U.S. PROPOSES STRICTER RULES OF ORIGIN FOR SINGAPORE

Byline: Kristi Ellis

WASHINGTON — U.S. trade officials have proposed a strict rule-of-origin provision for textiles and apparel in the U.S.-Singapore Free Trade Agreement, according to sources close to the discussions.
During the ongoing negotiations, the U.S. recently proposed a “yarn-forward” rule of origin, similar to the provision embodied in the North American Free Trade Agreement, the sources said. Under the “yarn-forward” rule, apparel must be made of yarn and fabric sourced within the free-trade area in the legislation to receive free-trade benefits.
Another component of the U.S. proposal currently on the table is a 10-year phaseout of duties on all apparel and textile products, the sources said.
The eighth round of talks is scheduled for late April between U.S. Trade Representative Robert Zoellick and Singapore Trade Minister George Yeo.
On Monday, the USTR will hold a public hearing to gather input on the impact of the Singapore trade pact on affected industries.
Repeated calls to U.S. trade officials went unanswered at press time.
Importers and retailers claim a “yarn-forward” rule of origin would not work in the case of Singapore because of time and distance issues. In addition, Singapore does not have a well-developed textile industry.
“My impression is that commercial viability has not been a consideration in these negotiations,” said Erik Autor, vice president and international counsel for the National Retail Federation.
He claimed retailers and importers will ultimately not use the Singapore program. “It virtually guarantees no trade.”
“We were extremely disappointed in the initial proposal from U.S. negotiators,” said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles and Apparel. “Not only are our member companies concerned about the proliferation of different rules of origin and regulations for each new agreement, but we also remain concerned that a precedent may be set for future free-trade agreements, where apparel represents a great proportion of the bilateral trade.”
Although Singapore accounted for only 0.2 percent of all apparel and textiles imported to the U.S. through January, it remains an important supplier of certain higher-priced items, such as cotton knit shirts.
Apparel and textile imports from Singapore were down 23.91 percent to 68.8 million square meters equivalent in January against January 2001, according to the Commerce Department’s latest figures. In terms of value, imports from Singapore dropped 22.02 percent to $288.83 million in January versus the year-ago period.
On the opposite side of the debate, the textile industry hailed the initial proposal.
“This administration and the previous administration understood our position with respect to yarn-forward,” said Charles Bremer, director of international trade at the American Textile Manufacturers Institute. “In the case of Singapore, there is no political sensitivity [it is not in the Mideast] so there is no excuse not to have a yarn-forward rule of origin.”
Jock Nash, Washington counsel for textile giant Milliken & Co., who is also helping to organize a new lobbying coalition comprising domestic textile firms, said most of the apparel is made on offshore islands, which would be ineligible for trade breaks under a trade pact with Singapore.
“We don’t need an increase in textile and apparel capacity globally. Anything that encourages an increase in capacity is mindless,” Nash said, adding that there is “massive” global overcapacity in textiles and apparel.

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