On December 14, 2009, U.S. Trade Representative Ron Kirk announced that the United States would join the Trans-Pacific Partnership (TPP) negotiations to develop a broad free trade pact in the Asia-Pacific region. The TPP negotiating partners currently include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.
According to the Office of the U.S. Trade Representative, TPP will be an “ambitious, 21st-century” agreement that will “enhance trade and investment among the TPP partner countries, promote innovation, economic growth, and development, and support the creation and retention of jobs.” USTR has a comprehensive website with information on the U.S. involvement in the TPP negotiations. The Congressional Research Service (CRS) has also published a comprehensive report on the TPP and issues for Congress to consider.
TPP represents a significant opportunity to enhance the global value chain for yarns, textiles, and apparel, as well as accessories and footwear. The TPP countries include some of the fastest-growing markets for U.S. exports and U.S. branded apparel products and U.S. yarns, textiles, and other components—which grows U.S. jobs.
The opening offer by the United States on rules of origin for apparel is a “yarn forward” Rule of Origin, which means that all materials in an item must originate and be assembled in a TPP country in order to receive the preferential treatment, though USA-ITA, along with bipartisan Members of Congress, do not support such a restrictive Rule of Origin. On October 25, 2011, a bipartisan group of 30 U.S. Representatives sent a letter to USTR Kirk calling for a flexible rule of origin and meaningful market access, especially for textiles and apparel. On May 1, 2012, a bipartisan group of 15 U.S. Senators sent a similar letter to President Obama.
During the December 2012 talks in Auckland, New Zealand, the United States made a new proposal for benefits for textiles and apparel. The U.S. negotiators met with several apparel brands and retailers and made a detailed presentation about their new approach to "short supply" in TPP. For more information on the short-supply proposal, click here.
The Obama Administration's goal is to complete the TPP negotiations by the end of 2013, though there remains much work to be done. But, the ongoing negotiations will be the basis for the eventual conclusion of the TPP agreement.
The United States Fashion Industry Association (USFIA) supports removing barriers to trade with countries in the Asia-Pacific region via the Trans-Pacific Partnership (TPP) and has been involved in stakeholder meetings during the negotiating rounds in the TPP partner countries.
USFIA supports an agreement that is flexible and recognizes that companies rely on global value chains to produce and to sell. USFIA does not support the restrictive “yarn forward” Rule of Origin offered by U.S. negotiators, which would require all the materials in an item to originate and be assembled in a TPP country in order to receive the preferential treatment. USFIA believes this will hinder trade opportunities within the TPP as well as job growth and sustainability in the United States. A true 21st century agreement should contain a flexible Rule of Origin for the majority of products and recognize the importance of the entire supply chain in sourcing decisions. When choosing sourcing partners, U.S. brands look at a variety of components, including design availability, fabric and trim availability, vendor compliance, and speed-to-market, not to mention overall value for price paid. As such, TPP should include, first and foremost, a liberal, simple, streamlined rule of origin for textiles and apparel, based on change in tariff heading (CTH) and/or the regional value content (RVC) requirement. In addition, TPP should be a 21st-century agreement, harmonized with existing Free Trade Agreements and other preference programs and recognize the global regulations with which companies must comply, in order to truly work with the global value chain.
USA-ITA welcomes the Administration’s short-supply proposal and looks forward to continuing discussions about ensuring a flexible, liberal, 21st-century Rule of Origin for textiles and apparel in the TPP agreement.
On December 14, 2011, USA-ITA (now USFIA) filed a statement with the U.S. House Ways & Means Subcommittee on Trade for the December 14th hearing on the Trans-Pacific Partnership. In the statement, USA-ITA said it is time for the U.S. to recognize that the textile and apparel sector does not need special Rules of Origin or special protection in the TPP negotiations. In order for the TPP agreement to be a true 21st-century agreement, it must recognize that U.S. companies manufacture for a global consumer. To achieve this end, the TPP agreement must contain a flexible Rule of Origin for the majority of products and impost a restrictive yarn-forward Rule of Origin only on those U.S.-manufactured products that need special protection. The yarn-forward Rule of Origin would hinder trade opportunities within the TPP, and consequently hinder job growth in the United States. The full USA-ITA statement is available here and the press release is available here.
On January 13, 2012, USA-ITA (now USFIA) filed comments with USTR to support the expansion of the TPP talks to include Japan, Mexico, and Canada. Similar to the comments filed with the House Ways and Means Committee, the comments emphasized the potential benefits of expanding TPP and also mentioned some of the special concerns for members doing business in Japan, Mexico, and Canada.
