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US House Warns Against TPP Fallout

A letter calling for robust protections of the US textile industry from the potential results of Trans-Pacific Partnership (TPP) was sent to US Trade Representative Michael Froman, signed by nearly 170 members of the House of Representatives.

According to Rep. Bill Pascrell (D-NJ), co-chairman of the Congressional Textile Caucus and a member of the Ways and Means Committee: “This agreement must be fairly constructed to protect and maintain investment in the many small and  medium-sized textile businesses in our nation that would be affected by it. Our trade agreements must provide American workers and businesses with the chance to compete on a level playing field, where no country has an unfair advantage over another.”

In particular, the letter expressed deep concern over aggressive positions staked out by Viet Nam in the latest round of negotiations. “After sixteen rounds of negotiations, Viet Nam is seeking to replace longstanding textile rules that have been included in previous free trade agreements with a new rule that would allow Viet Nam to source textiles from China and export garments and finished goods to the United States duty free,” the letter warned.

Viet Nam projects that the new rule would transform its market share in the US, which would bloom from 7 percent to 30 percent. The letter from US lawmakers complains that it could lead to the elimination of nearly 500,000 American jobs in the textile industry, potentially erasing another 1.5 million worldwide.

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This is not the first time sharply worded grievances have been issued over the possible fallout from the Asia-Pacific trade talks. Just recently, Smyth McKissick, CEO of Alice Manufacturing, cautioned that a poorly negotiated trade deal could “decimate” the US textile industry. “If properly structured, the US textile industry is poised to continue a positive trajectory of growth. However, if weak rules are adopted, particularly given Viet Nam’s participation in the TPP, our industry will be at the mercy of an unfair trade agreement, that will decimate the US textile industry once again,” said McKissick, speaking at a US House Small Business Committee Hearing on American competitiveness.

The hotly contested “yarn-forward” rule was at the forefront of McKissick’s apprehensions. The rule stipulates that only yarn and fabric both manufactured and assembled in designated free trade partner countries can enter the US market tariff-free. McKissick predicted that, in the absence of such a rule, China would take advantage of its favored trade status to export more cheaply by rerouting its textile products through Viet Nam.

The House letter also defended the yarn-forward rule as essential: “The rule has a proven track record of job creation in the US and our free trade areas, and it is responsible for hundreds of thousands of US manufacturing workers and millions of direct and indirect jobs in countries south of our border and in Africa.”

The letter also cited the yarn-forward rule as a necessary instrument for the protection of fragile emerging economies. “Maintaining provisions such as yarn-forward and strong duty preferences in the TPP will not only help the domestic textile industry keep well-paying and productive jobs in the U.S. but it will also aid the development and emergence of new export markets amongst our important trading partners. While the toll on U.S. manufacturing workers would be high, the social and economic impact on small developing economies south of our border that depend on the textile and apparel supply chain would be devastating,” the letter claimed.