Fashion Intel & Analysis

This week there were mixed signals from President Trump and key Administration officials about the progress in negotiating a trade deal with China. This morning on FOX News, the President said "the deal will probably happen." And on Wednesday he said that he intends to keep tariffs on Chinese goods even after a deal is signed. “There are no plans to remove the tariffs once an agreement is struck because we have to make sure that if we do the deal with China that China lives by the deal,” President Trump told reporters. These comments reflect a debate within the Administration about how to enforce any trade agreement unless there are penalty tariffs in place. Some ideas that are supposedly under discussion are keeping the 301 tariffs in place only on the original $50 billion in retaliation, and perhaps also lowering the duty rate from 25 percent. But no decisions have been made yet.  

Even with the uncertainty, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will be in Beijing next week for another round of trade negotiations with Chinese Vice Premier Liu He. We expect there will be several more rounds of talks for senior officials. The face-to-face meeting between President Trump and President Xi now is expected to happen in late April.  

While President Trump is very positive about the updated NAFTA agreement, called the U.S.-Mexico-Canada Agreement, once again he sends mixed signals. In the FOX News interview he said "it should get approved pretty quickly by Congress, because it’s a great deal." But as soon as he was asked whether Democrats in Congress will support the new agreement, Trump renewed his threat to terminate NAFTA if the Congress does not act.

In a Federal Register notice published today, the Trump Administration confirms that effective April 1st, there are several changes to the Rules of Origin for apparel under the Morocco Free Trade Agreement. The Government of Morocco filed petitions in 2016 under the FTA's Commercial Availability provisions. The FTA Rules of Origin are revised for five types of women's woven garments to allow for fabrics to originate from any country.  
 
These products are:  

  • Women’s or girls’ cotton corduroy skirts and divided skirts classified in subheading 6204.52, of cotton corduroy fabrics classified in subheading 5801.22
  • Women’s or girls’ man-made fiber blouses, shirts and shirt-blouses classified in subheading 6206.40, of polyester corduroy fabrics classified in subheading 5801.32
  • Women’s trousers classified in subheading 6204, of synthetic bi-stretch fabric containing 45 to 52 percent by weight of rayon and 1 to 7 percent by weight of spandex, classified in subheading 5515.11
  • Women’s trousers classified in subheading 6204, of woven fabric containing 60 to 68 percent by weight of polyester, 29 to 37 percent by weight of rayon and 1 to 7 percent by weight of spandex, classified in subheading 5515.11
  • Women’s trousers classified in subheading 6204, of woven herringbone fabric containing 31 to 37 percent by weight of viscose rayon, 17 to 23 percent by weight of wool, 5 to 11 percent by weight of nylon and 1 to 6 percent by weight of spandex, classified in subheading 5408.33

On Wednesday, the Responsible Sourcing Network released the YESS: Yarn Ethically & Sustainably Sourced Standard and YESS workbook. The documents provide guidance for spinners to avoid purchasing cotton that has a high production risk of forced labor.  The YESS Standard is a specific framework that applies the Organization for Economic Co-operation and Development’s (OECD) “Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector.”

“After years of engaging brands on the issue of forced labor in the cotton sector, it was clear to me that a robust industry-wide initiative was needed to identify and address the harm of forced labor in the upstream cotton supply chain,” says Patricia Jurewicz, Vice President of the Responsible Sourcing Network. “Not only has there been huge success with a similar approach for conflict minerals, but companies are now being required by law to address forced labor in their supply chains,” she continues.

Nirapon is a new Bangladesh-managed organization tasked with overseeing the ongoing safety and training efforts in all the Bangladesh factories from which its members source.  The successor to the Alliance for Bangladesh Worker Safety is committed to providing a safe work environment for Bangladesh garment factories, workers, owners, and managers.

Nirapon will monitor the factories to verify that they continue to meet the National Action Plan harmonized standards for structural, fire, and electrical standards, have implemented standardized training programs focused on worker safety, and continue to make the helpline, Amader Kotha, available to their factory workers.  To learn more about Nirapon click here.
 

Yesterday, President Trump met with Brazilian President Jair Bolsonaro at the White House and, as expected, trade was a key issue. Trump and Bolsonaro agreed to build a “Prosperity Partnership to increase jobs and reduce barriers to trade and investment,” according to the joint statement released after the meeting. The two leaders announced a plan of first steps to remove barriers to agricultural trade. 

In addition, President Trump said he would formally support Brazil’s accession to the Organization for Economic Cooperation and Development (OECD) and, in return, President Bolsonaro agreed that Brazil would forgo any special and differential treatment in World Trade Organization negotiations, corresponding with the United States’ efforts to implement new rules that make it harder for larger economies to self-designate as developing countries entitling them to preferential treatment.