlantic Trade and Investment Partnership (T-TIP)? Should they?
  • Should the U.S. textile industry worry about the competition from Germany after T-TIP?
  • What strategy should the U.S. textile industry adopt in response to T-TIP?

Background: the German textile and apparel industry

  • Similar as the case in the United States, the German T&A industry has significantly shrunk in size over the past few decades. In particular, employment and total industry output were only a fraction of what they were in the past.
  • At the same time, the German T&A industry has undergone tremendous structural changes. While most simple production has gone overseas, German companies remain global leaders in the technical textile sector. Statistics show that the production of technical textiles in Germany went up by 40 percent from mid-1990s to 2011. Manufacturers of technical textiles in particular are benefiting from the increasing use of their products in new fields of application (e.g. vehicle construction, building industry, energy sector, medical technology and functional clothing).
  • Additionally, German T&A companies in general support trade liberalization. On one hand, imported T&A components are of great importance for German T&A companies to get access to needed raw material today. On the other hand, German T&A companies are eager to explore export opportunities in many fast-growing emerging markets in the world. In 2011, Germany’s top export market for textiles were Poland, France, Italy and Austria. The United States was the largest non-European export market. Germany’s largest export market for apparel in 2011 include Austria, Netherlands, France, Switzerland and Poland.

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Author: Sheng Lu

Professor @ University of Delaware

18 thoughts on “The German Textile and Apparel Industry supports T-TIP?”

  1. I think it makes complete sense that Germany would support the Trans-Atlantic Trade and Investment Partnership. T&A have the highest tariffs to begin with compared to other industries but the ones stated in the video seemed over the top at almost 30%. A lot of money would be saved with a free trade agreement. The German companies could sell their products for less here in the US which would benefit them and American consumers. There will be the added pressure of competition for the US textile industry but it may also prove to be a benefit with a country such as Germany which is so invested in the advancement of technology. This could open up more channels of communication which could lead to advancement and growth of the textile industry in both countries. I think the biggest issue is going to come in when negotiating standards. Both the EU and US have high safety standards but it is hard to say in an FTA that one sides opinion is better than another. If higher standards must be met changes will need to be implemented by companies in their factories and production process that could be costly. The question is who will fund this and how will that affect companies that don’t have the capital to make the improvements? The EU also has different environmental standards and are a strong force against GMO’s, at least where food is concerned, I don’t know where they fall regarding fiber, so that could also play a big role since the US cotton industry runs on GMO seeds.

  2. Even if the german apparel industry has not much production capacities in Germany any more they are running own or organizing external production in other EU-countries. And the US is a very interesting market for european brands – of course also in the opposite direction.
    But the key issue are the rules of origin. Is it not understandable why the industry with the longest history in and the highest degree in globalization is still faced with RoO of the Middle Age : double- or even triple transformation from fabric or yarn to apparel is completely unrealistic in our completely diversified industry. TTIP can only be a success for both industries in the EU and the US with modern, state-of-the-art rules like single transformation or a realistic value-added criteria like in other industries.

    1. Hi Bernd, so glad to read your comment, which is always critical, insightful and enlightening! May I ask two follow up questions based on your comment: 1) In your observation, do you think the textile and apparel industries within EU overall have a united view on T-TIP? You mentioned that Germany no longer heavily engages in apparel production anymore, but statistics show that Italy, Spain and France as well as a few eastern European countries still do. Do textile and apparel industries there also support a less restrictive rule of origin in T-TIP? 2) Do you think T-TIP will result in manufacturing reshoring in the EU T&A industries–given the fact that EU still hold many high-end apparel brands loved by US consumers, lowered tariff and non-tariff rates as results of T-TIP may increase EU’s apparel exports to the US? Would love to hear your views and thank you so much!

      1. The situation is similar to the US. Textile manufacturers are still fighting for restrictive rules in order to force their “customers” to buy their european made fabrics and trimming whereas (most of the) apparel industry would prefer simpler rules like simple change-of-tariff or a value-added criteria in order to be free in their sourcing decision. There is a conflict existing within the european association EURATEX for years (where also Turkey as an important manufacturer of both textiles and clothing plays an important role).

        I do also see a chance for reshoring manufacturing back from non-EU-companies to the EU but -again- only with modern rules of origin.

  3. It makes sense to me that Germany would be interested in T-TIP. The United States is the largest source of Germany’s exports outside of Europe so it would be logical for Germany to support this because it directly affects their export business.

    1. Both yes and no in my personal view. first, although T-TIP may help Germany expand exports to the US, Germany also has its domestic industries that want trade protection (i.e. do not want import competition from “Made in USA”); second, it depends on the specific provisions in the agreement. Just as the comment above, if T-TIP adopts very restrict rule of origin (which is demanded by the US textile industry), the German apparel industry won’t be happy–either would it support T-TIP. This is why T-TIP matters to the T&A industry both in the US and EU.

