Curb China'S Textile Export Trade: Another US China Trade Bomb?

Since taking office, President Trump has repeatedly threatened to terminate the North American Free Trade Agreement, which came into effect in January 1994, criticizing the loss of manufacturing jobs in the United States and demanding renegotiation. After more than a year of hard negotiations, the United States and Mexico agreed on the renewal of the North American Free Trade Agreement in September 2018.

I. The US Mexico agreement will take effect in July 1, 2020.

In January 29, 2020, US President Donald Trump signed the revised US Mexico agreement. The new agreement is renamed the "American Mexico Canada agreement" (referred to as the Mexico agreement), or USMCA.

At present, Mexico and Canada have completed the domestic procedures, and the US trade representative lettse, 24, informed the US Congress that the United States is completing the final steps in the country, which is the necessary last step for the entry into force of the agreement. As agreed, the agreement will take effect in July 1st.

Two, the US Mexico agreement will benefit the development of the textile manufacturing industry in the United States.

In 2019, the number of textile industry workers in the United States was 585240, and sales of textiles and clothing in the United States amounted to US $75 billion 800 million, of which exports of textiles, textiles and clothing amounted to US $29 billion 100 million. Mexico and Canada are the two largest export markets of the textile and garment industry in the United States, and the total export volume is nearly US $11 billion 300 million in 2019.

Gingras, chief executive of the NCTO, said: "USMCA is an important trade agreement which will benefit the US textile industry. It is very important for us to maintain three dollar trade in clothing and textiles between the United States, Mexico and Canada." On the basis of the former North American Free Trade Agreement (NAFTA), USMCA has made some major improvements and become more marketable, which will increase exports of US textiles and attract foreign businessmen to invest in the US. On the other hand, we also need to maintain and expand our supply chain in Mexico and Canada in order to address future challenges and avoid over reliance on Asia and other developing regions.

At the same time, the domestic manufacturers of the United States are facing the crisis due to the impact of the COVID-19 pandemic. Many enterprises have turned to the production of personal protective equipment.

Hamrick Mills is a family textile company in Greenwood, South Carolina. It has a history of 119 years, and is headquartered in South Carolina, producing polyester / cotton blended and 100% cotton fabrics. The company has transformed a factory that produces jeans in Mexico into a factory that produces non medical masks and protective clothing. Cameron Hamrick Cameron Hamrick, President of Hamrick Mills, said: "USMCA has increased the certainty of the three side trade. After signing USMCA, we can make a long-term plan for the domestic and international textile supply chain, and also give us confidence in expanding investment. Now more than ever, we need to build a strong regional supply chain in the Western Hemisphere. "

Cotswold Industries is a textile manufacturing and marketing company that produces and distributes industrial textiles and non-woven fabrics. Its non-woven fabrics have been used to produce personal protective products. Chief executive James W Mackinnon (James W.McKinnon) said: "the implementation of USMCA will promote the sustained and healthy growth of the US textile industry and enable us to achieve localized cooperation in the supply chain. It is very important to establish a strong regional manufacturing base in the Western Hemisphere."

Three, what is the impact of the US Mexico agreement on China?

The signing of the free trade agreement by the US and Mexico appears to have nothing to do with China, but some people in the industry pointed out that the agreement is the same as Obama's TPP. China is the protagonist of the absence. The impact of the agreement on China's textile industry may be as follows:

1) the US Mexico agreement strengthens the discriminatory restraint on non market economy countries.

USMCA strengthened discriminatory restrictions on non market economy countries from two aspects:

On the one hand, USMCA constrains the free trade agreement between Member States and non market economy countries. USMCA stipulates that if Member States engage in FTA negotiations with non market economy countries, they must inform the other member states at least three months before the start of negotiations. The other Member States shall have the right to examine and terminate USMCA on the agreement text, which will bring difficulties and challenges to the negotiations on the Sino Indian free trade agreement.

On the other hand, although the investor state dispute settlement mechanism (ISDS) is preserved between the United States and Mexico, it is also stipulated that ISDS is not applicable to the control or all enterprises of a third country owned by a non market economy. This means that if Mexico enterprises invested in Mexico are reinvested in the United States and have disputes with the US government, Mexico enterprises with Chinese investment can not invoke the international investment arbitration under the US Mexico trade agreement to prosecute the US government.

2) curb China's textile export trade and global value chain division of labor

USMCA has put forward certain requirements for the origin of textile products, and has proposed a similar "starting from yarn" requirement in TPP agreement. Canada and Mexico will gradually reduce the quantity of yarn and fabric imported from China in order to enjoy preferential tax rates exported to the United States. The three countries have accelerated the regional economic integration and the circulation of the industrial chain. In the long run, they have hindered the textile trade between China, Mexico, China and Canada and China and the United States.