WASHINGTON — The Moroccan government has filed new petitions with the Committee for the Implementation of Textile Agreements on behalf of three of its apparel producers seeking the ability to use certain non-U.S. or Moroccan woven fabric in the production of apparel in Morocco and still qualify for duty benefits under a trade deal with the U.S.
The U.S. textile industry immediately raised an objection to the petitions.
The Moroccan government and producers, one of which is said to be a big supplier for Talbot’s, are alleging in their petitions that certain types of woven fabric cannot be supplied by the U.S. or Moroccan textile industry in “commercial quantities in a timely manner.”
If approved by the U.S. and Morocco, companies making apparel in Morocco would be allowed to import the designated fabric from anywhere in the world and still receive duty-free treatment when shipping the apparel back to the U.S. The U.S.-Morocco Free Trade Agreement contains a strict yarn-forward rule of origin that requires apparel to be made of fabric and yarns supplied by the U.S. and Morocco to qualify for duty-free benefits when shipped back to the U.S.
Some trade agreements contain what is known as a “short-supply” mechanism that is designed to allow importers a chance to use specified yarns or fabrics from non-U.S. or FTA countries if they can prove the domestic textile industry or an industry in the partner country cannot supply a large enough commercial volume of the product in a timely manner.
The trade deal with Morocco does not contain such a mechanism but does have a process by which companies can request a modification of the rules of origin.
The first petition, filed on behalf of the company Crossing, requests such a modification for certain woven of fabrics used for making pants, skirts, jackets, shirts and casual dresses. Another petition for Modaline Holding, seeks to modify the rule for certain types of woven fabric made to use women’s pants and a third petition was filed for Aryans for certain types of woven fabric used to make dresses, skirts, blouses and tops.
The process for approval can be contentious. The U.S. textile industry has opposed some requests in the past when U.S. mills come forward saying they can supply the product in question.
It has already raised concerns about the new requests because the Moroccan government argued in each that some of the specified woven fabrics have already been deemed in short supply under other U.S. trade agreements and therefore should be considered a factor and receive similar treatment under their trade agreement.
Augustine Tantillo, president and chief executive officer of the National Council of Textile Organizations, said: “In essence, Morocco is making a claim that they should have this [allowance] because the fabrics were listed on the short supply lists in TPP or in other trade deals.
“We strongly object to any blanket transfer of items from one short supply list to another,” Tantillo said. “We think that violates not only the letter but spirit of this process. Short supply is supposed to be [determined] on a case-by-case basis. These items need to be vetted to determine whether they are available in the U.S.
“Every geographic region and area is different,” Tantillo said. “We should not assume that because something isn’t doable between one set of FTA partners, it is not doable with another set.”
But Stephen Lamar, executive vice president at the American Apparel & Footwear Association, said the Moroccan government’s argument “makes abundant sense.”
“If an input is in short supply in the United States, with respect to one FTA, it is logical to presume that same input is in short supply in the U.S. with all other FTAs,” Lamar said.
Julia Hughes, president at the U.S. Fashion Industry Association, said: “I think it should be a factor. If a product is on one short supply list why not make it broader?” she asked.
Joshua Teitelbaum, who is chair of CITA and deputy assistant secretary for textiles, consumer goods and materials at the Commerce Department, said CITA considers each request under the process of each free trade agreement.
“Just because an item is on the short supply list of the CAFTA agreement does not necessarily mean it can be put on the short supply list or under commercial availability provisions under another free trade agreement,” he said. “Each free trade agreement has provisions that lay out a process by which we consider these requests. We’ll review them under the process laid out under that agreement. While they [the petitioners] may note it is on another short supply list we’ll continue to go through the process of soliciting industry comments.”