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AAFA “Strongly Supports” TTIP Negotiations

The Trans-Atlantic Trade and Investment Partnership (TTIP) has largely been negotiated quietly, avoiding the same journalistic scrutiny lavished upon the Trans-Atlantic Pacific Partnership or Pacific Alliance. Nevertheless, the TTIP negotiations have been gaining ground and, if successfully settled, could have wide-ranging consequences, allowing the U.S. and the E.U. to set common rules between them on emerging trade issues like regulatory standards and regional cooperation.

Acknowledging the potential significance of the TTIP, the American Apparel & Footwear Association (AAFA) recently weighed in on the treaty’s provisions, endorsing its central goal of removing gratuitous obstacles to free trade between the E.U. and the U.S. Stephen Lamar, Executive Vice President of the AAFA, recently wrote:

“AAFA strongly supports negotiation of a high standard comprehensive trade agreement with the European Union (EU) that actually reduces barriers to trade and investment between Europe and the United States. Europe is an important partner of the U.S. apparel and footwear industry. Not only is Europe a top market, but it is also a source of key fabrics and other inputs that are used in the production of apparel in the United States and around the world by top American brands. Strong US-EU synergies exist throughout the supply chains as designers, compliance experts, and logistics professionals from both continents routinely collaborate to bring today’s fashions into homes in the United States, Europe, and throughout the world.”

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Lamar also commented on the common misconception that duty reduction between the E.U. and U.S. can’t properly be a principal goal of TTIP negotiations since the existing trade barriers are already negligible. He said:

“We often hear that the T-TIP is not about duty reduction since the overall tariff rates between the EU and US are relatively low. While this may be true of duties collected in other industries, it is not the case of tariffs affecting our sector. In 2012, the United States collected more than $580 million worth of duties on imports of textiles, apparel, and footwear from Europe. This figure represents more than 12 percent of all duties collected on U.S. imports from Europe, even though textiles, apparel, and footwear represent less than 2 percent of all total U.S. imports from Europe.”

And similar to the TPP talks, “rules of origin” have assumed a central place in TTIP discussions. According to Lamar, any progress targeting unnecessary duties will be undercut if overly constricting rules of origin remain unrevised. Lamar explained:

“Duty elimination is meaningless if the rules of origin are so restrictive that they cannot be used. Restrictive rules of origin — such as the yarn forward rule of origin used in some of the free trade agreements the United States has negotiated — serve as “localization barriers to trade” by forcing companies to use certain inputs in order to gain the benefits of the agreement. Ultimately, such restrictive rules discourage use of the agreement by both importers and exporters. We urge that the ROO in the TTIP be simple and flexible to encourage the development of trade and investment of U.S. companies using global supply chains.”

Lamar’s remarks included a defense of the importance of the Berry Amendment, too, as a signature feature of U.S. free trade policy, calling it a “a staple of U.S. procurement law for more than 70 years,” explaining that it “has ensured that all clothing and footwear purchased by the U.S. military is made in the United States.” He said that the AAFA continues to “strongly support continuation of this policy.”

At the heart of the TTIP is the attempt to create common standards between the U.S. and E.U., especially with respect to currently disparate regulatory regimes. With this end in mind, Lamar emphasized that the AAFA  will “strongly support efforts to harmonize regulations and requirements on product safety and labeling.” To this end, he said the AAFA “submitted a joint letter with our counterpart organization in Europe, EURATEX, to do just that.” He bemoaned the lack of synergy on this score, writing, “Diverse and conflicting regulatory requirements are among the biggest costs our members face.”

While generally optimistic in tone, Lamar did express concern that the “EU  continues to maintain a punitive 26 percent tariff (on top of an existing 12 percent duty) on certain women’s jeans made in the United States and exported to Europe.” Lamar called the introduction of a moratorium on the expansion of new trade restrictions during the talks “critical to the negotiation of the TTIP.” The position of the AAFA on this point was unequivocal: “We urge that these duties be eliminated immediately.”

Lamar ended his remarks with a clear endorsement of the discussion’s aims. He said, “In conclusion, we strongly support negotiation of the TTIP. We look forward to working with U.S. and EU negotiators and stakeholders to help craft an agreement that creates value for the U.S. apparel and footwear industries.”