Potential Impact Of TPP Agreement On US Textile Industry

　　 The impact of tariff relief

Dr Sheng Lu's research focuses on tariff relief between TPP countries and puts forward the possible situation of the US textile industry. To some extent, he believes that it is hard to say whether TPP can develop new export markets for American textiles because of the unique pattern of the Asia Pacific region's textile and garment production and trade network (RPTN).

At the beginning, everyone felt that the entry into force of the TPP agreement would be good news, because the tariff reductions and exemptions of imported products between TPP countries could enhance trade among TPP Member States, including promoting the export of US textiles.

However, after Japan's accession to the TPP negotiations, the possibility of the US expansion of textile exports has been greatly reduced. The reason lies in the fact that Japan is the supplier of textiles to Vietnam and other TPP Asian countries, while the other TPP Asian countries have insufficient production capacity and will continue to rely on imported raw materials and textiles to cope with the increased demand for garments exported to the United States, Canada and Japan.

Sheng Lu said that Japan is not only closer to Vietnam than the United States, but also the fourth largest textile exporter in Vietnam; under the framework of TPP, tariff relief will make Japanese textiles more competitive in Vietnam market, and the tariff rate of Vietnamese textiles is 9.7% on average.

Japan is currently the largest textile exporter in mainland China, and will become the key supplier of textiles in Vietnam in the next few years. This fact supports the argument of Dr. Sheng Lu.

On the product side, Japan's exports of textiles meet the needs of Vietnam's imports. For example, according to UN Comtrade data, in 2012, man-made fiber plain woven fabric accounted for 28% of Vietnam's imported textiles, accounting for 24% of Japan's exports of global textiles. However, in 2012, Japan exported only 11.4% (217 million US dollars) of man-made fiber plain weave to Vietnam, and the number of exports could be even higher in the future.

Another expected result is that the market share of imported garments in the United States will be weakened by the non TPP members in the North American Free Trade Agreement (NAFTA) and the Sino US free trade agreement (CAFTA). When the export garments of NAFTA and CAFTA are popular, the export textiles of the United States will also be favored in the two regions.

　　 Mexico It is not only a member of the TPP, but also an important textile market in the United States, because under the NAFTA, Mexico has been able to export garments to the United States without duty, so it is difficult to get the benefits of additional market access. In fact, Mexico may lose its chance because the United States imports cheap garments from Vietnam and other TPP Asian countries.

On the bright side, trade between the two countries is expected to expand as the United States and Japan will provide more favorable market access conditions for each other's products.

Finally, the study points out that TPP will lead to the expansion of the trade deficit of the US textile industry and reduce the domestic output of the United States.

　　 Problems to be solved

because TPP negotiations The deadline for final completion has not been set, and it has taken more than 4 years since the beginning of negotiations, so the above possible situation is only hypothetical.

In addition, some key industrial issues remain to be resolved, including provisions on the origin of garments and footwear.

The 12 members of the TPP negotiations are: the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

　　 Textile industry The trade group strongly urged the US negotiations to adhere to the strict "yarn start" rule (that is, lining, narrow elastic band, sewing thread and pocket cloth).

The US negotiators also put forward a shortage list of fabrics, yarns and fibers, that is, they can be procured from non TPP countries, including from mainland China.

However, apparel retailers, brands and importers who have a large global supply chain want to have the greatest flexibility in purchasing, and they do not care much about whether or not they use American made textiles.

They believe that such a rule is too strict, hindering the textile industry's new trade and investment opportunities, and making most existing trade activities unable to enjoy preferential tariff treatment.

On the contrary, they want to be free to purchase from the best suppliers, regardless of whether they are made in the US or other TPP member countries, and hope that the post processing (tailoring and sewing) of garments can be carried out in TPP countries, regardless of the origin of the fabric.