Textile Producers Warn Against Apparel Tariff Exemptions in TPP

U.S. trade negotiators likely won’t wrap up textile origin and tariff negotiations in the Trans-Pacific Partnership until the final stage of talks, said National Council of Textile Organizations President Auggie Tantillo in a March 25 briefing with reporters. The U.S. textile industry is continuing to fight to keep the yarn forward rule of origin for apparel “robust,” said Tantillo. NCTO will remain neutral on TPP until USTR releases the text, but is “positioning” to support Trade Promotion Authority, so long as the final package surrounding the bill doesn’t threaten the U.S. textile industry, he said.

NCTO has long feared a surge of Vietnamese apparel imports through TPP (see 13082011), but Tantillo said USTR has shown “unprecedented” outreach to the textile community. The Office of the U.S. Trade Representative has assured NCTO the “short-supply list” will be the “main exception” to the yarn forward rule. The list draws together exempted inputs to the yarn forward rule, which aims to ensure a product's inputs are sourced from the exporting country. Some observers have said TPP textile talks are likely nearly complete (see 1503160071).

There's still fear of an “11th hour” decision to tack a tariff-preference level program for apparel on top of yarn forward, Tantillo and other textile CEOs said at the briefing. A TPL allows a certain threshold of imports of goods that don’t qualify for the rules of origin. “TPLs are a blanket exemption” that disregards yarn-producing capability and regional access, said Tantillo. “We have developed a high level of trust with the administration and work very closely with them, but until they come back from that final round and show us the documents, we won’t know for sure.” USTR didn't respond for comment.

At the last minute, previous administrations put apparel TPLs in both the North American Free Trade Agreement and the Central American Free Trade Agreement, said Tantillo. The textile industry also prefers a 10-year tariff phase out period for sensitive apparel products, and correlating market reforms in Vietnam, said Tantillo.

The NCTO also opposes a flat extension of the Nicaragua TPL program, which expired in recent months (see 1410150064), said Tantillo. The industry is keeping an eye on the African Growth and Opportunity Act, but the biggest concern is with additional TPL renewals, he said. The TPA legislative process, in the event that lawmakers introduce a bill, will be a lightning rod for amendments, ranging from currency rules to Miscellaneous Tariff Bill renewal, trade observers have said. “Members of Congress are calling us constantly [asking] ‘what’s your position?’” said Tantillo, referring to TPA.

The CEOs at the briefing included Jay Self from Greenwood Mills, Jeff Price from Specialty Fabrics Division of Milliken & Company, Robert Chapman from Inman Mills and William Jasper from UNIFI. They, along with Tantillo, said U.S. textile investment is sharply rising and domestic producers are largely maintaining U.S. market share. Despite having to combat cheap production from China and Vietnam, the U.S. textile industry "invested $20.5 billion in new plants and equipment from 2001 to 2013," said a NCTO release. U.S. textile exports reached a record $24.4 billion in 2014, with nearly two-thirds of shipments headed to free trade agreement partners in the Western Hemisphere, said the release.