USTR Michael Froman Comments on the Textile and Apparel Chapter under TPP

Trans-Pacific-Partnership-1

In an event hosted by the Council on Foreign Relations on October 15, 2015, U.S. Trade Reprehensive Michael Froman left a comment on the textile and apparel chapter (T&A) under TPP. He said that:”

“You know, we worked very hard to find solutions that could address the broad range of stakeholder interests here, even when we had conflicting interests here in the U.S. I’ll take textile as an example. You know, we have a domestic textiles industry that’s been investing in more production in the U.S., growing their employment in the U.S. And obviously we have a strong sector of our economy that brings in apparel from other countries, apparel importers and retailers. We worked very closely with both groups of stakeholders to come up with a solution, to come up with an outcome that we think both will be comfortable with and both will be supportive of. And that’s been very important to us to try and address the broad range of U.S. stakeholder interests, whether it’s labor, environment, importers, exporters, to make sure we’re covering everybody’s interests well.”

In the remarks, Forman also ruled out the possibility that TPP would be renegotiated. He said that:

“So this isn’t one of those agreements where, you know, you can, you know, reopen an issue or renegotiate a provision. This is one where, you know, every issue is tied to every other issue and every country’s outcome is balanced against every other country’s outcome. And so that’s the agreement that we’ll be putting forward under TPA for a vote by Congress.”

According to Inside U.S. Trade (October 9, 2015), the final TPP reflects some of the key priorities of the U.S. textile industry by allowing limited exceptions from the prevailing yarn-forward rules of origin and by including tariff phaseouts for “sensitive apparel items” of 10 to 12 years.

Besides the basket of goods that will become duty-free upon entry into force (which include cotton shirts and cotton sweaters), TPP sets up three other categories for tariff reductions on apparel:

TPP apparel

Major exceptions other than the “short supply list” mechanism under TPP include:

  • An “earned import allowance program for cotton pants made in Vietnam from third-country fabric by importing a specified amount of U.S. cotton pants fabric. This would allow cotton pants from Vietnam would enter the U.S. duty-free as soon as the agreement is implemented. It is said the ratio for the program is “close” to 1:1. However, for men’s cotton pants, there could be a 15 million square meter equivalents (SMEs) annual cap until year 10, after which it will increase to 20 million. There is no quantitative limit for the other types of cotton pants that can be shipped under the program, such as women’s, girls’ and boys’ pants.
  • A limited list of cut-and-sew items that Vietnam and other TPP countries can ship to the U.S. under the preferential TPP duty rate. These include synthetic baby clothes, travel goods including handbags, and bras.
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Author: Sheng Lu

Professor @ University of Delaware

10 thoughts on “USTR Michael Froman Comments on the Textile and Apparel Chapter under TPP”

  1. It is interesting to see how globalization has created torn interests from different parts of the same industry. The soft goods industry may collectively be a whole, but negotiations like the TPP show how it is really broken down into smaller parts such as textiles, importers, retailers, etc. and it stresses how each one is differently affected by trade and the politics of trade.

  2. I never really thought about how conflicting different areas of the fashion industry could be. It does make sense that the textile industry has been wanting to produce more product domestically and that that contradicts a lot of areas of the apparel industry because they need to produce their product in the cheapest and most efficient way possible. It seems like a never ending conflict and I do not really see how they can agree on the TPP. They are definitely affected in different ways.

    1. “conflicting interest”–think about the debate over rules of origin
      How TPP can be reached despite the conflicting interests—stay tuned for our class on Friday 🙂

  3. I agree with Michael Froman. I believe every sector of the Textile and Apparel industry has their own concerns and interests. This class has really opened my eyes to see how many different areas and subdivisions go into what we know as the T&A industry. Froman describes some of the sectors like retailers, importers, exporters and more. What importers and retailers might want could be very different. Importers, in some cases, want their product to be made as cheaply as possible and with as little issues as possible. Retailers want exactly what is best for their customer. Sometimes these issues will not line up and in turn be conflicting for the people involved. Froman says in closing, that they do the best they can to keep all people and sectors in mind. I can imagine how difficult this can be when there is so many different beliefs.

  4. I do agree with USTR Michael Froman because the Textile and Apparel Industry and many concerns, that either overlap or directly effect another country, are based off another country’s decision. This is best described here where Froman states, “this is one where, you know, every issue is tied to every other issue and every country’s outcome is balanced against every other country’s outcome. And so that’s the agreement that we’ll be putting forward under TPA for a vote by Congress.” As a result of countries conflicting interests, it is important to take everyone from all sectors into consideration in hopes for the best possible outcome for everyone. An example of conflicting interests for a U.S. yarn producer vs. a U.S. apparel manufacturer/apparel importer/retailer in regards to Yarn-forward RoO and fabric-forward RoO:

    U.S. Yarn producer Yarn-Forward RoO: Apparel & fabric manufacturers in the region can only use U.S. made yarn (as the only supplier) so as to be qualified for duty-free access under the FTA.

    U.S. Yarn Producer Fabric-forward RoO: Apparel & fabric manufacturers in the region can import yarn from elsewhere and still be qualified for duty-free access under the FTA.

    U.S. apparel manufacturer/ apparel importer/ retailer Yarn-Forward RoO- Apparel & fabric manufacturers in the region can only use more expensive US made yarn (as the only supplier) so as to be qualified for duty-free access under the FTA.

    U.S. apparel manufacturer/ apparel importer/ retailer Fabric-Forward RoO- Apparel and fabric manufacturers in the region can import cheaper yarn from elsewhere and still be qualified for duty-free access under the TFA.
    As a yarn producer, Yarn forward – has to be made in the CAFTA region. Based on what we discussed in class, U.S. makes the yarn and only the US has the capacity to make Yarn in the whole CAFTA region. As a U.S. Apparel Importer, they would want fabric forward. They don’t care about cost of goods; they care about flexibility. U.S. made yarns isn’t the cheapest, and an apparel importer would rather use cheaper input from Asia so to speak in order to offer a cheaper product.

    This example highlights Michael Froman’s concern in regards to the importance of taking all sector’s into consideration.

  5. I think this article really shows the complexity of such negotiations. Not only is it necessary to balance the interests of the country as a whole while anticipating how other countries may react, it is also necessary to balance each subcategory of the industry. Agreements that may benefit retailers are completely different for apparel manufacturers and again different from apparel manufacturers. The industry and politics are very complex

  6. I agree with Michael Froman because the T&A industry should follow its own interests because they have their own purposes and accomplishments. I did not understand the different divisions or sectors that are under the T&A industry and what they discuss or decide. I understand that what importers and retailers want are different but some sort of negotiation should be made to make things better between them and for the industry as a whole. I understand that every country has a different outcome but I believe they should be striving to change that and make a difference for the sectors to consider so they can work together.

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