U.S. Textile and Apparel Trade Policy

Update

Kim Glas Deputy Assistant Secretary for Textiles

and Apparel

International Trade Administration

U.S. Department of Commerce

USA-ITA

January 9, 2013

Agenda

Trans-Pacific Partnership

CAFTA-DR Fixes/AGOA 3rd Party Fabric

Extension

Free Trade Agreements

National Export Initiative

Argentina, Brazil, and Mercosur

Trans-Pacific Partnership Agreement

Successful completion of 15th negotiating round in

Auckland, New Zealand: December 3 – 12th

• Mexico and Canada join TPP negotiations

• Target completion the end of 2013

TPP: A 21st-Century Agreement that

Promotes Jobs and Sourcing

Opportunities

Labor and Environmental provisions

Promotes trade and investment among member

countries and ensures benefits are shared among

signatories

Forward-looking agreement with aim of future

expansion to other partners in the region

TPP Region Has Substantial Textile and

Apparel Production

Total TPP textile exports -

$25.7 billion

Total TPP apparel exports -

$32.7 billion

The four largest TPP textile

exporters – the U.S.,

Vietnam, Mexico and

Malaysia – represent over 80

percent of total TPP textile

exports

Exports by TPP Country

Textiles Apparel Total

United States: $13.8 B $5.2 B $19.0 B

Vietnam: $3.8 B $13.2 B $17.0 B

Mexico: $2.1 B $4.6 B $6.7 B

Malaysia: $2.0 B $4.6 B $6.6 B

Canada: $2.0 B $1.3 B $3.3 B

Singapore: $851 M $1.2 B $2.1 B

Peru: $374 M $1.5 B $1.9 B

Chile: $213 M $441 M $654 M

New Zealand: $297 M $206 M $503 M

Australia: $253 M $235 M $488 M

Brunei: $2 M $224 M $226 M

Source:: WTO Statistics Database, “Time Series on International Trade”.

TPP: Textiles and Apparel

The Product Specific Rule of Origin (PSR) for textiles is based on the ‘yarn-

forward’ concept, where a good qualifies for duty preferences if production

occurs in one or more parties to the FTA from the yarn manufacturing stage

forward to the end product, however we realize that some products may not be

available from TPP partners.

Thus, in order to maximize the eligibility of textile and apparel products for duty

preference, flexibilities will be considered, such as short supply.

A short supply list (SSL) would be structured to identify inputs not available in

TPP countries and eligible for use from third countries.

The SSL would be structured on a permanent and temporary (3 years) basis.

After FTA implemented, Interested Entities submit requests for review by

U.S. Government.

NAFTA style: request rule of origin change for specific product that

allows sourcing of fiber, yarn, or fabrics from outside region. U.S. first vets

domestically, then consults with trading partners.

CAFTA style: request that a specific fiber, yarn, or fabric be placed on a

list that can be used in any product. Request/offer between businesses

with U.S. Government determining based on submitted information

whether product is available.

Current Short Supply Process under

NAFTA/CAFTA

Governments will agree to shorts supply lists of fibers,

yarns, and fabrics that can be sourced from outside the

region for qualifying products. These lists will be part of

the agreement when implemented. There will be NO

PROCESS after implementation.

No voluminous request/offer communications need be

provided.

Governments will vet proposed products with their

industries and discuss concerns to reach a resolution on

which products will be included on the short supply lists.

NEW for TPP: Negotiated Short

Supply

Simplified

Consolidated

Logical

Efficient

Changes under TPP Short Supply

Types of Product Descriptions for TPP

•Example - 5506.3000 – acrylic or modacrylic synthetic staple fiber, carded. Entire HTS

classification

•Example - 100 percent cotton yarn-dyed woven flannel fabrics, made from 14 through 41 NM single ring-spun yarns, classified in 5208.43.0000, weighing 200 grams per square meter or less.

Subset of HTS classification

•Example – Fabrics of average yarn number exceeding 93 metric, classified in tariff items 5208.2160, 5208.2280, and 5208.2980, for use in dress shirts classified in HTS headings 6205 and 6206.

Product with a specified end-use

•Example – 3-layer laminated fabric; waterproof and breathable with DWR coating and laminated with ePTFE membrane classified in tariff item 5903.9025; face: weave, twill or plain; back: tricot knit, Warp face: 70-120d; Warp back: 20-40d; Filling face: 60-130d; Filling back: 15-30d; face and back: flat or textured continuous filament. Face 125-180 g/m2; Back: 28-40g/m2 for use in outdoor apparel

Composite product with a specified end-

use

• Passed US Congress

on August 2, 2012

• Signed by the

President on August

10, 2012

• Fixes took effect on

October 13, 2012

Implementation of AGOA 3rd Party

Fabric Extension and CAFTA Fixes!

