China'S Textile Foreign Trade Worries TPP

At the summit of the APEC sandalwood summit held recently, the president of the United States Obama A high profile is in line with the "Pan Pacific Partnership Agreement" (TPP), announcing that the basic framework of the agreement has been worked out and is expected to be formally concluded next year. TPP was first launched by four small and medium-sized APEC members in Singapore, Brunei, Chile and New Zealand. But since 2008, the United States has participated and started to dominate. negotiation Since then, TPP has attracted the attention of all parties and is widely believed to have a huge impact on the existing economic integration pattern and cooperation mechanism in the Asia Pacific region. At the same time, TPP negotiators are constantly expanding. Australia, Malaysia, New Zealand and Vietnam have joined the negotiations. Japan, Mexico and Canada have recently expressed their strong interest in TPP, and TPP is likely to continue to expand in the future. The Republic of Korea ASEAN and other Asian Pacific countries have become a truly trans Pacific regional free trade arrangement.

Because TPP covers textile and apparel products, China's export oriented textile industry can not be independent. So, where are the particularities of TPP? What are the clauses that are directly or indirectly directed against textile and clothing? What are the possible impacts on TPP in China's textile industry? How should we deal with the potential impact of TPP?

　 The agreement has three particularities.

At present, the United States has established bilateral or regional free trade arrangements covering textiles and clothing to 14, and these trade arrangements exclude China, but TPP is obviously "different":

First of all, TPP has a more profound and complicated international political and economic background and the US national strategic intentions. On the one hand, although the United States has already signed free trade agreements with other countries such as Korea and Singapore, the intention of the US intervention in TPP is not only to achieve freer trade with Asian countries one by one, but to seek the leadership of economic and trade affairs in the Asia Pacific region. Although "Asia" and "Asia Pacific" are only one word difference, for the United States, the former is "out of place" while the latter can "stay in it". Behind the promotion of TPP is the strategic vision that the United States hopes to achieve "return to Asia Pacific" in twenty-first Century, thereby countering China's growing and comprehensive influence in the Asia Pacific region. On the other hand, the Obama administration's development of foreign trade, especially the expansion of exports, is regarded as an important measure to revive the US economy and create domestic employment in the post crisis era. In the context of the failure of the Doha round of World Trade Organization (WTO) negotiations and the failure of existing international trade rules to fully protect the commercial interests of the United States, the United States hopes to mold TPP into a "high standard twenty-first Century trade agreement" to reflect its will and eventually become a "model" for the formulation of international rules. TPP's profound motives and strategic intentions are not available in the previous 14 free trade agreements in the United States.

Secondly, the composition of TPP members is more complex, causing more controversy in the textile and apparel industry of the United States. In the past, there were only one or two trade partners in the us free trade agreement. Even though the US textile industry and the American apparel industry are controversial on some issues for their own interests, at least the two sides have a clearer position. However, TPP's existing negotiating partners include Vietnam, the second largest source of clothing imports in the United States, and New Zealand, Australia and other developed economies that are expected to become the future expansion of clothing exports in the US. The list of potential TPP accession countries includes both Japan, which is able to compete with us products in the field of high-end textiles and fibers, and Mexico, which is an important overseas export market for us textiles. In the future, if it meets the strategic needs of the United States, TPP may even evolve into a "9+X" model, that is, any TPP economy in the Asia Pacific region can be considered to be included. Because of the parallel development of the textile and garment industry and the economic strength of a country, the uneven level of TPP's economic development will directly lead to the complex relationship between cooperation and competition. So the situation of "difficult to adjust" is bound to greatly increase the difficulty of the negotiation of TPP and leave a lot of suspense for the final judgment of TPP.

Thirdly, the trade area covered by TPP is more extensive. As TPP assumed the strategic mission of shaping the "high standard twenty-first Century trade agreement", compared with the 14 free-trade agreements previously reached by the United States, TPP has first incorporated many new trade agendas, such as e-commerce, competition policy, trade facilitation measures, environmental standards, labor standards, government procurement and investment policies. It is precisely because of the introduction of these forward-looking and forward-looking issues that the impact of TPP on trade activities will be more complicated than in the past 14 free trade agreements, whether in breadth or depth.

The members of the agreement enjoy three additional concessions.

In terms of textile and apparel industry, its members can enjoy three additional benefits after TPP is reached:

One is to get import tariff relief. Like other free trade agreements, TPP will first expect its member Fang Xianghu to enjoy a waiver of treatment in the field of import tariffs, thereby increasing the price competitive advantage of its products compared with non TPP members. Fang Pubian, a member of the TPP, is a product of tariff peak. This means that only one tariff reduction after the entry into force of TPP will have an important impact on the price and trade pattern of textile and clothing trade among TPP members.

