United States Fashion Industry Association

Gail W. Strickler Assistant U.S. Trade Representative June 10, 2014 1

Trade Overview • Where We Are Now – Existing FTA’s and Preference Programs – Seamless AGOA Renewal

• Where We Are Going – TPP • State of the negotiation

– TTIP • Stakeholder input needed

• Other Issues 2

Trade Preference Programs and Free Trade Agreements (FTAs)

Percentage of Apparel Imports to U.S. Receiving Preference (2011) 100%

98%

98%

99%

96%

94% 94%

91% 92%

89%

90%

88%

88% 86%

84%

82%

NAFTA Egypt QIZ

AGOA

Haiti CAFTA

Data not yet available for Colombia or Korea

Peru

Free Trade Agreements – – – – – – –

Panama (October 2012) Colombia (May 2012) Korea (March 2012) Peru (February 2009) Oman (January 2009) Bahrain (August 2006) CAFTA-DR El Salvador (March 2006) Honduras/Nicaragua (April 2006) Guatemala (July 2006) Dominican Republic (March 2007) Costa Rica (January 2009)

– – – – – – –

Morocco (January 2006) Australia (January 2005) Singapore (January 2004) Chile (January 2004) Jordan (December 2001) NAFTA (January 1994) Israel (September 1985)

Textile and Apparel Imports under Free Trade Agreements • FTAs with 19 countries. • Imports of textiles and apparel increased 18 percent from $99.7 billion in 2005 to $117.5 billion in 2013.

• Imports of textiles and apparel under FTAs increased faster, growing 39% from 12.5 billion in 2005 to $17.4 billion in 2013. • United States imports of textiles and apparel that meet the yarnforward rule of origin under free trade agreements increased 65 percent from $8.2 billion in 2005 to $13.6 billion in 2013. • Yarn-forward rule of origin imports accounted for 78 percent of imports under free trade agreements in 2013.

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CAFTA-DR Imports by Provision 4.6% 1.9% 0.6% 4.0%

FTA Qualifying, Yarn-forward 6.7%

Commercial Availability Value Added 62.5%

Cumulation Cut and Sew Nicaragua TPL

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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

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U.S. imports of textiles and apparel from SSA totaled $931.6 million in 2013, up 11% from 2012

•

Virtually all imports receive preferential access to U.S. market under AGOA

Egypt Qualifying Industrial Zones (QIZs) Qualified Industrial Zones (QIZs) are designated geographic regions within Egypt and Jordan, whose products are granted duty-free access to the U.S. market provided certain rules of origin are met.

EGYPT QIZs

• In early 2005, QIZs began operating in seven designated industrial locations in Egypt. • The QIZs have rapidly expanded and now encompass additional designated industrial zones. • The rules of origin for the Egyptian QIZs require that 35 percent of the product’s value is manufactured in Egypt, of which 10.5 percent must be of Israeli origin. • The rule of origin is the same for all products, including textiles and apparel.

Haitian Hemispheric Opportunity through Partnership Encouragement Act / Haiti Economic Lift Program (Haiti HOPE/HELP) •

• •

HELP represents the second comprehensive expansion of the Haiti preference program which began in 2006 as the Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE) HELP utilizes Tariff Preference Levels (TPLs) as a mechanism to reduce the costs of apparel production in Haiti. TPLs allow yarns and fabrics to originate from any country. HELP rules of origin allow most apparel to enter the U.S. duty-free provided one of the following rules is met: • Woven TPL – Yarns and/or fabrics for woven apparel can be sourced from any country up to 200 million square meter equivalents (SMEs) with a limit of 70 million SMEs that can be used in the production of trousers. • Knit TPL -- Yarns and/or fabrics for knit apparel can be sourced from any country up to 200 million SMEs with a limit of 85 million SMEs that can be used in the production of upper body knit garments (other than shirts with pointed collars and plackets). • Value-Added TPL – A value-added TPL requires that a certain percentage of the value of the garment be added in Haiti. The value-added rule under HELP begins at 50% and increases to 65% over time. • Unlimited duty-free treatment for certain textile (primarily home furnishings, i.e. sheets, towels, etc.) and apparel articles wholly-assembled or knit-to shape in Haiti with yarns and fabrics from anywhere. • Apparel made of yarns and fabrics not produced in the U.S. • Earned Import Allowance Program – 2 for 1 match program (see separate slide for details).

