From the U.S. textile industry’s perspective, the United States-Mexico-Canada Agreement (USMCA) is a fine document given that most of the original provisions laid out in the North American Free Trade Agreement (NAFTA) is included, according to testimony today from Auggie Tantillo, president and chief executive officer of the National Council of Textile Organizations (NCTO).
But that doesn’t mean there aren’t sticking points.
While Tantillo said during a U.S. International Trade Commission hearing on the USMCA that the NCTO has not taken a formal position on the agreement, the association has analyzed it and made several conclusions. In Tantillo’s nearly 1,000-word, written testimony to the commission, the ceo said that, overall, the USMCA is an improvement over NAFTA except in regard to yarn-forward provisions via the Tariff Preference Levels (TPLs) system.
“TPLs allow products to be shipped duty-free among free trade partner countries even though the components within the product are sourced from countries that are not signatories to the agreement,” Tantillo told the commission. “While NAFTA TPLs have annual limits that cap their impact to a degree, more than $641 million in textile and apparel TPL shipments entered the U.S. last year. As such, eliminating the TPLs was a primary focus of NCTO’s in the NAFTA renegotiation.”
Tantillo said while the USMCA did reduce the size of some specific TPLs, “the reductions will not cut into existing trade levels. This outcome is frustrating given the President’s stated goals of increasing benefits for U.S. manufacturers and eliminating provisions that have helped non-signatory countries, such as China, take advantage of tariff preferences intended for North American producers.”
Additionally, the ceo praised the Kissell Amendment of the USMCA, which is a “Buy American” statute for textiles that are for the Department of Homeland Security. “Kissell requires 100 percent U.S. content, with very limited exceptions, for purchases by the Coast Guard and Transportation Security Administration (TSA),” Tantillo noted. Under NAFTA, these agencies procured uniforms made from Mexican textiles.
Tantillo concluded by reiterating that the USMCA is an improvement over NAFTA, and promised the organization’s analysis would continue and the NCTO would take a formal position in the new agreement.
During the testimony, Tantillo offered updated data about the textile industry in the U.S., noting that it employs 550,000 workers and this year is on track to generate output worth $78 billion — with $28 billion of production earmarked for exports.
Tantillo also said that the U.S., Canada and Mexico have “built a vibrant and prosperous textile production chain over the 24-year life of the North American Free Trade Agreement. In 2017, total textile and apparel trade between the three countries was approximately $20 billion. U.S. exports accounted for more than $11 billion of this trade, with Canada and Mexico serving as our two largest export markets worldwide.”
Tantillo said this compares to $7 billion worth of textile trade between the U.S., Canada and Mexico in 1993 — prior to NAFTA’s implementation.