The Trans-Pacific Partnership (TPP) Apparel Coalition supports negotiation of a 21st Century TPP agreement that generates new trade and investment opportunities for the benefit of workers, businesses, and families. These opportunities include buying and selling goods and services, sustaining and growing well-paying jobs, and providing high added value for the U.S. and TPP economies. To maximize benefits to companies, consumers, and workers, TPP negotiators should embrace a policy on textiles and apparel that facilitates today’s global value chains and the millions of American jobs that depend on them.
As it stands today, textiles and apparel are treated differently than other products. 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.
Today’s consumers expect a wide variety of fashionable apparel and flexibility in sourcing inputs 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.
TPP countries collectively paid $1.4 billion in duties on apparel shipped to the U.S. in 2012. Nearly 30 percent of all duties collected by the U.S., the largest importer of apparel among TPP countries, from TPP nations are on apparel imports. For Vietnam and Malaysia, apparel represents more than 73 percent and 46 percent, respectively, of all tariffs collected by the United States from those countries. 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.
The TPP Apparel Coalition endorses the following priorities
to achieve the best overall agreement for American businesses, American
workers, American farmers and American consumers:
- Integrate textile and apparel products into the Market Access negotiations in the same way as is done with other products. We advocate for no separate chapter or separate provisions. This includes no separate safeguard process for textile and apparel products, and no separate customs enforcement measures.
- Liberalize and simplify
the Rules of Origin. At a minimum, these liberalized and simplified rules
should:
- Base the rule of origin
(ROO) for apparel on either a change in tariff heading (CTH) or a
regional value content (RVC) requirement. A change in tariff heading
would require any product in an apparel chapter (chapters 61 and 62) to
be transformed within the region from any heading outside of that
chapter. With an RVC rule, the value of those processes (and the inputs
they create) within the territories must account for a minimum percent
[35%] of the total value of the garment with a specific value
calculation.
- Limit tougher
product-specific ROOs to sensitive products when necessary and
appropriate, meaning there is data establishing sufficient availability
of inputs in commercial quantities within the TPP territory;
- Allow outward processing
of intermediary products and not penalize products that use TPP-country
inputs;
- Harmonize the ROOs for
all TPP countries, including those that currently have FTAs with the
United States;
- Guarantee the “ability to
cumulate” among all TPP partner countries to facilitate regional
integration;
- Establish a transparent
and commercially meaningful “Commercial Availability” [Short Supply]
process; and
- Create a process to allow
“cumulation” with other countries that have FTAs with all TPP countries.
- Implement immediate and reciprocal duty-free treatment for all qualifying products.
- Harmonize and streamline procedures throughout the supply chain (including customs procedures) among all TPP countries and incorporate account-based processing to facilitate the flow of goods.
- Harmonize the rules and regulations – such as product safety and labeling – among all TPP countries, including those that currently have FTAs with the United States.
- Strengthen intellectual property rights (IPR) protections among all TPP countries to better enable American apparel brands, manufacturers and retailers to protect their brands from counterfeiters and trademark violators.
- Create a "living" agreement that welcomes additional parties and can evolve to address new textile and apparel issues as they arise.