Australia

Brunei

Canada

New Zealand

Mexico

Peru

Chile

Singapore

Japan

Vietnam

Malaysia

United States

TPP Region Has Substantial Textile and Apparel Production

Total TPP textile exports – $33.5 billion Total TPP apparel exports – $34.3 billion

The four largest TPP textile exporters – The U.S., Japan, Vietnam and Mexico – represent over 80 percent of total TPP textile exports

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United States: A Global Leader •

The U.S. has a strong and diverse textile industry, manufacturing a range of high quality products including fibers, yarn, fabric, and apparel.

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The U.S. is the fourth largest single country exporter of textiles, with $13.5 billion in exports in 2012.

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A significant trade partner to TPP countries and the world, the U.S. imported $88.0 billion in apparel and $26.0 billion in textiles in 2012.

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In 2012, the U.S. was the largest single country importer of apparel and the largest single country importer of textiles, accounting for 20% of total world imports of apparel and 9% of textiles.

1Source:

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

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Short Supply List

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While we believe that a yarn-forward rule is best way to promote regional integration, encourage investment and create sustainable supply chains, we realize that some products may not be available from TPP partners.

•

To maximize the eligibility of textile and apparel products for duty preference, a short supply flexibility is being negotiated.

•

A short supply list (SSL) has been structured to identify inputs not available in TPP countries and eligible for use from third countries.

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Exports BY TPP Country (2012)

United States: Vietnam: Japan: Mexico: Malaysia: Canada: Peru: Singapore: Chile: Australia: New Zealand: Brunei:

Textiles

Apparel

Total

$13.5 billion $4.1 billion $7.8 billion $2.2 billion $1.8 billion $2.0 billion $488 million $801 million $193 million $257 million $266 million $1 million

$5.6 billion $14.1 billion $557 million $4.4 billion $4.5 billion $1.3 billion $1.6 billion $1.3 billion $404 million $264 million $186 million $7 million

$19.1 billion $18.2 billion $8.4 billion $6.7 billion $6.3 billion $3.3 billion $2.1 billion $2.1 billion $597 million $521 million $452 million $8 million

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

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Transatlantic Trade & Investment Partnership (T-TIP)

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Transatlantic Trade and Investment Partnership (T-TIP) A comprehensive trade and investment agreement between the United States and the European Union that offers significant benefits in promoting U.S. international competitiveness, jobs, and growth. – First round of negotiations – July 8-12, 2013 in Washington, DC – Second round - October 7-11, 2013 in Brussels (sequestered) – Third round – December 16-20, 2013 in Washington, DC – Fourth round– March 10-14, 2014 in Brussels – Fifth Round – May 19-24, 2014 Arlington, VA – Sixth Round – July 2014 Brussels 17

Transatlantic Trade and Investment Partnership (T-TIP) The U.S. and the European Union are each other’s largest economic partners: •

$2.6 billion worth of goods and services flow between the U.S. and EU each day.

•

In 2012, the U.S. exported $458 billion of goods and services to the EU, our largest export market.

•

World’s largest investment relationship, almost $3.7 trillion in investments in each other’s economies, as of 2011.

•

More than 13 million jobs tied to the transatlantic economic relationship.

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Transatlantic Trade and Investment Partnership (T-TIP) A successfully negotiated agreement would aim to boost economic growth in the United States and Europe and add to the over 13 million American and European jobs already supported by transatlantic trade and investment. In particular, the Partnership would aim to:

• • • • •

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Further open EU markets U.S. goods and services. . Eliminate all tariffs on trade. Reduce costly non-tariff barriers that impede the flow of goods. Reduce the cost of differences in regulations and standards by promoting greater compatibility, transparency, and cooperation. Develop rules, principles, and new modes of cooperation on issues such as intellectual property and market based disciplines addressing state-owned enterprises and discriminatory localization barriers to trade. Promote the global competitiveness of small- and medium-sized enterprises. 19

Transatlantic Trade and Investment Partnership (T-TIP)

“The greatest opportunity – and the greatest challenge – of T-TIP is in the area of regulation and standards…” U.S. Trade Representative Michael Froman, September 30, 2013

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T-TIP Regulatory and Standards Issues

• Labelling requirements

• Flammability requirements • Chemicals

• Product-specific regulations • Eco-labelling • Standards development

Transatlantic Trade and Investment Partnership (T-TIP)

• What we need from you: • Input on Testing Requirements • Input on Labeling Requirements – Statutory vs. technical – Input on options ie: QR Labeling

• What other NTB’s deter or add to the cost of doing business in the EU? • What would facilitate trade?

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Gail W. Strickler Assistant USTR for Textiles Office of the U.S. Trade Representative

[email protected] Telephone: (202) 395-3026

http://www.ustr.gov/trade-topics/textiles-apparel

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