Textile and Apparel Alliance for TPP
We support trade rules in the TPP that promote private industry, entrepreneurship and job growth within the TPP region and within the free trade areas of the Western Hemisphere and Africa.
These are the same rules that the United States has supported in free trade agreements over the past twenty-five years. They include the “yarn forward” rule of origin.
These rules have created an enormous supply chain made up of small and medium sized businesses in the United States and across the globe. They have fostered billions of dollars of investment into our countries. They have created jobs for nearly two million manufacturing and agricultural workers.
We oppose new proposals which would give new one-sided benefits to China and other countries that support state-ownership, government subsidies and other free market distorting practices.
Instead, we believe in trade rules that promote private industry and investment, support entrepreneurship and increase opportunities for small and medium sized business.
Specifically, we support in the textile chapters:
1) A Comprehensive Yarn Forward Rule
The “Yarn Forward Rule” has been the basis for U.S. trade agreements going back to the early 1990’s. It requires that all the manufacturing processes for making textile and apparel products occur in a free trade region in order for a product to get FTA benefits.
The ‘Yarn Forward Rule” is a powerful rule for free trade and private entrepreneurship. It has created billions of dollars of private investment in textile and apparel production in FTA countries. It is responsible for nearly two million jobs in FTA countries. Without the yarn forward rule, those jobs would have gone to China and other countries that subsidize their textile exports and use state-run conglomerates to dominate markets and squeeze out private producers.
Using the ‘Yarn Forward Rule” in the TPP will foster textile production throughout the TPP region. It will provide an enormous incentive to move textile production into the TPP region. However, without the “Yarn Forward Rule,” China will continue to dominate textile trade in Asia and an important opportunity to build a modern textile industry with high paying jobs will be lost.
2) Strong Customs Enforcement
Strong rules require strong enforcement. The “Yarn Forward Rule” requires all the major components in a garment to be made in an FTA region. Today, China and other countries ship goods through FTA countries, illegally claiming they are products of those countries. They do this because they can save one billion dollars a year in duties which should have gone to the U.S. government.
Without strong enforcement rules – and adequate resources to enforce those rules – this illegal trade would increase enormously under a TPP. China already ships billions of goods through Vietnam, and without strong rules, those goods would simply be relabeled as "meeting TPP rules."
Strong customs rules – and adequate customs resources – ensure that these bad players don’t take jobs from legitimate producers such as producers in the United States, the Western Hemisphere and Africa. They also ensure that U.S. taxpayers don’t get left on the hook for $1 billion in duties.
3) Realistic Market Access Rules
Market access rules determine how long it takes to phase tariffs out in an FTA. These phase-outs can last ten years or longer depending on how high tariffs and how large the trade is. The point of market access rules is to ensure there is a smooth and fair transition for all players in the agreement.
TAAT supports market access rules that take into account all these points and recognize that countries that subsidize their industries and have developed large government run sectors must face special requirements for market access.
4) Safeguards against Unfair State-Sponsored Subsidies
Only two countries – Vietnam and China – have created large state-owned enterprises in textiles and apparel and subsidy structures to support them. One of these countries, Vietnam, is a member of the TPP. Government-owned companies are inherently unfair because the governent does not need to make a profit in order to stay in business. Government subsidies make this anti-competitive behavior even more damaging. NCTO has submitted a report to USTR outlining Vietnam's subsidies for textiles and apparel and its continuing state-ownership of Vinatex, the tenth largest producer in the world.
USTR acknowledges the seriousness of the issue and states that TPP must “ensure that state-owned enterprises compete fairly with private companies and do not distort competition in ways that put U.S. companies and workers at a disadvantage.”