WASHINGTON — The U.S. textile industry is turning a page.
This story first appeared in the January 22, 2016 issue of WWD. Subscribe Today.
Long a wary and divided industry over global trade, it has united to support the largest trade agreement the U.S. has ever negotiated. The National Council of Textile Organizations said Thursday its four-member councils voted to formally support the 12-nation Trans-Pacific Partnership trade deal.
The group’s backing marked a key endorsement for the Obama administration, which is trying to build support ahead of a tough Congressional battle for approval.
Confronted with hundreds of thousands of job losses over the past two decades, in part attributed to outsourcing and automation, the textile industry has struggled to find a footing in the world of globalization. The resurgence in Made in America has helped boost its U.S. and Western Hemisphere production and contributed to the growth in apparel and textile industry exports, which were expected to have reached $22 billion to $24 billion in 2015, according to NCTO.
But the industry has historically been cautious about global trade and opening markets to imports from foreign competitors, some of whom it has argued are heavily subsidized.
On Thursday, NCTO, the industry’s one remaining key trade and lobbying group, lent its support to TPP after what it said was an “exhaustive analysis” of the deal and a determination that the pact met its principal objectives.
Trade ministers reached a deal in October on TPP, which includes the U.S., Australia, Japan, Mexico, Canada, Vietnam, Malaysia, Peru, Singapore, Chile, Brunei and New Zealand. It aims to tear down barriers to trade and would encompass 40 percent of the world’s gross domestic product if enacted.
NCTO raised concerns about Vietnam’s state-owned enterprises and subsidies throughout the negotiations and pressed vigorously for strict rules of origin and long tariff phaseouts on “sensitive” products. Vietnam is the second largest apparel supplier to the U.S.
“Due to the inclusion of Vietnam and other major textile and apparel exporting countries, the TPP agreement is the most significant trade policy initiative to confront the U.S. textile sector over the past 25 years,” said Jeff Price, NCTO chairman and president of the Specialty Fabrics Division at Milliken & Co. “As such, it was critical for our government to produce a final agreement that appropriately reflected the needs of U.S. textile manufacturers and the hundreds of thousands of workers we employ nationwide. We believe that the agreement concluded late last year in Atlanta meets our core objectives and is worthy of our full support.”
Milliken & Co., under its legendary chairman, the late Roger Milliken, long opposed trade agreements and was outspoken about the impact global commerce had on U.S. manufacturing.
But the broader NCTO support marks a new chapter in the textile industry’s strategic approach. NCTO did support another free-trade agreement — the Central American Free Trade agreement — a decade ago after side deals were negotiated, but the industry was divided over that deal at the time.
“No agreement is perfect and certainly that is the case with TPP,” Price said. “There were difficult trade-offs that we, as U.S. manufacturers, had to consider during this process, as is the case with any complicated negotiation. Nonetheless, this agreement is very sound in the essential elements that govern textile trade.”
Outlining its reasons for supporting TPP, NCTO said it met three key objectives: a strong yarn-forward rule of origin for the “vast majority of textile and apparel products,” multiyear tariff phaseouts for “sensitive” textile and apparel products and “terms that provide stability of the Western Hemisphere textile and apparel production chain.”
Augustine Tantillo, president and chief executive officer of NCTO, said, “The united aspect of the industry’s support of this agreement is virtually unprecedented.”
“We took a strategic approach to try to have a reasonable impact on the terms of the textile chapter,” Tantillo said. “The U.S. government worked with us in a very transparent, straightforward manner that ended up producing a text that NCTO found to be satisfactory. The bottom line is it is not a perfect agreement. No complex contract or negotiation ever is. There are always concessions as well as benefits, but we believe that the U.S. negotiators were able to produce a final text that met our core objectives.”
Tantillo said the industry wanted to ensure that TPP would not harm its Western Hemisphere business, adding, “One of our key objectives was that TPP would be constructed in a way that would allow for continuing this very valuable production chain in this hemisphere and based on our analysis, we feel like the final terms will allow for that.”