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USTR Affirms Yarn-Forward Stance in TPP Talks

Trade Representative Michael Froman said the U.S. is standing behind a strict rule of origin for textile and apparel trade in the Trans-Pacific Partnership.

WASHINGTON — U.S. Trade Representative Michael Froman said Friday the U.S. is standing behind a strict rule of origin for textile and apparel trade in the Trans-Pacific Partnership negotiations between the U.S. and 11 countries.

Trade negotiators from all 12 countries — the U.S., Vietnam, Singapore, Australia, Peru, Brunei, New Zealand, Chile, Malaysia, Mexico, Canada and Japan — are meeting in Brunei through Aug. 30 for the 19th round of trade talks on the TPP pact, which could have a significant impact on billions of dollars in commerce.

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Negotiators in Brunei will try to narrow differences between the countries over a textile rule of origin and tariff phaseout schedule on sensitive imports such as apparel and textiles. 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.

“This has clearly always been one of the most sensitive trade issues in every negotiation, including this one,” Froman said on a conference call with reporters as he returned from a weeklong series of talks in Asia on the TPP. “We’ve made clear that a yarn-forward rule is at the center of our proposal and we are working with the other countries, negotiating with them, around that principle.” He added that there is still work to be done but noted some progress has been made.

Apparel and textile imports to the U.S. from the 11 TPP negotiating countries totaled $15.1 billion for the year ended June 30.

A group of 34 companies sent a letter to Froman on Wednesday asking him to negotiate more flexibilities into the rule of origin. The firms included Wal-Mart Stores Inc., Target Corp., Sears Holdings Corp., J.C. Penney Co., LF USA, Ann Inc., Levi Strauss & Co., Macy’s Inc., Gap Inc., Nike Inc., American Eagle Outfitters and Kohl’s Corp.

“Our experience with yarn forward is that, in most cases, it no longer serves as an effective model to support all the various supply chains on which our companies rely,” the companies said in the letter. They also stated, “A flexible rule of origin for apparel products, and immediate and reciprocal duty-free access, are critical for a commercially meaningful agreement, which will help support and grow the three million U.S. jobs created by American retailers, apparel brands, manufacturers and importers, as well as domestic textile and apparel producers.”