WASHINGTON — The Obama administration highlighted the benefits of the 12-nation Trans-Pacific Partnership trade deal for U.S. textile and apparel manufacturers in a report released Thursday and at roundtable remarks by U.S. Trade Representative Michael Froman.
The Commerce Department released the report, one of a series of industry specific studies it has been issuing, detailing how TPP will boost exports in the sector. The aim is to win the support of key textile and apparel state lawmakers on Capitol Hill.
The fashion industry stands to benefit from the TPP agreement, which seeks to tear down barriers on trade covering 40 percent of the world’s gross domestic product.
Trade ministers reached a deal in early October on TPP, which includes the U.S., Australia, Japan, Mexico, Canada, Vietnam, Malaysia, Peru, Singapore, Chile, Brunei and New Zealand. The pact seeks to eliminate duties, strengthen labor and environmental provisions, ease the flow of cross-border trade and strengthen intellectual property protections.
“We’ve got a whole government operation under way here to engage with Congress and to get it passed,” Froman said at a President’s Export Council meeting on Thursday. “We’re committed not to just getting this passed, but making sure we do everything we can to help American businesses take full advantage of the new openings, whether that’s through our export promotion activities or our export trade finance capabilities. We want to make sure we do everything possible for American workers and American businesses to take full advantage of it.”
Froman acknowledged how difficult the battle will be in Congress to approve the deal. A large group of Democrats has voiced opposition or skepticism about the deal and some key Republican lawmakers have also voiced concern. Most business groups, including the National Council of Textile Organizations, the industry’s lobbying and trade group, support TPP. A vote is expected next year.
“Trade votes are always hard. This is going to be a tough battle,” Froman said. “We’re already up on the Hill talking with Republicans and Democrats, the House and Senate, in individual and small groups and in larger groups to answer their questions. We’re convinced in the end we’ll have the necessary support but it’s only going to happen if they fully have an understanding of the benefits of this agreement for their constituents and how it is going to affect jobs and growth for their companies and workers in their districts.”
The Commerce Department report, titled “Opportunities for the U.S. Textiles and Apparel Sector,” focused on benefits for exports. It also highlighted benefits for importers, largely centered on tariff reductions on goods companies make in the TPP partner countries like Vietnam or Japan, and ship back to the U.S. to sell.
“U.S. businesses and workers in the textile and apparel sector will be positively impacted by the elimination of many barriers once TPP is enacted,” said Stefan Selig, undersecretary of Commerce for international trade. “TPP is a high-standard agreement that levels the playing field for our products, making Made-in-America goods more attractive to the fast-growing Asia-Pacific region.”
The U.S. textile and apparel sector employed more than 372,000 manufacturing workers in 2014, according to Commerce. Exports from the sector totaled $835 million to the TPP markets where the U.S. does not currently have trade agreements.
The report provided details about the barriers U.S. textile and apparel producers face in TPP countries, highlighting how the companies can benefit once the deal is implemented. There are currently five of the 11 TPP countries — Japan, Malaysia, New Zealand, Vietnam and Brunei — with which the U.S. does not have preferential market access, the report noted.
Of those five, Japan will eliminate duties on 99.2 percent of U.S. textile and apparel exports immediately under TPP, the report said. Vietnam will cut duties on 98.4 percent of U.S. textiles and apparel exports on day one and 100 percent within four years. Malaysia will eliminate duties on 79.2 percent of the sector’s exports immediately and New Zealand will drop duties on 50 percent of those exports immediately and 100 percent within seven years.
U.S. textile- and apparel-makers face tariffs as high as 34 percent in the five countries.
Japan was the largest market of the five for U.S. industry exports, with $504 million, followed by Vietnam at $206 million; New Zealand with $68 million; Malaysia with $58 million, and Brunei with $345,000.
On day one, duty savings on imports of textile and apparel to the U.S. from the five countries are estimated to be as high as $932 million, the report said. The U.S. is the fourth-largest “single country” exporter of textiles in the world and 54 percent of those goods went to TPP markets last year.
The report broke down specific categories of textile exports that will benefit from TPP.
It said the U.S. exported $394 million of cotton fiber, yarn and woven fabric to Vietnam last year, making the U.S. that country’s second-largest supplier of the products behind China. U.S. exporters have 16 percent of the Vietnamese market for those products and face tariffs as high as 12 percent. Under TPP, tariffs on those items will be eliminated immediately, “giving U.S. cotton textile manufacturers an opportunity to increase their already significant exports to the Vietnamese market,” the report said.
Synthetic fiber, yarn and fabric exports to Japan have grown 61 percent since 2009 and U.S. producers exported $91 million worth to that country last year. But U.S. textile exporters face tariffs ranging from 2.7 percent to 10 percent, which will be cut immediately under TPP.
In the area of industrial and advanced textile fabrics, the U.S. exported $91 million to Japan last year and $27.2 million to Malaysia, facing tariffs as high as 8.2 percent in Japan and 20 percent in Malaysia. The majority of those tariffs will be eliminated immediately.
The report also outlined three “market opportunity spotlights.”
“The Made in USA label has great appeal in the Japanese market,” it noted. “One segment with significant potential for U.S.-made product is men’s and boys’ trousers and knit shirts.”
Japan is the fifth-largest market for the U.S. in those product areas. U.S. exports of men’s and boys’ trousers and knit shirts totaled $32.6 million last year, marking an increase of 30.9 percent from 2009. Under TPP, Japan will eliminate its tariffs on that category, which average 9.8 percent, immediately.
“Since Japan is a fashion leader across Asia, success in Japan can significantly raise a brand’s visibility in other Asian markets,” the report said.
Vietnam, another country in the spotlight, provides significant opportunities, for example, for non-woven fabrics used in things such as surgical gowns and protective apparel. U.S. exports of non-woven fabric to Vietnam are “an especially promising opportunity” for U.S. manufacturers, rising 951 percent to $23 million from 2009 to 2014, the report said. TPP will cut tariffs on those exports, which average 12 percent.
The report also made clear that TPP contains a strict yarn-forward rule of origin that helps domestic textile companies by requiring the use of yarns and fabrics from the TPP region.