GENEVA — The U.S. has proposed reducing costly labeling requirements for textiles, apparel and footwear as part of the Doha Round of global trade talks.
The plan notes that industry experts estimate that diverse labeling requirements “can add approximately $1 per article, an amount higher than the actual cost of the label itself.”
Global trade in textiles, apparel and footwear is worth more than $500 billion a year, according to the World Trade Organization, which is sponsoring the talks intended to reduce or eliminate tariffs among its 149-member countries. The talks, involving trade in goods and services worth $11 trillion, face a deadline at the end of 2006.
“There are certain labeling requirements that are overly burdensome and costly, and thus have the potential to distort trade,” the proposal states, noting that many factories and companies are producing merchandise for a range of countries in the same facility. “In many cases, the only difference in products are the labels, which must meet the requirements of the final consumer market.”
The U.S. text, circulated during a negotiating session on nonagricultural market access last week, suggested two ways to avoid costly increases associated with diverse labeling. One is to work toward harmonizing textile, apparel and footwear labels. This was characterized as representing “a gold standard” in cutting costs arising from differences in labeling standards, through it is often difficult and time consuming.
The second way in which the WTO talks can have a direct impact is to examine administrative and other practices used to implement labeling programs and determine the “efficient methods that can be employed” to ensure goods are not subjected to undue costs and delays, the U.S. text said.
The proposal noted that WTO members have a right to use labels to provide information or to ensure the health and safety of their consumers, and underscored that the targets of the plan are the differing national and regional labeling requirements that “adds costs to the production and distribution process.”
Some typical costs associated with labeling include the direct cost of adding labels after manufacturing, maintaining additional production lines, rehandling of goods to change labels, and penalties and held shipments due to incorrect labeling. When labeling changes are required with little notice at the border, “costs can be very significant,” the proposal said.
“In some cases, companies report instances where inspectors in one port enforce one set of labeling requirements, while inspectors in another port enforce another,” the plan said. “Such confusion increases the chance for noncompliance, while reduced transparency increases opportunities for corruption.”