The other is non-tariff barriers and market access barriers. TPP will also strongly restrict the use of non-tariff barriers and reduce market access barriers. According to WTO statistics, since the abolition of quotas in 2005, the use of non-tariff barriers against textiles and clothing has increased significantly in the world, and has become more covert and diversified in terms of restrictions. TPP intends to further enhance the transparency and compliance of the members in various non-tariff barriers, such as clarifying the release procedures of technical trade measures and the relationship with international standards, and cancelling most administrative licensing for trade in goods. This will remove many obstacles to the export of textiles and clothing in TPP. TPP parties are also expected to make wider market opening commitments in the field of service trade, allowing enterprises to invest in a wider range and be protected by investment agreements. Clothing wholesale and retail industry is now in the category of "service trade". TPP can obviously create a more favorable institutional environment for some countries to expand overseas investment and operation.

Third, rules are protected in emerging trade. In recent years, with the upgrading of science and technology and the change of consumer demand, some new trade patterns and trade areas have begun to emerge, such as cross-border e-commerce, low carbon products trade, many of which also involve textile and garment industry. But at present, for these new trade areas, the international "game rules" are obviously lagged behind, and the interests of enterprises can not be effectively and fully protected, which greatly limits the development of related trade. In the light of the above new trends in the field of international trade, TPP is the first to include e-commerce, natural resource exports, green subsidies, competition policies and other issues in the negotiations. If an agreement is reached, TPP will enable members' trade activities to be "lawfully acceptable" and commercial interests protected to the greatest extent in these areas. The text of TPP will also become a "template" for future international rules in related fields, so that its members will benefit greatly from the "rules originator".

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When China is built up

Exploring the multiple impacts of TPP on China's textile and garment industry

In the short term, China's textile exports will be affected by the trade diversion effect generated by the TPP tariff reduction scheme. In the medium and long term, TPP may facilitate the formation of a new regional textile and garment production and trade network in the Asia Pacific region, weakening China's position in the current Asian regional integration division of labor.

China's textile industry must pay close attention to the potential impact of the TPP agreement, largely due to the fact that China is likely to be excluded from TPP for a long time, resulting in "discriminatory" treatment and competitive disadvantage in terms of market access. Although judging the specific impact of TPP still needs to wait for the final outcome of negotiations, TPP is likely to affect China's textile industry in the short and medium term, based on the usual effect of free trade agreements (FRET).

Short term effects:

Trade transfer effect fermentation

It should be pointed out that the trade diversion effect of TPP will be far more than that of a US market, and will also affect China's export of textiles and clothing to Australia, New Zealand, Singapore and other countries involved in TPP negotiations. The specific extent of the trade diversion effect will depend on the competitiveness and mutual substitution between China and other TPP members, on the other hand, it depends on the specific tariff reduction scheme of TPP.

Judging from the current situation, there are two suspense in TPP's tariff reduction scheme for textiles and clothing. The first is whether the United States will abolish Vietnam's import tariffs. As the second largest source of clothing imports in the United States, Vietnam has been highly sought after by American Apparel and retail businesses, but has also been strongly disliked by the US textile industry. Through more than ten years of transformation, local garment enterprises have generally focused their core business functions on high value-added fields such as design, product development, brand management and market development, and outsourcing labor intensive and low value-added production processes to developing countries. As imported products have been integrated into the supply chain of American apparel enterprises, the US apparel industry strongly advocates that policy makers can relax import restrictions as much as possible, simplify the import process and give enterprises the full convenience and autonomy of "global sourcing", which naturally includes Vietnam, which is labor force, cheap, and increasingly capable of processing.

