WASHINGTON — Wal-Mart Stores Inc. expects to see significant benefits, particularly in the area of apparel, footwear and travel goods, if the 12-nation Trans-Pacific Partnership trade deal is enacted.
Thorn testified on the first of a three-day hearing at the ITC, which has instituted an investigation to assess the “likely impact” of the TPP on the U.S. economy and specific industry sectors. The ITC is seeking input from an array of industry sectors in the public hearings.
Trade ministers reached a deal in October on TPP, which includes the U.S., Australia, Japan, Mexico, Canada,Vietnam, Malaysia, Peru, Singapore, Chile, Brunei and New Zealand. It aims to tear down barriers to trade and would encompass 40 percent of the world’s gross domestic product if enacted.
The U.S. fashion industry has a big stake in the agreement. The U.S. imports $22 billion in apparel, textiles and footwear from the TPP countries and exports around $14.25 billion. Vietnam is the second-largest apparel supplier to the U.S. after China and a big sourcing hub for companies.
“Wal-Mart strongly supports the TPP agreement,” Thorn told the commissioners. “We believe TPP will lower the cost of goods, increase choices for our customers and provide new markets for our suppliers throughout the Asia-Pacific. The agreement will also provide greater investment security and enhance e-commerce throughout the region.”
She said Wal-Mart operates stores in the TPP markets of the U.S., Mexico, Canada, Chile and Japan. On the sourcing side, she said Vietnam “represents a significant sourcing market for our company.”
Thorn argued that the U.S. has the most “regressive” taxes on consumer products, with the highest tariffs being imposed on the products that Wal-Mart customers purchase.
“For these reasons, we support the new footwear, textile and apparel commitments of the TPP,” Thorn said. “Under the agreement, all footwear and clothing tariffs will be eliminated in 12 years and nearly half of the value of imports will receive immediate duty-free treatment.”
“We see particular benefits in the few apparel categories that received a cut-and-sew rule of origin, such as travel goods,” Thorn added. “This category, which includes popular back-to-school items, such as backpacks, pencil cases and other bags that face up to a 17.6 percent duty, will be eliminated on entry into force” of the agreement.
Thorn said Wal-Mart will also see significant benefits for footwear from Vietnam, which is a significant footwear importer to the U.S., second only to China, she said.
“Under the TPP, the majority of footwear tariff lines will be eliminated upon entry into force, with remaining tariff lines within 12 years,” Thorn said. “The duty savings of this commitment could be approximately $450 million for this sector.”
In the area of retail investment, Wal-Mart could benefit from a new rule in Vietnam, which agreed to eliminate in five years an economic needs test on stores over a certain size, said Thorn, adding, “Removing this will allow investor certainty and should serve as a template for the region.”
TPP will also cut high tariffs on U.S. exports of beef, pork, poultry, cheese and processed foods, particularly to Japan, where Wal-Mart has a big retail presence and provide e-commerce opportunities.