NAFTA Renegotiation and Textile-Specific Rules of Origin in Free Trade Agreements: Discussion Questions from FASH455

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(Photo credit: Steve Lamar, AAFA)

#1 The US textile industry and the fashion retailers/brands/importers have very different priorities regarding modernizing and updating NAFTA. Do you believe that a compromise acceptable to both sides can be found? If so, what do you believe that compromise can be?

#2 Overall, why or why not do you think the U.S. textile and apparel industry is a beneficiary of NAFTA over the past decade? From the perspective of the U.S. textile and apparel industry, should or should not reducing the U.S. trade deficit be a prioritized objective in the NAFTA renegotiation?

#3 What will happen to the U.S. textile and apparel industry if NAFTA is gone? How should U.S.-based textile and apparel companies respond to NAFTA’s termination?

#4 In your view, why or why not the “yarn-forward” rules of origin are outdated in today’s global-based textile and apparel supply chain?

#5 Why do you think the “yarn-forward” rules of origin vary from free trade agreement (FTA) to FTA? Do you think there’s a way to make a universal “yarn-forward” rule for all U.S. FTAs?

#6 Why are the textile-specific rules of origin under free trade agreements so complex? What potential issues do you think can arise because of the complexity of these rules?

(Please feel free to join our online discussion. In your comment, please mention the question #)

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Author: Sheng Lu

Professor @ University of Delaware

13 thoughts on “NAFTA Renegotiation and Textile-Specific Rules of Origin in Free Trade Agreements: Discussion Questions from FASH455”

  1. #3. I just recently read an article about what would happen if NAFTA was completely abolished. The main points that were talked about in this article were; there would be higher tariffs, broken supply chains, more expensive goods and ultimately, estranged neighbors. I strongly agree with the points made in this article. The higher tariffs would cause about a 7.5% increase on American goods, whereas the NAFTA has reduced the tariffs between the three countries to zero. This will have a major impact on North American trade. American’s should expect to pay more for Mexican goods because right now since there are no tariffs, this allows us to be able to pay a lower price for goods, abolishing NAFTA would change this. Getting rid of NAFTA could also hurt the relationships we have with the signing countries, because this agreement has made everyone more willing to work together due to the economic partnership. As for American textile and apparel companies, this would cause prices to go up ultimately cutting into the profits of the companies. I believe that these American companies need to take a stand so that NAFTA does not go away for good. It wouldn’t be good for anyone.

  2. #4 In my opinion, I think that the “yarn-forward” rules of origin are outdated in today’s global-based textile and apparel supply chain. The industry is so globalized today, so I think that it is kind of impossible for products to be made within certain regions from start to finish, or from fiber to garment. All countries around the world rely on each other for different resources and I think that the yarn-forward rules of origin in a way restrict countries from trading amongst each other and relying on one another for the manufacturing of different textiles and apparels.

  3. #3 What will happen to the U.S. textile and apparel industry if NAFTA is gone? How should U.S.-based textile and apparel companies respond to NAFTA’s termination?

    As Cameron discussed in her blog post, I completely agree that the termination of NAFTA would cause a slew of issues in both our local and global economy. I think it has been a great aid in connecting our global markets to one another so we can benefit from each others resources and labor. Also, I don’t think there is any perfect system or agreement, especially on a global scale. There will always be some issues. I definitely recognize some refinements that need to be revisited, such as cleaning up regulations surrounding TPL’s and making sure no country is cheating the system through “back door entry” into the US market, but overall NAFTA has been key to our trade negotiations. If the US cuts ties with NAFTA, I think the US would be left in the dark, scrambling on how to fix the holes in some of their supply chains. An agreement should be such that every partner benefits equally, if the US doesn’t think they the are getting equal benefits, they should focus on why that is…because with the proper attention to fix those issues, NAFTA can work more seamlessly for all parties involved.

