GENEVA — European and U.S. industry executives agree that a successful conclusion in the Transatlantic Trade and Investment Partnership talks will open up new opportunities in the world’s most valuable textile and apparel import markets.
But they have divergent views on issues that impact textiles and apparel, with tariffs and rules of origin high on the list, along with other thorny topics. The T-TIP talks, which last month completed the latest round in Miami, seek to eliminate import duties, remove costly hidden trade barriers and streamline regulatory standards.
“Europe is ready to make the necessary agreements and concessions,” said Francesco Marchi, director-general of the influential European apparel and textile confederation known as Euratex. “We also have to have a level playing field for tariffs.”
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Auggie Tantillo, president and chief executive officer of the National Council of Textile Organizations, said the EU is “a better market than other countries where we have free-trade agreements.”
The U.S. market is the biggest export destination for EU textiles and apparel, with shipments worth a combined $5.6 billion in 2014, while the 28-member EU trade bloc imported U.S. textile products worth $1.1 billion and apparel valued at $580 million.
Washington and Brussels have set their sights on trying to complete the T-TIP talks in 2016. But trade experts note it’s still unclear whether a deal can be hammered out in the final year of the Obama presidency.
“I would say the Obama administration is earnest in its desire to bring it to a close,” said Tantillo. “Whether or not that is doable is hard to say.”
In September, U.S. Trade Representative Michael Froman and EU Trade Commissioner Cecilia Malmström agreed ” to intensify” the pace of the talks.
Transatlantic trade diplomats said the talks, which kicked off in July 2013, are advancing in numerous fields, including tariffs and labeling of textile and apparel goods.
The trade diplomats said at the Miami talks, negotiators generally agreed on tariff offers covering 97 percent of tariff lines, but still need to negotiate details on 3 percent of the most sensitive product categories lines. It’s estimated that all duties would be scrapped on 87.5 percent of tariff lines upon entry into force of a T-TIP accord, while some would be eliminated in a three-year basket and some lines in seven years.
What categories will be back-loaded has yet to be determined and will only take place when the talks enter the final phase, sources said.
Marchi, reflecting the view of European industry, said, “We are as competitive as the Americans. There’s no reason to delay reduction of tariffs in the negotiations. Euratex wants to have zero duties from day one” apply in any T-TIP deal, he said, adding, “Why treat textiles differently? We are competitive as they are competitive for textiles.”
NCTO’s Tantillo indicated the U.S. industry has a different agenda.
“We always, as an industry, whether our government agrees with us or not, connect tariff issues back to rules of origin,” he said. “Before we get to what tariff lines should be treated, we want to know what the rules of origin are.”
The European industry executive said a specific annex on textiles “is something we cannot agree to have.”
Tantillo said the yarn forward rule of origin is “one of the points of dispute” because “we feel there should be an individualized chapter and this is the way we have done it in every free trade agreement that we have had. We have asked the government to maintain that model of having individualized textile chapter. Secondly, placing importance on products faced with sensitivity is also a model the U.S. uses and we’re fine with that.”
Generally, he said, the relations of trading partners come into play and noted in the case of the EU, “We’re clearly not dealing with Vietnam, a low-cost producer manufacturing under a state-run economy, so were going to take all of that into consideration as we get to that on figuring out rules of origin.”
The NCTO president conceded that not everything covered under the tariff codes on textiles and apparel is sensitive, and not all need special treatment, but, “We’re also concerned about cotton and man-made fiber knit products, woolens, denim and apparel.”
Tantillo said another issue of contention is the demand by Brussels for the U.S. to grant access to the defense procurement. NCTO estimates textile and apparel sales to the U.S. military average $1.5 billion to $2 billion annually.
“That’s a complete non-starter…we want our government to maintain that exemption,” Tantillo said.
World Trade Organization rules allow for procurement exemptions for national security reasons.
Differences over intellectual property protection for designs, such as for printing of fabrics, is also “an issue of concern,” Marchi added.