  4. I think that the German textile and apparel industry supports the trade agreements because it will lower the cost of exports for them. Lower export costs mean that they could import into the United States and other countries as often as they want and send more product than they are now. I think that they are rightful in supporting a trade agreement because it would greatly increase business and decrease costs for them. I do not think that the US textile industry should worry about the competition from Germany. While a trade agreement would allow Germany to import many more products at little to no cost, it would also give the United States more freedom to export to Germany. The two countries could build up a good partnership. In response to the T-TIP, the United States should continue to work hard on its textile and apparel industry. It should welcome whatever changes may come, and try to build positive relationships to encourage trade and business.

    1. I agree with the comment above. German textile and apparel industries are smart in supporting the trade agreements in T-TIP. This will allow them to sell their products to the US duty free, creating an increase in sales thus benefitting the T&A industry employees. The US will also benefit from this agreement since the German products would be sold there at a cheaper rate. This trade agreement will provide a great relationship between Germany and the US. Supporting T-TIP allows Germany and the US to export products to one another freely. I do not believe that the US should worry about Germany as a competitor and be supportive to the relationship and benefit the trade and business of the T&A industry. In the long run it would be wise for Germany to continue to support T-TIP and value their trading relationship with the US for it will benefit both countries T&A industries.

      1. good thinking. One follow up question: textile products made in USA and made in Germany can be very similar in nature (both are developed countries and both try to produce more high-end technical textiles). Then why do you suggest the US textile industry should not worry about the competition from Germany?

  5. In my opinion, German textile and apparel industries made the right move in supporting the trade agreements. This would, without a doubt, make their economy flourish. How could it not? They are increasing their profit by decreasing their prices and increasing business. Even though I can see this agreement being super beneficial to the country of Germany, I would also say that we would benefit as well. Like I stated in some of my other comments, if we root for these other countries to be successful I really do feel as though it will help us. They are not our competitors because we are all on the same team. T-TIP is a great thing and we should be supportive and happy for them, and know that eventually in the long run it will be beneficial to us. Even though we are both selling high end technical textiles it will only push us in the right direction. Motivate us to keep doing great things!

  6. My experience in dealing with FTAs in the T&C-business for more than 20 years now: companies are not successful because of FTAs, rules and regulations, they are successful because they are dynamic, innovativ, reliable, quick etc.. FTAs are just a nice add-on. Unfortunately the discussion is mostly led by the non-dynamic, non-innovative ones believing that restrictive rules will help them to survive. But that´s an error.

    1. I agree with your observation. Making a change is never easy—for example, it took 40 years to get rid of the quota system. But things are moving in the right direction. TPP may include major exceptions to the yarn forward RoO and T-TIP may go even further. Concepts such as “global value chain” and making trade policy “supply-chain friendly” are discussed more often these days than in the past. And they are influencing policymakers’ mind. So in a joint effort, I am confident trade barriers of all kinds will get lower and lower in the long run.

  7. I think that even though T-TIP could aid in Germany’s expansion of exports to the US, they also have their own domestic industries that might not want to compete with made in the USA goods. Depending on what the agreement said, if T-TIP has strict rules of origin the Germans wont be very happy, but the US T&A industry would be. I think that because Americans have such a niche market for EU goods and because the Germans produce their goods in the EU that Germany will be able to keep production.

  8. I agree that Germany would be interested in T-TIP. This agreement directly affects Germany and it lowers the cost of exports for them. And since they are US is the largest source of exports this affects the capital greatly. Even though this solely benefits Germany I do not think the US should worry if anything this will increase the imports because the price is decreased. I think if anything the US should let Germany make their decision and support them so their relationship remains concrete. The US should welcome the changed and use them to their advantage, with reduced importing cost the imports should increase benefitting both the US and Germany.

  9. There can be many reasons why the German Textile and Apparel industry would support the trade agreement. First, it could have the potential to lower the cost of exports which would mean more options to import to as well as exporting more products. Second, it would help business improve. Third, it would create a good alliance between Germany and the United States. They can become partners and trade back and forth.

  10. I think that the German Textile and Apparel industry supports the Trans-Atlantic Trade and Investment Partnership because it really seems like the best move for their industry. The T-TIP will help save money for the German Textile and Apparel Industry because they won’t be spending so much money on Tariffs on different products, which then means that they can sell to consumers for a lower cost. Having a lower price on their products will then cause more consumers to buy and will make the industry stronger, and the consumer happy, so its a win-win. Right now, the German Textile and Apparel Industry has to pay a different amount of tariffs on products based on what gender they are made for and what kind of material they are made of, the T-TIP will disregard that and will benefit everyone.

  11. The German (and EU) textiles and apparel industry mainly consists of small- and medium sized companies. Until now only very few of them are acting successfully on the US market. Some of them have tried to but failed: not because of the high duties but because of the non-tariff regulations for labelling, product standards etc.. It is simply to difficult and expensive to deal with.
    I am fully aware that US exporters are facing similar hurdles in the EU. That´s why TTIP can be a “win-win-win-solution” for both industries -by enabling or intensifying exports- and the consumers -by getting better prices.

  12. I think it would be most appealing for Germany to support T-TIP free trade agreements because it could dismantle the extremely high import duties. The textile and fashion industry also hopes for the harmonization of standards, this could prevent the additional costs that Germany is running into. If Germany accepts this agreement, products could be exported duty free into the United States and could be sold at lower prices. Ultimately, the United States benefits from this and the employers in Germany would also benefit.

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