Below is a collection of stories related to trade and government policy that may impact the sewn products industry around the world.
U.S. Vaccine Mandate
As announced by President Biden September 9th, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) is developing a rule that will require all employers with 100 or more employees to ensure their workforce is fully vaccinated or require any workers who remain unvaccinated to produce a negative test result every week. Employers will also be required to provide paid time off for employees to get vaccinated. The new requirement is not yet in effect. More details are expected from OSHA in the coming weeks. Read more from AP or CNBC.
California Worker Bills
Before closing its legislative session last week, the California State Legislature passed two bills impacting factory and warehouse workers.
The Garment Worker Protection Act (Senate Bill 62) bans piece-rate garment production in which garment workers are paid for each piece of clothing produced rather than an hourly rate. Advocates for the change argued the piece-rate system results in below-minimum wage earnings for those workers. One of the most controversial components of the bill was language that would hold brands and retailers accountable for unpaid wages when they work with subcontractors that produce goods sold at their stores. However, a compromise was reached in the final version removing potential liability and penalties for brands and retailers. The bill now heads to the desk of Governor Gavin Newsom who has until October 10th to sign or veto it. Read more in the Los Angeles Times or Sourcing Journal.
Assembly Bill 701 would prevent companies (Amazon seems to be the main target) from imposing speed quotas that interfere with an employee’s ability to use the restroom or take meal breaks. The bill also aims to increase transparency, giving workers, their representatives, and government officials more access to detailed records of quotas and workers' actual rates. Read more.
USTR Considers Extension of Covid-Related Section 301 Exclusions
The Office of the US Trade Representative (USTR) is requesting public comments on whether to continue excluding certain medical products from the Special 301 tariffs imposed on imports from China. The exclusions are currently set to expire September 30th and comments are due September 27th. Information on how to submit comments is included in the Federal Register Notice.
Note: This week's Behind the Seams also includes a refresher on the 301 tariffs for anyone interested in learning more.
Related: U.S. Trade Representative Katherine Tai announced in August that the “Biden-Harris Administration and USTR are conducting a comprehensive review of U.S.-China trade policy.” Read more from CNBC or Sourcing Journal.
Cotton Import Fee Lowered
The U.S. Department of Agriculture’s Agricultural Marketing Service (AMS) has issued a direct final rule decreasing the fees paid by businesses that import cotton and products that contain cotton. Currently, the assessment rate on imported cotton is s $1.1562 cents per kilogram. The revised assessment rate is $1.1136 cents per kilogram, a decrease of $0.0426 cents per kilogram. The decrease will come into effect on October 25th, 2021, unless the AMS receives a significant amount of negative feedback by September 27th.
Australian Senate Passes Forced Labor Bill
In August, the Australian Senate passed legislation to ban products made using forced labor. Specifically, it amends the Customs Act 1901 to prohibit the importation into Australia of any goods produced or manufactured, in whole or in part, through the use of forced labor. The bill initially sought to block only goods from China’s Xinjiang Uyghur Autonomous Region. However, the language was expanded in June to cover goods produced anywhere in the world. For the measure to come into effect it will also need to be passed by the government-controlled House of Representatives. Read more in Sourcing Journal or The Guardian.
Trade Agreement Updates
Let’s take a quick look at some of the trade maneuvers happening around the world:
India and Australia are working towards an “early harvest” trade deal that will prepare the grounds for a comprehensive economic cooperation agreement. (Early harvest trade deals are precursors to larger agreements. They are typically used to liberalize tariffs on the trade of certain goods between two countries or trading blocs.) India’s Commerce Minister noted the government is also working on an early harvest deal with the United Kingdom. India is currently pursuing additional free trade agreements with Canada, Israel, the United Arab Emirates, and the European Union. Read more.
Tunisia is seeking an urgent review of its trade agreement with Turkey, which could lead to an amendment or even cancelation of the agreement. Tunisia and Turkey signed the agreement in 2005 to strengthen relations between the two countries. However, according to Tunisian sources, thousands of jobs, especially in the textile sector, have been lost in Tunisia as a result of Turkish dumping of textile products through the formal and informal trade sectors. Read more.
The United States and Ukraine have signed a memorandum of understanding (MOU) outlining areas of renewed cooperation on trade. The MOU also notes U.S. support for Ukrainian efforts to improve its business and investment climate, which could help to increase U.S.-Ukraine commercial ties. The U.S.-Ukraine Trade and Investment Council is holding its 10th meeting later this year to confirm work plans to address regulatory barriers, intellectual property, and other issues. Read more.
In August, the United States and Singapore launched the Partnership for Growth and Innovation. The new initiative is meant to strengthen U.S.-Singapore trade and investment collaboration starting with four pillars: digital economy; energy and environmental technologies; advanced manufacturing, and healthcare. Read more.
Also in August, China’s Ministry of Commerce announced the country is set to upgrade its current free trade agreements and is actively considering joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The ministry will also accelerate the pace of negotiations on new trade deals including the China-Japan-Korea Free Trade Agreement as well as negotiations with Israel and Norway. This is all part of China’s “opening-up policy.” Read more.
Last week, Uruguay announced a formal proposal had been issued to begin free trade agreement negotiations with China. The Uruguayan government suggests the objective is for Uruguay to be a "gateway to Mercosur" for China. (Mercosur is a regional trade bloc made up of Brazil, Argentina, Paraguay, and Uruguay.) However, Uruguay’s desire to negotiate the trade agreement with China on its own has led to tensions with the other Mercosur members, with news outlets calling it “the beginning of the end of Mercosur.” Read more.
South Korea has announced plans to implement or launch negotiations for several new free trade agreements with trading counterparts from Southeast Asia and Latin America this year in an effort to diversify its supply chains and reduce its reliance on major economies (i.e. China and Vietnam). The country has pending trade deals with Cambodia and Indonesia, as well pending ratification of the Regional Comprehensive Economic Partnership (RCEP). Negotiations are also underway with Mercosur, the Pacific Alliance (Chile, Colombia, Mexico, and Peru), and the Philippines. Read more. In addition, South Korea has proposed a new pact on digital trade within ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore, and Vietnam) to cope with the changing global business environment and forge deeper economic ties with the region. Read more. Related: South Korea’s new Trade Minister recently announced the country will take a new approach to trade in five core sectors in a bid to maximize its national interests: supply chain, vaccine, technology-based trade, digital commerce, and carbon neutrality and climate change. Read more.