As for the textile industry in the United States, because the textile is the upstream product, and the domestic garment processing scale has shrunk greatly, the domestic textile demand in the US has been very limited. In recent years, the textile industry in the United States has increasingly relied on the overseas market sales, especially those developing countries which are located near the United States, the labor cost is low, and the textile production capacity is not yet available, such as Mexico, the Caribbean countries. From the United States to provide yarn and fabric, and then processed by the surrounding developing countries into clothing, and eventually sold back to the United States, this business model constitutes the Americas textile and garment trade network, which now accounts for more than 60% of the total textile exports in the United States. But the "overseas market chess" of the US textile industry is not stable. As the abolition of the quota system greatly reduced trade barriers, Asian countries began to seize the share of American countries in the clothing import market in the Americas, which led to the reduction of demand for textile imports from Mexico and other countries. Therefore, the US textile industry wants to see that the United States imports more clothing from its neighboring developing countries and firmly resists imports from other Asian countries such as Vietnam. The other is whether the developing members of the TPP are willing to cancel the import tariffs on textiles and garments. At present, Vietnam, Malaysia and other TPP developing countries are in the tariff of textiles and clothing, and some products even up to 30%, far exceeding the average level of 5%~10% in developed countries such as the United States, Singapore, Australia and so on. 10%~20% If TPP finally cancels all textile and clothing tariffs, it means that developing countries need to bear a larger tariff reduction obligation than developed countries. At the same time, tariffs still play an important role in protecting the domestic industry for developing countries, especially supporting the textile industry whose competitiveness is not yet competitive and protecting their own clothing industry from the impact of other exporting countries. The openness of TPP members will make some developing countries reluctant to rush to accept tariffs, because once China's textile and garment exporting countries such as China and India finally join TPP, the textile and garment industries of these small countries may face challenges if they lose tariff protection.

Medium and long term effects:

Integrated division of labor and status weakening

At present, a considerable part of China's textile and apparel exports are intermediate goods trade, especially to other Asian developing countries, which can not produce their own textile materials. But through the rules of origin and preferential import tariffs, TPP can change the vertical division and cooperation mode to some extent, and even help us textile industry expand exports to Asia.

To what extent will this result occur? This will ultimately depend on what kind of rules of origin for textiles and clothing that TPP will adopt. The US textile industry is strongly advocating the "spinning" rules of origin, which is because many developing countries do not yet have the capacity to produce textiles. If clothing products that enjoy preferential tariffs under the TPP agreement are required to be completed by the TPP members from the beginning of spinning process, they will actually lock the export market for American yarn manufacturers. American apparel companies and retailers are trying to encourage TPP to adopt more relaxed "rules of origin" after weaving. This allows TPP members to import cheaper yarn and raw materials from abroad and ultimately reduce the overall import cost of products. Obviously, if the rules of origin for weaving are adopted, China's related textile enterprises may be protected from TPP and remain stable suppliers of textile materials to some Asian countries. However, if the strict "spinning" rule is adopted by TPP and the preferential incentives are sufficiently large, it is likely that some countries will abandon the import of textile raw materials from China and turn this market opportunity to the US or other TPP countries. In addition, if the "spinning" rules of origin are adopted, China's textile and garment processing trade will also be negatively affected to a certain extent. This is because TPP can bring preferential tariffs to the sewing products of Vietnam and other countries when exporting to the United States, and some processing trade orders of Chinese enterprises will be lost.

China's textile industry:

Actively respond to TPP

In view of the potential potential impact of TPP, China's textile industry should take the initiative to seek countermeasures.

On the one hand, the development trend of TPP should be closely followed. Although the TPP negotiations are progressing smoothly on the surface, as mentioned above, there are still some uncertainties and controversies in the setting of some specific clauses, but it is precisely these "details" that will play a key role in the specific impact of TPP in the future. As far as the issue area is concerned, the specific arrangements for the tariff concessions and the method of determining the rules of origin are the most important concerns. For the TPP participants, Vietnam's special treatment under the TPP agreement needs to be tracked especially because Vietnam is the primary competitor of China's textile and apparel market in the United States and other markets. In addition, the new trade agenda included in TPP should also be concerned, because in the long run, labor standards, environmental standards, competition policies, trade facilitation measures, e-commerce and other fields have not been discussed in real terms on multilateral occasions. However, it is necessary and reasonable to strengthen their "rules of the game", which is accepted by the international community at the same time.

On the other hand, China should be more active in planning and discussing the strategy of China's free trade area in the Asia Pacific region. Especially when there is no hope of joining the TPP in the near future, as one of the means to effectively evade or even offset the negative effects of TPP, China can consider reaching bilateral or regional preferential trade arrangements with existing TPP members. Because China's trade level and its increasing import potential are expected to attract many Asian Pacific countries and China to form closer economic and trade cooperation through these trade frameworks, at least they can pin down the TPP strategy of the United States.

In addition, with the promotion of TPP, the maintenance and development of WTO multilateral trading system is of strategic importance in China. We need to be vigilant that if TPP achieves great success, especially in some forward-looking trade areas, it will open up international standards and attract more and more countries. It will pose a serious challenge to WTO, which has already been trapped in Doha's Dilemma and its multilateral trading system. The rescue of the WTO round of Doha and the maintenance of the authoritative position of WTO in the international trade system and rules making will help to deal with the medium and long term demonstration effect of TPP at a higher level.