The United States and eight other Pacific Rim members of the Trans-Pacific Partnership (TPP) concluded a 12th round of trade negotiations in Dallas, Texas, last week. Progress was made on a number of fronts, according to the US Trade Representative’s office, but few details have been made available.
A news release from Washington reported that discussions on a US proposal regarding State-owned enterprises (SOEs), and how to ensure that they compete fairly with private companies, was among the focus areas. Negotiating teams also discussed new issues related to trade and the environment, the digital economy, and the development of supply chains in the region, as well as tariff packages that would provide access to member’s industrial goods, agricultural, and textiles markets.
Meantime, the Textile and Apparel Alliance for TPP (TAAT), a global coalition of US textile and apparel trading partners from Africa, North, Central and South America, as well as US congressional allies, are pressing the US Trade Representative to ensure that the textile and apparel section of the final pact provides a “positive environment for job creation among TPP members” and prevent non-members, namely China, from reaping a business windfall without being obligated to abide by the rules of the trade agreement.
In a statement issued earlier this month, the TAAT commended 76 members of Congress who have formally written to urge the US Trade Representative to see that textile rules in the TPP agreement support US jobs, develop new export markets, increase opportunities for private investment and entrepreneurship, and reinforce strong trade ties with existing Free Trade Agreement (FTA) partners.
Background information in the statement explained that “the TAAT coalition was formed in February after Vietnam, a TPP participant, proposed country-of-origin rules for textiles and apparel that are far weaker than those in current US free trade agreements (FTAs) and preference programs.”
TAAT contends that if adopted, the weaker rules would allow Vietnam's state-owned enterprises to export textiles and apparel made from subsidized inputs produced by China's “massive” textile SOEs duty free to other TPP countries. The competitive advantage gained by Vietnam's SOEs would therefore shift business to them at the expense of privately-owned and financed textile and apparel producers in the United States and elsewhere in the African and North and Central American trade blocs, “thereby harming potential for new textile and apparel export markets for US producers and those of FTA partners.”
Vietnam, a non-market economy, exported US$7.2 billion in textiles and apparel to the United States in 2011, making it the second largest supplier of those products behind China, the TAAT noted. The Vietnamese government both owns and subsidizes textile and apparel production. Vinatex, Vietnam's state-owned textile and apparel conglomerate, is one of the largest garment producers in the world. In addition, Vietnam depends on China for much of its yarns and fabrics, importing US$4.4 billion of textile components from that country in 2010.
Therefore China, “the largest textile and apparel exporter in the world and a country not participating in the TPP, would gain substantial new access to the US market without having to make trade concessions in return,” said the statement.
Consequently, the TAAT coalition said it is supporting rules proposed by the US government which build on the free trade agreements that have been negotiated over the past 25 years.
These include the "yarn forward" rule of origin, responsible market access provisions, and strong customs rules and enforcement. A yarn-forward rule of origin means that all yarn, fabric, and assembly production stages must be done in a TPP country for a textile or apparel product to be eligible for duty-free treatment, unless an exception applies.
TAAP said Washington has also insisted that the TPP agreement ensure "that state-owned enterprises compete fairly with private companies and do not distort competition in ways that put US companies and workers at a disadvantage."
The TAAT coalition includes textile and apparel associations from the United States and more than two dozen other free trade and trade preference countries. Coalition members represent nearly two million workers in the textile, apparel, and fiber production sectors, thousands of privately owned factories, and nearly US$25 billion in two-way textile and apparel trade.
The six-year-old Trans-Pacific Partnership, which has evolved from an original membership of Brunei, Chili, New Zealand and Singapore, now includes New Zealand, Peru, Singapore, the United States, and Vietnam. The next round of negotiations will be in San Diego, California, from July 2-10.
Questions: Considering complaints that TPP talks have been less than transparent to the public, what reasons can be given to open the deliberations or keep them private?
The Dallas round featured the opportunity for those who will be affected by the final agreement to be on the sidelines and meet with chief negotiators. Does this provide a satisfactory means for stakeholders in the talks to ensure their positions on specific issues are put forward?