WASHINGTON — U.S. Trade Representative Michael Froman, touting a resurgence in U.S. textile manufacturing in a speech on Thursday, pledged to a conference of U.S. textile producers that there would be “no surprises” in an Asia-Pacific trade deal the U.S. is negotiating.
Froman praised the members of the National Council of Textile Organizations, attending their annual confab here, for forging a close and “unprecedented” partnership with the Obama administration, which has said it is in the final stages of completing negotiations on the Trans-Pacific Partnership agreement between the U.S. and 11 other countries.
Froman’s pledge reassured textile executives, who have been pressing the U.S. not to water down its proposal for 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.
But textile producers are concerned that if there are any changes to provisions that give Vietnam, a TPP partner country and the second-largest apparel supplier to the U.S., more duty-free access to the American market in the final stage of negotiations, it could undermine their business in the Western Hemisphere that has strengthened in recent years. This could be particularly true if apparel companies shift out of that region to Vietnam or other Asian suppliers to take advantage of duty-free benefits.
U.S. apparel importers, on the other hand, are opposed to a strict yarn-forward rule of origin and have intensified pressure on the administration to negotiate a more flexible rule that would allow for the use of inputs outside of the TPP region.
“We are in the end game, but we’re not done,” Froman said. “There are odds and ends that won’t be closed until the very end, but I just want to assure you there will be no surprises, that we will be working with you hand and glove as we have in the last year and a half to two years to make sure we understand your perspective on all of the outstanding issues and consult closely with you throughout.”
Froman went even further than what he said at the NCTO summit in a copy of the “prepared” speech released to the media.
“We do not expect significant changes to the existing parameters and structure of the deal being considered and any further modifications to the package will be based on consultations with NCTO leadership, just as we have been doing throughout this negotiation,” he said in the written remarks.
In past trade agreements, the U.S. has made last-minute concessions to countries, including something known as “tariff preference levels” that exempt a designated amount of apparel from the rules of origin.
Froman told the meeting that the industry and government did not “necessarily have the same ideas about what an acceptable market-access package looked like,” but through close collaboration “identified mutual interests” and adjusted the approach as negotiations went on.
“We looked very closely at what was going on in the Western Hemisphere and took into account sensitivities and made sure those sensitivities of our domestic market were reflected in our approach to these negotiations,” Froman told the group. “We are convinced that at the end of the day we are helping to position the U.S. textile industry to be globally competitive and to take advantage of further markets.”
Auggie Tantillo, president of NCTO, said after Froman’s speech that textile producers are “pleased with the reassurances about working with us to get a safe landing spot in TPP.”
Froman also called on the U.S. industry to help support presidential Trade Promotion Authority, seen as vital to completing several trade deals because with it Congress can only vote up or down on a trade agreement, which gives the administration leverage with trading partners.
“We’re very pleased with [Froman’s] remarks,” Tantillo said. “We are very pleased with the status of our relationship and we are prepared to support TPA.”