The sweeping trade pact seeks to remove barriers to trade and strengthen law in areas such as labor and the environment in a zone encompassing 40 percent of the world’s gross domestic product.
This story first appeared in the December 16, 2015 issue of WWD. Subscribe Today.
Trade ministers reached a deal in early October on TPP, which includes the U.S., Japan, Mexico, Canada, Vietnam, Malaysia, Peru, Singapore, Chile, Brunei, Australia and New Zealand. It was a major milestone for negotiators who had been at the table for more than six years. It was also the next step in a process that will require a critical mass of the 12 countries to ratify the deal before it can be implemented.
The American fashion industry has a big stake in the agreement. The U.S. imports $22 billion in apparel, textiles and footwear from the TPP countries and exports around $14.25 billion worth of goods. Vietnam is the second-largest apparel supplier to the U.S. after China and a big sourcing hub for companies.
Fashion industry groups, ranging from apparel importers to textile producers, have voiced support for the deal, along with other business groups, but Obama is facing opposition from many quarters.
The President is countering that by embarking on a national and international tour to sell the deal and garner support for what most experts believe will be a tough battle in Congress during a presidential election year.
“With TPP, we’re not only writing the rules for trade in the Asia-Pacific region, we also have an historic opportunity to shape the future of the global economy,” Obama said at a recent business and investment summit in Kuala Lumpur, Malaysia, that capped off a 10-day trip through Asia. “Our 12 nations comprise nearly 40 percent of global GDP, about a third of global trade, and already a growing number of nations are expressing interest in joining TPP. And even countries that may never join TPP will have to compete in a TPP world, giving them an incentive to raise their standards, as well. So countries will have a choice: reform and modernize, or risk getting left behind. In this way, I believe TPP will help strengthen the hand of reformers far beyond our 12 initial members.”
Obama has long cast TPP as a 21st-century deal that will not only tear down barriers to trade, but also raise labor and environmental standards in Asia-Pacific and create rules in countries that have not committed to international standards in the past.
It has also been framed as the U.S. rebalance toward Asia, part of a strategic pivot the Obama administration has said will act as a counterbalance to China, which is not a TPP signatory.
Obama’s lieutenants are also criss-crossing the country to highlight how the deal will boost exports state by state, eliminate some 18,000 product categories of tariffs on exported products and promote Made in USA products.
The full-court press for TPP in part belies the difficult path ahead for the trade deal on Capitol Hill and in legislatures in the other countries.
TPP has already drawn criticism and opposition from some key Republican candidates, all three Democratic contenders, including Obama’s former secretary of state, Hillary Clinton, some Congressional Democrats, and labor and environmental groups. Clinton has said she is concerned that TPP doesn’t have strong enforcement language in relation to currency manipulation, while some Republicans feel it doesn’t contain strict enough stipulations for intellectual property rights. Critics on the Democratic side in general have voiced concerns that the deal does not provide strong enough labor and environmental protections, will lead to more U.S. job losses and will not raise wages at home.
But Obama is banking on support from business groups and trade-friendly Republicans and some Democrats to get the deal across the finish line. A bipartisan group of former agriculture secretaries also recently lent support to TPP and urged Congress to pass it.
The fashion industry is poised to get immediate benefits from TPP. The Obama administration released the text of the massive trade deal in early November and women’s wear companies could be among the first to see a boost from the deal.
While many high-volume “sensitive” products will be subject to longer tariff phaseouts, many were granted duty-free treatment on Day One, including dresses and skirts in all fabrics.
Several companies, including Gap Inc., Wal-Mart Stores Inc. and Nike Inc. have expressed support for TPP this year, noting it will lower export barriers and, in some cases, bolster U.S. manufacturing jobs.
Nike president and chief executive officer Mark Parker endorsed TPP in May when Obama traveled to the company’s headquarters to make a major pitch for the pact.
Parker pledged at the time that if TPP was enacted, Nike would create an “advanced footwear manufacturing center” in the U.S. that would create 10,000 manufacturing and engineering jobs and up to 40,00 indirect supply chain and services jobs over the next decade.
“We support President Obama’s leadership in trade and the Trans-Pacific Partnership,” Parker said. “We are proof that trade works. Free trade opens doors, removes barriers and creates jobs.”