For SFIA members, the elimination of U.S. tariffs on athletic and other types of apparel and footwear is among the most closely watched issues in the ongoing Trans-Pacific Partnership (TPP) negotiations. Vietnam has been pushing the issue hard, saying this is the only aspect of the entire negotiations in which Vietnam has a major interest and it would be unreasonable for the United States to deviate from the TPP’s “high standards” principles in this area.
Regarding apparel, the United States has tabled a proposal for a yarn-forward rule of origin that would be applied on a unified basis by all TPP partners. This would be combined with both permanent and temporary short-supply provisions, which would be subject to a more liberal cut-and-sew rule of origin. The permanent short-supply provision would cover items that are not made in the TPP region and are not expected to be made in the region in the future (e.g., silk, linen, or items having some unique technical property that makes them unlikely to be produced in the region). The temporary short-supply provision, which would cover items not currently made in the region but capable of being made there in the future, would be phased out after a temporary multi-year period.
“With the rapid growth of many economies in the Pacific-rim, the Trans-Pacific Partnership agreement has the potential to be the most significant trade agreement in the history of the U.S,” said Bill Sells, SFIA Vice President Government & Public Affairs. “There is still much work to be done, but the continued efforts to reach consensus on the agreement by year’s end is very encouraging.”
During the recent Brunei round, negotiators began work on consolidating a short supply list prepared by the United States with additional items requested by other TPP countries. While the United States hopes to use this consolidated list as the basis for upcoming negotiations, Vietnam remains adamantly opposed to the underlying U.S. approach that is based on a rigid yarn-forward rule of origin. Pushing in the opposite direction are 167 members of the House of Representatives, who wrote U.S. Trade Representative Froman in July urging the Administration to maintain a strong yarn-forward rule of origin for textiles and apparel.
Regarding footwear, Vietnam’s objectives include the accelerated elimination of U.S. tariffs on athletic footwear, which typically range from 12 to 20 percent, and for rules of origin that would make it easier for footwear assembled in Vietnam from imported inputs to qualify for preferential TPP duties. Domestic footwear manufacturers have urged U.S. Trade Representative Michael Froman to retain duties on 24 categories of athletic footwear that compete with domestically produced footwear.
Ministers from the 12 countries negotiating the TPP reported that substantial progress had been made during the 19th round of negotiations held during the last week of August in Brunei and they reaffirmed their goal of concluding the agreement by the end of this year. As reported, the TPP negotiations are expected to result in a regional free trade agreement incorporating high standards with few deviations from full trade liberalization principles for goods traded among the member countries. The participating countries include the United States, Canada, Mexico, Peru, Chile, Australia, New Zealand, Brunei, Singapore, Vietnam, Malaysia and Japan.
In what is expected to be an important milestone, leaders of the 12 TPP countries are expected to meet on the margins of the Asia Pacific Economic Council (APEC) summit in Bali, Indonesia in October.
The SFIA will be hosting a webinar on September 12th that will include a discussion of the effects the Trans-Pacific Partnership will have on SFIA member companies among the updates on the changing international trade landscape. Click here for more details and to register.