  4. This article shined a light of comprehension on the subject of NAFTA. In combination with our discussions in class as well as latest essay assignment the debate of the agreement is clearer to me. To my understanding, a small percentage would say that NAFTA has been, for the most part, positive. I however, would have to disagree only due to the fact that the goals were to eliminate the barriers and promote trade. Since NAFTA has accomplished exactly that and shown benefits to many countries and citizens alike, I believe this aspect proves the trade ideals to be some what constructive. However, these changes have mostly been seen in the key six players, lacking both the necessary and promised attention of other nations. This has a great deal to do with yarn forward rules. Not only are these standards impossible in todays manufacturing but feeding into this unfair situation. NAFTA can be successful but only if changes are made to assist all those involved. Likewise, elimination of this rule would cause good results for all markets, not just ours.

  5. #3 What will happen to the U.S. textile and apparel industry if NAFTA is gone? How should U.S.-based textile and apparel companies respond to NAFTA’s termination?

    If NAFTA is gone, the U.S. textile and apparel industry will cause a great amount of issues in both our local and global economy. I believe that NAFTA has been very successful in connecting our global markets to each other which has been extremely beneficial. With NAFTA we are able to gain access to resources and labor that we do not have. There is always going to be issues with agreements, but the way we react and work to fix these issues will affect the success of our textile and apparel companies. Every partner of an agreement should benefit equally, but if a member feels as though they are not than they must do something to change that. If the U.S. focused on fixing the issues, NAFTA can still be a working and developing agreement. Many can benefit from NAFTA and all that it includes.

    1. In my view, NAFTA is more about the regional economic integration. Why do you think “NAFTA has been very successful in connecting our global markets to each other which has been extremely beneficial.” Can you explain more? You also mentioned that “If the U.S. focused on fixing the issues, NAFTA can still be a working and developing agreement.” But just like a business contract, a done deal is a done deal. Will it create unnecessary uncertainties for companies if we make NAFTA a “working and developing agreement”–meaning the rules will always keep changing?

  6. 4. In my opinion, I feel as though the “yarn-forward” rules of origin are especially outdated in today’s global textile and apparel industry. The yarn-forward rule states that each step of apparel production, from the spinning of the yarn, must take place in one of the FTA regions. In today’s textile and apparel industry, America relies on other countries to help create apparel. I don’t think that it’s possible for the production of a garment to be limited to one specific country because each region possesses its own set of skills and labor.

    6. In regards to my previous comment, I think that the textile-rules of origin are so complex because of the fact that America relies on other countries in order to manufacture apparel. There can’t be a law enforcing production within one country. The lack of labor and production will in turn lead to the downfall of the textile and apparel industry. I think that the complexity of the rules will cause disputes between other countries because it directly affects their work force and economy.

    1. very interesting thinking! for question #4, how about the interests of the US textile exporters? In their view, if free trade agreement is a club, then the benefits should be enjoyed by its members only (i.e. only those products using regional made inputs can be qualified for the preferential duty treatment).

      regarding question #6, can you explain more why ” complexity of the rules will cause disputes between other countries because it directly affects their work force and economy”?

  7. #4 In your view, why or why not the “yarn-forward” rules of origin are outdated in today’s global-based textile and apparel supply chain?

    In my opinion, I do believe that the “yarn-forward” rules of origin is outdated and does need to be updated. The textile and apparel industry is mainly based off of globalization and would make it almost impossible for it not to be. Both developed and developing countries all use each other to get different resources and the “yarn-forward” rules of origin does clash with how globalization does work today.

  8. #4 In your view, why or why not the “yarn-forward” rules of origin are outdated in today’s global-based textile and apparel supply chain?

    I feel that the “yarn-forward” rules of origin are outdated in today’s global-based textile and apparel supply chain. These rules state that every step of the supply chain must take place in an FTA region. Today, many materials are hard or expensive to make or find in these regions, and need to be sourced from other places outside of the FTA region.

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