The African Growth and Opportunity Act

(AGOA)

Expires September 30, 2015

Administration committed to working with Congress to extend

AGOA beyond 2015

3rd country fabric provision extended through September 30,

2015

Trade (YTD 2012)

- U.S. imports of textiles and apparel from SSA totaled

$919.5 million in 2011 (+14.5% from 2010)

- Almost 90% of imports receive preferential access to US

market under AGOA

CAFTA-DR Update: Technical Fixes

1. Women’s and girls’ woven sleep bottoms

2. Treatment of knit to shape components

3. Clarification of Chapter notes to the short supply list for sewing thread, pocketing fabrics, and visible lining fabrics

4. Treatment of elastomeric yarn in fabrics on the short supply list

5. Classification of knit waistband ribs

6. Monofilament sewing thread

Implementation of Three New FTAs

In 2012, 3 FTAs implemented: Korea (March 15, 2012); Colombia

(May 15, 2012) and Panama (October 31, 2012)

Rule of origin: yarn-forward – immediate duty-free if product meets

rules of origin

Textiles-specific safeguard

Customs enforcement provisions

Streamlined commercial availability provisions

Combined, US exports of textiles and apparel to these markets grew

by 13% between 2010 and 2011, to $646.1 million

National Export Initiative (NEI)

President Obama announced the

National Export Initiative (NEI) in

his 2010 State of the Union

address, and set the ambitious goal

of doubling U.S. exports in the

next five years to support millions

of jobs here at home.

U.S. Textile & Apparel Trade with

CAFTA-DR,

2009-2011

($M

illio

ns)

U.S. Exports of Yarns and Fabric to CAFTA-DR

Top 10 Markets for U.S. Exports of

Textiles and Apparel

Country 2010 2011 % change

Canada $4.5 $5.0 +11.8

Mexico $4.3 $4.9 +13.7

Honduras $1.5 $1.8 +26.4

China $1.2 $1.3 +14.3

Dominican Republic $0.672 $0.818 +21.7

Japan $0.589 $0.642 +9.0

El Salvador $0.435 $0.632 +45.3

United Kingdom $0.543 $0.557 +2.6

Belgium $0.417 $0.428 +2.6

Hong Kong $0.390 $0.427 +9.5

World $19.7 $22.4 +13.6

Ranked by 2011 Value

($Billions)

Source: Office of Textiles and Apparel, Export Market Report.

Export Promotion Success

Unprecedented Success!

Sourcing in the Americas Summit & Pavilion was featured at MAGIC

Sourcing in August of 2011 and 2012

Sourcing in the Americas 2011 and 2012 brought together regional

businesses from all industries in the

supply chain – fiber, yarn, fabric, apparel

manufacturers, brands and retailers

Successful Partnerships

Sourcing in the Americas Events

were a collaborative effort between the

Office of Textiles and Apparel

(OTEXA), the Office of the U.S.

Trade Representative (USTR), multiple

major domestic and international trade

associations, and various domestic

trade show organizers

2011 and 2012 DOC Americas

Pavilion featured over 100 companies

from the U.S., CAFTA-DR, Colombia,

Haiti, Mexico, and Peru

Argentina Trade Restrictions

August 21, 2012 - U.S. requested consultations with Argentina

concerning measures imposed on imported goods

Argentina accepted requests of Australia, Canada, the EU,

Guatemala, Japan, Mexico, and Turkey to join the consultations

Consultations did not lead to resolution of concerns

December 6, 2012 - U.S. requested establishment of WTO

Dispute Settlement Panel

Specific concerns raised in the dispute:

Non-transparent licensing requirements

Importers must agree to export products of equal or greater value, invest

in production facilities in Argentina, increase Argentinean content in their

products, control prices and/or agree not to repatriate profits

Brazil’s New Tax Breaks for the Textile Industry

On April 3, 2012 the Brazilian government

announced tax incentives for the textile sector (and 14 other sectors).

The current 20 percent payroll tax will be replaced by a tax on gross revenues that was set at 1 percent for industries.

Exports will be excluded from the calculation of revenues.

MERCOSUR Members Allow Duty Rate Increases

On December 20, 2011, MERCOSUR1 Member countries

agreed that each member country is allowed to increase import

duty rates temporarily to a maximum rate of 35 percent on up to

100 tariff items per member country

Effective January 2012; to remain in effect through the end of

2013, with the possibility of extension through the end of 2014

1MERCOSUR: Argentina, Brazil, Paraguay and Uruguay

OTEXA Website

Thank You

Kim Glas

Deputy Assistant Secretary

Office of Textiles and Apparel

Kim.Glas@trade.gov

Telephone: (202) 482-3737

OTEXA website: otexa.ita.doc.gov