Fashion Intel & Analysis
After a trilateral meeting in New York last week, Canada has agreed to join the United States and Mexico in a new trade agreement, which will replace the North American Free Trade Agreement (NAFTA). The new agreement will be called the United States-Mexico-Canada Agreement (USMCA). “USMCA will give our workers, farmers, ranchers and businesses a high-standard trade agreement that will result in freer markets, fairer trade and robust economic growth in our region. It will strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home,” said the trade negotiators of the three countries in a statement.
According to a longer joint statement, the three nations discussed issues including non-market-oriented policies and practices of third countries, industrial subsidies and state-owned enterprises, forced technology transfer and practices of third countries, World Trade Organization (WTO) reform, and digital trade and e-commerce, among other issues.
According to reports, A U.S. official also pointed to the prospect of enforcing the agreement, calling it “one of the most enforceable trade agreements we've ever had.”
As a reminder, USFIA and Associate Member Akin Gump will hold a webinar with a full update on the status of the NAFTA negotiations on Wednesday, October 3rd. This webinar is free for USFIA members and affiliates, so we encourage you to register to learn the latest news on the agreement. Click here for details and registration.
This week, the United States, Australia, Canada, New Zealand, and the United Kingdom announced the Principles to Guide Government Action to Combat Human Trafficking in Global Supply Chains, a framework on which all countries can build a strategy to take effective action to prevent human trafficking in public and private sector supply chains, one of the key themes of last year’s “Call to Action.” The Principles highlight the critical role of governments and acknowledge the necessity of strategic cooperation with civil society, survivors, and the business community. The U.S. Department of State will invest $75 million in the Program to End Modern Slavery. The Principles are available here. More information is available on the State Department blog.
Meanwhile, the U.S. Department of Labor released two reports that shine a spotlight on child labor and forced labor in nations around the world: the eighth edition of the List of Goods Produced by Child Labor or Forced Labor and the 17th annual edition of the Findings on the Worst Forms of Child Labor. These reports, prepared by the Department's Bureau of International Labor Affairs (ILAB), highlight specific sectors in which child labor or forced labor persists in foreign nations, and describe the progress some countries have made in upholding their international commitments to eliminate these practices. The List of Goods Produced by Child Labor or Forced Labor notably removed cotton from both Paraguay and Uzbekistan that had been produced by child labor previously; the Cotton Campaign has opposed the removal of Uzbekistan from the list. In addition, two key apparel sourcing countries—Colombia and India—met the new criteria for "Significant Advancement" in the Findings on the Worst Forms of Child Labor, which this year requires specific legal and policy labor standards to be met. The reports are available on the Labor Department website.
The United States Fashion Industry Association (USFIA) joined with Americans for Free Trade in sending a letter to U.S. Trade Representative Robert Lighthizer requesting an exclusion process for the most recent wave of tariffs on $200 billion in goods. While an exclusion process was provided to American businesses for the nearly $50 billion in previously announced tariffs (Lists 1 and 2), the administration has said that no similar process will be provided on the most recent tariffs on $200 billion (List 3) in goods that went into effect Monday. The letter is available here.
Lenzing, the innovative Austrian-based cellulosic fiber company, announced this week that it plans to “temporarily mothball” its plans to expand Tencel production in Mobile, Alabama, citing the “rising likelihood of increasing trade tariffs, paired with the potential surge in construction costs due to the buoyant U.S. labor market” for increasing the risk profile of this project. Lenzing will put all its effort to readjust the execution of its growth plan to meet strong market demand of its lyocell fibers. This includes an increased focus on the lyocell expansion project in Prachinburi (Thailand). Lenzing will reassess this decision on a regular basis but no substantial additional lyocell volumes, over and above the successful 25.000 tons expansion in Heiligenkreuz (Austria), will be added to the market in 2019 and 2020 by Lenzing. The press release is available on the Lenzing website.
During the United Nations General Assembly, President Trump and South Korean President Moon Jae-in announced that they have signed an updated U.S.-Korea (KORUS) free trade agreement, which President Trump called “a basic redoing of the agreement that was done before, which was a very unfair agreement for the United States,” adding that the new agreement is “great for South Korea. It’s great for the United States. It’s great for both.” President Moon added, “As for the revision of the free trade agreement between our two countries, I believe that it’s significant because it means that our alliance is being expanded to the economic realm as well. And I’m very pleased that we have revised this agreement to achieve a freer, a fairer, and more mutually beneficial agreement.” The full transcript of the announcement is available on the White House website.
According to the Office of the U.S. Trade Representative’s fact sheet, “The United States achieved important steps to improve the large trade deficit in industrial goods and to address KORUS implementation concerns that have hindered U.S. export growth.” The agreement covers auto and truck tariffs, pharmaceutical reimbursements, and customs: “Korea will address long-standing concerns with onerous and costly verification procedures through agreement on principles for conducting verification of origin of exports under KORUS and establish a working group to monitor and address future issues that arise.” The fact sheet is available on the USTR website.
While not mentioned in the fact sheet, the updated KORUS agreement includes a commitment by the United States to expedite the addition of three products to the Commercial Availability list to allow the use of non-FTA inputs. The letter is available here.
House Ways & Means Committee Chairman Kevin Brady (R-TX) praised the announcement for putting “our trade relationship on an even stronger and more durable foundation.”
USFIA to Help Companies Minimize Impact of the Tariffs
As a reminder, yesterday, September 24th, the United States officially imposed tariffs on an additional $200 billion in imports from China, including some products imported by the fashion industry like textiles and fabrics, hats, handbags and wallets, and leather goods. The full list of products is available on the USTR website. The United States Fashion Industry Association (USFIA) will host a webinar series in early October, Fighting on the Frontlines of the Trade War: Strategies for Minimizing the Impact of the New Tariffs on Your Business. These three webinars, which are free for USFIA members/affiliates, will feature experts discussing ways to minimize the impact through the exclusions process, through working with your customs brokers, and through other duty-savings initiatives. Click here for details and registration.