By Karen E. Thuermer
As appeared in the American Journal of Transportation (AJOT)
In what may seem as an usual bi-partisan effort for Washington, D.C. these days, 30 members of the U.S. Congress – 15 House Democrats and 15 House Republicans –recently sent a letter to Ambassador Ron Kirk, U.S. Trade Representative, urging that the United States adopt a new approach on apparel trade in order to seek a high-standard Trans-Pacific Partnership (TPP) agreement that promotes U.S. jobs and innovation, creates new trade and investment opportunities, and that is consistent with the business realities, production, and global value chains of the 21st Century.
The Trans-Pacific Partnership (TPP) Agreement, also known as the Trans-Pacific Strategic Economic Partnership Agreement, is a multilateral free trade agreement (FTA) that aims to further liberalize the economies of the Asia-Pacific region. It is currently being negotiated among the United States and eight other partners: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam.
The TPP Apparel Coalition would like to see the TPP include additional Asia-Pacific countries in successive clusters to eventually cover a region that represents more than half of global output and over 40 percent of world trade.
South Korea has requested to join the TPP after the signing of the US-South Korea FTA.
The goal of the TPP Apparel Coalition is to seek a TPP agreement that creates opportunities to maximize innovative strengths and generates U.S. jobs along the full range of activities that American firms and American workers do to bring a product from its conception to the final customer. This includes activities such as design, production, marketing, distribution, retail and support to the final customer.
Currently, textiles and apparel are treated differently than other products. The Coalition maintains that Restrictive rules such as the “yarn forward” style rule of origin, which require all the materials that go into a garment to originate and be assembled in a TPP country to receive tariff-free treatment, are unworkable in today’s global value chains.
Past FTAs with TPP countries have shown that such an “all or nothing” approach does not spur new U.S. exports or new apparel trade, it says.
In fact, according to a Coalition position paper, because consumers today expect a wide variety of fashionable apparel, flexibility in sourcing is vital to meet design specifications and consumer demands.
“While scrutiny in very specific cases may be warranted, applying such constraints to all textiles and apparel goes beyond supporting the domestic industry, rather it actually reduces export opportunities in the region, and artificially increases prices for consumers during a time of global economic distress,” the paper says.
In addition, nearly 70 percent of all duties collected by the United States, the largest importer of apparel among TPP countries, from TPP nations are on apparel imports.
“Changing these rules is important for the exchange of concessions from the other participating nations on new market access for U.S. exports of industrial goods, services and agricultural products, and strong intellectual property rights and investor protections,” it says.
The TPP members have set a goal of reaching the outlines of an agreement by the APEC Leaders’ meeting in Honolulu in November.
Nine rounds of negotiations have taken place so far between TPP partner nations, with the latest – the ninth round, held in Lima, Peru in October.
The United States is participating in the TPP because leaders see it as the best vehicle to advance U.S. economic interests in the rapidly expanding and growing Pacific region.
Not only would a TPP agreement create and retain U.S. jobs, the Coalition maintains, it would promote innovation and competitiveness, encourage new technologies and emerging economic sectors, increase the participation of small- and medium-sized businesses in trade, support the development of efficient production and supply chains that include U.S. firms, encourage firms to invest and produce in the United States, and promote regulatory coherence and cooperation among the TPP members.
The Coalition sees this as significant since in 2010, U.S. consumers spent nearly $340 billion on new clothes and shoes. This translates to Americans purchasing an estimated 20.5 billion garments and 2.3 billion pairs of shoes last year.
“While the United States accounts for one-quarter of the world’s overall apparel and footwear retail sales, the U.S. represents just five percent of the world’s population,” its website reports.