The debt ceiling brinkmanship in Washington set retailers back on Tuesday — both on Wall Street and in Bali, where officials from 12 nations were working to complete a Trans-Pacific trade deal by yearend.
The S&P 500 Retailing Industry Group suffered its worst drop since June, falling 2 percent, or 16.57 points, to 826.48 as the Dow Jones Industrial Average declined 1.1 percent, or 159.71 points, to 14,776.53. The Dow is now off more than 900 points since Sept. 18.
At a White House news conference, President Obama warned that a “very deep recession” could be in the offing if lawmakers allowed the country to default on its debts. The federal government has been partially shut down for eight days as some conservatives have pressed Obama for changes to his signature health care overhaul. Markets were largely taking the shutdown in stride, but investors are beginning to contemplate what would happen if Congress didn’t raise the debt ceiling.
The government is expected to run out of money by Oct. 17 without action by Congress. If that happened, the country might fall behind on its debt payments, sending a severe shock through the global economy, which depends on the reliability of Treasury debt.
“This is the credit worthiness of the United States that we’re talking about,” Obama said. “This is our word. This is our good name. This is real.”
Obama had to cancel a trip to Asia to deal with the impasse. He was scheduled to participate in the Asia-Pacific Economic Cooperation summit and the TPP leaders’ meeting in Bali, Indonesia, this week.
Obama said when he has to cancel trips abroad: “It sends a message to foreign leaders and governments that we don’t have our act together,” and lowers confidence in U.S. financial stability and hurts the reputation of the U.S. abroad.
Industry officials said the government shutdown and Obama’s absence at key meetings in Asia had slowed the pace of progress on outstanding textile issues in the trade talks.
Even so, the trade ministers negotiating the Trans-Pacific Partnership agreement said they are “on track” to complete the regional trade deal this year even though many sensitive issues, including apparel and textile rules of origin and market access, remain unresolved.
The U.S. is in talks with 11 countries — Vietnam, Canada, Mexico, Japan, Australia, Brunei, Chile, Malaysia, New Zealand, Peru and Singapore — on a TPP trade accord.
“Ministers and negotiators have made significant progress in recent months on all the legal texts and annexes on access to our respective goods, services, investment, financial services, government procurement and temporary entry markets,” the ministers said in a joint statement at the close of a high-level leaders’ meeting in Bali. “We have agreed that negotiators should now proceed to resolve all outstanding issues with the objective of completing this year a comprehensive and balanced regional agreement that achieves the goals we established in Honolulu in 2011, ensures the benefits of the agreement are fully shared and takes into account the diversity of our levels of development.”
The ministers said they have “made significant strides” in five “defining” areas of the agreement, including market access, a key area for retailers, brands and the domestic textile industry. The U.S. has proposed a yarn-forward rule of origin that requires apparel be made of fabric and yarns supplied by the U.S. or other TPP partner countries to qualify for duty-free benefits when shipped back to the U.S. Importers oppose the rule, but American textile producers claim they need it to compete. The U.S. has also proposed a short supply program that allows importers to use third-country fabric and yarns in apparel production if the U.S. determines they are not commercially available in the TPP member countries.
“[Obama’s absence] made it harder to achieve the goal set out for the APEC ministerial, which was to have the politicians resolve some of the key sticking points [in TPP],” said Nate Herman, vice president of international trade at the American Apparel & Footwear Association. “It would be very difficult for them to reach the type of agreement outlined in today’s announcement by the end of the year.”
Responding to a question on missing the APEC and TPP meetings, Obama said: “It didn’t help that I wasn’t there to make sure we were able to close a trade deal that would create jobs and open up markets to U.S. businesses and make sure that countries were trading fairly with us. I should have been there.”
The President said he didn’t think it would cause lasting damage, as long as the current political crisis is dealt with, but called it a “missed opportunity.
“We continue to be the one indispensable nation,” Obama said. “Countries admire our economy and our entrepreneurs...and our freedom of commerce...and they want us to be there and want to work with us.”
The President added that the U.S. is a driving force in organizing these meetings, “so it’s like we’re not showing up at our own party. I’m sure the Chinese don’t mind that I’m not there right now. On trade, for example...we’re trying to raise the standards for intellectual property rights,” which he said hasn’t always been a priority for the Chinese.
Obama noted that Secretary of State John Kerry attended the APEC and TPP meetings.
Herman said there was some expectation that negotiators would reach an agreement on the short supply process in Bali and then move forward on textile and apparel rules and market access.
Julia Hughes, president of the U.S. Association of Importers of Textiles and Apparel, said: “When the government reopens, I think there will certainly be an effort to move quickly to finalize [the short supply concept] part of the discussions so we can all move on to talk about the larger areas of importance — rules of origin, market access and enforcement language.”
Auggie Tantillo, president of the National Council of Textile Organizations, said: “We believe the U.S. government has been clear about a yarn-forward rule with the only exception being short supply and we want hold them to that.”
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews
“Stranger Things” is getting a new cast member for season 2. Meet @sadiesink_, the 15-year-old who will be joining the Netflix series for its new season. You may recognize her from “The Glass Castle” with Brie Larson and Woody Harrelson, but the Texas native’s next role goes in an entirely different direction. She describes her character, Max, as “a rough and tumble skater girl [who] becomes friends with the boys at school.” The second season debuts on October 27. (📷: @jgreenery) #wwdeye
Amid the Harvey Weinstein controversy, there’s another sector that’s being put under the spotlight for sexual abuse: the modeling industry. While rumors about abuse and sexual harassment of female and male models — and the photographers, agents and others who perpetrated it — have circulated within the fashion world for years, model @cameronrussell started posting stories from models on Instagram last week about abusive situations they’ve encountered — from sexual harassment and molestation to attempted rape. Over 75 have weighed in so far. Read more on WWD.com. Link in bio. #wwdnews
To celebrate its 16th anniversary, @dylanscandybar tapped designers and celebrities to create mosaics out of candy. The mosaics will be auctioned off to support the philanthropic cause of each participant’s choice. Pictured here is the mural created by @aliceandolivia's Stacey Bendet. For a first look at some of the other artwork being unveiled tonight, go to WWD.com. #wwdeye
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye