WASHINGTON — The Trans-Pacific Partnership regional trade pact could expand significantly beyond the nine countries currently negotiating it to include Canada and Mexico, both of which signaled an intent to join the talks on Sunday at a summit in Honolulu.
The TPP negotiations currently encompass nine countries: the U.S., Vietnam, Singapore, Australia, Peru, Brunei, New Zealand, Chile and Malaysia.
The addition of Canada and Mexico — the largest export markets for U.S. products — in the talks could provide significant sourcing and exporting opportunities for U.S. apparel brands and retailers. The U.S., Canada and Mexico are already trade partners under the North American Free Trade Agreement and adding them to the TPP agreement could broaden and integrate the markets where U.S. apparel brands are made and sold.
“The United States welcomes the interest of Canada and Mexico, our neighbors and largest export markets, in seeking to join the Trans-Pacific Partnership talks,” said U.S. Trade Representative Ron Kirk. “Along with Japan’s similar announcement this week, the desire of these North American nations to consult with TPP partners demonstrates the broadening momentum and dynamism of this ambitious effort toward economic integration across the Pacific.”
The announcement by Mexico and Canada came on the heels of Japan’s announcement on Friday of its intent to begin consultations to join the talks and would bring the total number of participating countries to 12.
President Obama, attending the 2011 Asia-Pacific Economic Cooperation leaders meeting this past weekend in Honolulu with the leaders and trade ministers of the other 20 member economies of APEC, said he hopes to finalize a TPP agreement with the other countries next year. The leaders said they had reached the broad outlines of an agreement for the TPP in Honolulu, with the common goal of creating a regional trade area that would tear down barriers.
Vietnam, currently a partner in the TPP talks, already holds potential for apparel brands and retailers because it could receive duty free benefits and make apparel imports to the U.S. cheaper. But U.S. textile producers argue Vietnam poses a threat to their businesses because of its subsidized private sector and a potential gateway for transshipments from China.
The U.S. has proposed a yarn-forward rule of origin for the TPP region, which requires that 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 have stressed that the rule of origin for textiles and apparel must be flexible enough to allow them to use third-country fabric and yarns in apparel production. U.S. textile producers, which support a yarn-forward rule, are vigorously opposed to a liberal rule of origin, saying their yarn and fabric business and exports could be undermined if yarns and fabrics produced from China or other countries not part of the TPP qualify and are eligible for duty free treatment.