Below is a collection of stories related to trade and government that may impact the sewn products industry around the world.
China Tariffs Challenged
We previously reported on a lawsuit filed against the Trump Administration contesting the China 301 Tariffs on Lists 3 and 4, as well as the opportunity for companies to file independent claims and possibly receive refunds on tariffs paid on products on those lists. According to Reuters, within just two weeks of that first lawsuit, 3,500 other U.S. companies filed suits in the U.S. Court of International Trade related to the imposition of tariffs on more than $300 billion worth of Chinese-made goods. The suits challenge “the unlawful escalation of the U.S. trade war with China through the imposition of a third and fourth round of tariffs.”
Right around the same time, a World Trade Organization (WTO) dispute panel concluded that the Section 301 tariffs violated WTO rules. The WTO’s determination is based on the fact that the tariffs only applied to products from China (in violation of the WTO most-favored-nation principle requiring equal treatment) and exceeded the previously agreed upon bound tariff rates.
The Trump administration justified the tariffs by arguing China was stealing intellectual property and that the U.S. must be allowed to defend itself against unfair trade practices. While the WTO ruling doesn’t really hold a lot of power, it could be used as leverage in the lawsuits mentioned above. Read more.
Possible Vietnam Trade War The Office of the U.S. Trade Representative announced October 2nd it would be launching a Section 301 investigation into the currency valuation practices of Vietnam, leading many to believe it could be the beginning of the next U.S. “trade war” (see China above). A new federal rule allows the U.S. Commerce Department to consider currency manipulation as one of a number of factors in deciding whether to raise duties on a trading partner, meaning the investigation could ultimately lead to the implication of U.S. sanctions on Vietnam in the form of new or increased tariffs on imports from the country. Please keep in mind this is all still hypothetical and there is no indication when any new tariffs would go into effect. Not surprisingly, the National Council of Textile Organizations (NCTO) has welcomed the investigation, while the American Apparel & Footwear Association (AAFA) opposes it.
USTR Press Release | Sourcing Journal Article Explaining the Industry Impact
Speaking of Vietnam, Just-Style has reported that textile and apparel exports from Vietnam to the Eurasian Economic Union (EAEU) may face safeguard duties this year as volumes to the bloc (Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia) are close to exceeding the trigger set under the Vietnam-EAEU free trade agreement. Read more.
CBTPA Renewal Pending
The U.S. Congress passed legislation last week to renew the Caribbean Basin Trade Partnership Act (CBTPA) for another 10 years, extending preferential tariff treatment for the region. The bill is now waiting for presidential approval. Many groups within the apparel industry publicly support the renewal. The current agreement expired September 30, 2020. At that time, U.S. Customs and Border Protection issued guidance on the requirement to collect duties. Read more.
UK-Japan Trade Deal
In September, the United Kingdom and Japan signed a free trade agreement aimed to boost trade between the countries by about £15bn. This is notably the first trade deal for the UK since Brexit. The UK Fashion & Textile Association (UKFT) claims the agreement will make it easier for UK clothing manufacturers to export to Japan, allowing clothing producers to undergo a single process in the UK and then export to Japan under preferential tariffs as long as 50% of the inputs are sourced domestically. Japan is the UK fashion and textile industry’s third largest export market.
UK Government Press Release | 5 Things To Know About the UK-Japan Trade Deal
Philippines Could Lose GSP Benefits
The European Union has threatened to temporarily withdraw trade preferences to the Philippines under the Generalised Scheme of Preferences Plus (GSP+) program in response to “the seriousness of the human rights violations” committed by the administration of President Rodrigo Duterte. However, CNN Philippines reports the Philippine government is “unfazed” by the threat. Read more.
Textiles and Apparel Not in EU Deal
On September 8th, following an earlier announcement from both parties, the European Commission published a proposal to eliminate duties on certain imports to the European Union (EU). In return, the United States would reduce its duties on certain EU exports to the U.S. market. However, the agreements do not include textile and apparel products. Read more.
Canada-China Deal Canceled
During an interview with The Globe and Mail, Canada's Foreign Affairs Minister François-Philippe Champagne confirmed a trade agreement between Canada and China is no longer worth pursuing at this time, abandoning free trade talks that were initiated four years ago. Read more.