NEW YORK — Textile and apparel sourcing executives are entering uncertain times when it comes to predicting the impact of U.S. trade policy, a situation that is likely to persist until a new administration takes office next year.
This story first appeared in the May 6, 2008 issue of WWD. Subscribe Today.
Matt Priest, deputy assistant secretary for textiles and apparel at the Commerce Department and chairman of the interagency Committee for the Implementation of Textile Agreements, addressed the state of the country’s trade policy during a presentation at the Fashion Institute of Technology here on Thursday. Priest also sought to convey the situation sourcing executives will face as trade provisions with countries such as China and Vietnam come to an end.
“It comes as no surprise that the administration has been aggressive on opening up markets and lowering trade barriers around the world,” said Priest.
The Bush administration has been particularly aggressive in implementing bilateral free trade agreements. Priest noted the U.S. has free trade agreements with 14 nations. Out of those, 11 have been implemented since 2002. Agreements with Oman and Peru are pending and Congress has yet to vote on pacts with Colombia, Panama and South Korea. The Colombian agreement has already faced significant challenges from Democrats in the House, who last month successfully stalled bringing the agreement to a vote potentially until after the presidential election in November.
“It’s our view that Colombia deserves a vote as soon as possible in the U.S. Congress,” said Priest.
The nature of our trade relationship with China will also change at the end of the year. Priest said the apparel industry should prepare to cope with a China that is finally free from quotas. A bilateral agreement implemented in November 2005 that placed safeguard quotas on China will expire at the end of the year. Priest said there is no manner in which the U.S. could introduce new quotas.
“Ultimately, the industry will move into the normal trade remedy world that all other industries have faced throughout the years,” he said.
The government monitoring program of Vietnamese apparel imports will also cease at the end of the current administration. The first review of six months of data revealed no evidence of dumping, or placing goods in a country below market value or the price of manufacturing. Priest’s office is wrapping up its second review and he expects to have results within the next few weeks.
While no evidence of dumping has been seen, Priest said there has been significant growth in the product areas that fell under the monitoring program. Textile and apparel imports from Vietnam grew 34.2 percent overall in 2007, and growth in the five product categories that were monitored exceeded 40 percent.
Priest said there is evidence that sourcing in places like South and Central America could become more viable as Asian countries deal with mounting macroeconomic issues such as high energy prices and rising labor costs.
“We are seeing some substantial growth in exports in the hemisphere,” said Priest.
Lowering trade barriers with countries in the Western Hemisphere, he said, would be key to being more competitive with Asia.
“I think there’s some thought that as there are increased pressures in Asia, there may be some movement back to the Western Hemisphere, so I think it’s a positive thing for U.S. exports,” he said.