On July 2, 2012, USA-ITA (now USFIA) joined U.S. and Vietnamese apparel industry associations in sending a letter to the Vietnamese and U.S. negotiators urging the inclusion of provisions that recognize the importance of global value chains to the competitiveness of the U.S. and Vietnamese apparel industries. These provisions include simple and flexible rules of origin for apparel, focusing on either assembly or regional value content requirements; immediate and reciprocal duty-free access for apparel; and customs procedures that facilitate trade and reflect smart enforcement based on risk.
On June 9, 2013, USA-ITA (now USFIA) filed comments on Japan’s entry into the TPP negotiations, updating our comments filed the year prior, in support of Japan’s participation as it will allow our members “duty-free entry into Japan’s lucrative and influential retail market” and urging a flexible rule or origin for textile and apparel products.
The Trans-Pacific Partnership (TPP) Apparel Coalition
USFIA (formerly USA-ITA) is an active member of the TPP Apparel Coalition, along with the American Apparel & Footwear Association (AAFA), National Retail Federation (NRF), Outdoor Industry Association (OIA), and the Retail Industry Leaders Association (RILA). The TPP Apparel Coalition includes American retailers, apparel brands, apparel manufacturers, and importers who design, market, and retail products manufactured in and imported to the United States, as well as market and retail products throughout the TPP partner countries.
The Coalition supports the negotiation of a 21st-century agreement, which offers a potential growth platform for economic integration, trade and investment that could provide tremendous new opportunities for our members to buy and sell goods and services and to sustain and grow well-paying U.S. jobs and provide high value add for the US and TPP economies.
The TPP Apparel Coalition has produced a number of resources on TPP, including:
- TPP Apparel Coalition Position Paper
- Fact Sheet: Common Myths About the Trans-Pacific Partnership and the Yarn Forward Rule of Origin
- Fact Sheet: U.S. Free Trade Agreements and the Yarn Forward Rule
- Fact Sheet: Yarn Forward and the TPP
- Fact Sheet: Customs & the TPP
- Fact Sheet: U.S. Domestic Textile Industry & the TPP
- Fact Sheet: Vietnam & the TPP
- Stakeholder Presentation: TPP & Textiles & Apparel: A Storyboard
- Stakeholder Presentation: The Supply Chain Structure for the Apparel Industry and the Role of TPP
- December 14th Ways & Means Statement
On February 13, 2013, the TPP Apparel Coalition welcomed a new study titled, Analyzing the Value Chain for Apparel Designed in the United States and Manufactured Overseas. The report, by trade economist Susan Hester, Ph.D., of Moongate Associates, found that on average, 70.3 percent of final retail price of studied apparel is created by workers in the United States. Specifically, the global value chain for apparel relies on a full range of highly-skilled and highly-compensated American workers in blue-collar and white-collar jobs that contribute to the design, development, production, importation, distribution and sale of apparel in the United States. The Coalition conducted numerous Hill meetings to talk about the study, and will continue to use it when discussing the importance of global value chains to the TPP agreement.
For more information on the TPP Apparel Coalition, visit http://www.tppapparelcoalition.org.
The U.S. Business Coalition for TPP/Emergency Committee for American Trade (ECAT)
USFIA (formerly USA-ITA) supports the U.S. Business Coalition for TPP and is a member of the Emergency Committee for American Trade (ECAT), which co-chairs the coalition.
The U.S. Business Coalition for TPP supports the negotiation of a high-standard TPP agreement that will open markets for U.S. farmers, manufacturers, and service providers, and increase U.S. exports and support and create American jobs. The TPP agreement should also advance security, stability, and prosperity throughout the Asia-Pacific region. The U.S. Business Coalition for TPP is co-chaired by the Emergency Committee for American Trade (ECAT), founded in October 1967 by a number of U.S. business leaders concerned about a worldwide trade war resulting from pending proposals in Congress to restrict imports into the United States. These business representatives felt that a combination of restrictions and retaliations could destroy two decades of progress in the expansion of trade and investment and would consequently damage other areas of international cooperation.
USA-ITA has joined the U.S. Business Coalition for TPP in signing a number of letters and statements, including:
- 06-29-12: U.S. Business Coalition for TPP Services Letter to USTR
- 12-14-11: U.S. Business Coalition for TPP Statement for House Ways & Means Hearing on December 14th
- 11-10-11: U.S. Business Coalition for TPP Statement on APEC and TPP
- 10-19-11: U.S. Business Coalition for TPP Letter to Obama in Advance of Peru Negotiations
- 09-07-11: U.S. Business Coalition for TPP Letter to Obama in Advance of Chicago Negotiations
- 08-25-11: ECAT Letter to USTR on Supply Chain Priorities for TPP