Fashion Intel & Analysis
In advance of a meeting scheduled between President Trump and Indian Prime Minister Narendra Modi, 44 members of congress sent a bipartisan letter to U.S. Trade Representative Robert Lighthizer expressing strong support for reinstating India’s GSP Eligibility. President Trump revoked India’s GSP benefits in June after saying that India was failing to provide the U.S. with equitable and reasonable access to its markets.
The letter asks that India’s GSP status be reinstated as soon as possible to ensure market access for U.S. industries while negotiations continue on other issues. According to the Coalition for GSP, in July alone, American companies lost about $30 million as a result of revoked GSP benefits for India.
The U.S. International Trade Commission (USITC) reports the Earned Import Allowance Program (EIAP) did not provide enough incentives to manufacturers in the Dominican Republic to increase apparel exports from the Dominican Republic to the U.S. This is the tenth, and final, annual review of the Earned Import Allowance Program: Evaluation of the Effectiveness of the Program for Certain Apparel from the Dominican Republic. Under CAFTA, the EIAP allowed manufacturers in the Dominican Republic who used U.S. fabric to earn a credit that could be used to export apparel made with non-U.S. fabric to the U.S. duty free.
The report includes three recommendations from the D.R. government to improve the EIAP, 1) Lower the 2-for-1 ratio of U.S. to foreign fabric to a 1-for-1 ratio; 2) Expand the program coverage to enable other types of fabrics and apparel items to be included in the EIAP; 3) Change the requirement that dyeing and finishing of eligible fabrics occur in the United States. The program was terminated in December 2018 and there are no current efforts to extend this program.
Americans for Free Trade and the Tariffs Hurt the Heartland campaign have an online petition so that everyone can sign a letter opposing the tariffs on imports from China. The coalition will send the letter to the White House and to Congress when they have a critical mass of signatures. Please take a look and see if you want to send a message, it only takes a minute to fill out.
There are several positive developments to report this week. While there are no guarantees, we do see several signs that there could be a resolution of some of the simmering trade disputes affecting fashion brands and retailers. Let's start with the biggest issue - the trade war with China. A delegation of trade officials from China are on their way to Washington DC for talks this week. The goal for these talks is to agree on the agenda for the high-level negotiations planned for October. If the two sides can at least agree on the main issues, that would represent important progress in the talks. There also is the wild card whether President Trump and President Xi may meet during the UN General Assembly.
In addition, yesterday the White House notified the Congress of their intention to sign a trade deal with Japan. While this deal is not a comprehensive free trade agreement, it will open up Japan's market to some U.S. agricultural products and will lower some U.S. tariffs on imports from Japan. The official notification cites a provision in Trade Promotion Authority that allows the President to cut tariffs on products subject to a tariff of 5% or lower. This will leave out most products of interest to fashion brands and retailers. There also will be an executive agreement on digital trade. Press reports say the two sides are still working on specific language to exempt Japan from any 232 tariffs on automobile imports. That deadline is November 13th, and getting the exemption is the priority for the Japanese negotiators.
One more potentially upbeat report, the Administration is hopeful that there will be an agreement with India to reduce barriers to U.S. exports before President Trump and Prime Minister Modi meet in New York later this month. An agreement, and a positive meeting, could mean that GSP duty-free benefits would be restored to imports from India.
As you might expect, not everything is positive. The end of September is when the U.S. could take action against imports from the EU as part of the World Trade Organization dispute over subsidies to Airbus and Boeing. EU officials are frustrated that the Trump Administration has not scheduled any meetings to try to avert a new trade war. The potential retaliation list includes handbags, textile products and apparel, along with many other products.