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TPP and TTIP Won’t Happen With a Trump Administration

Bosnian Shoe Company Designs Heels for Melania TrumpDonald Trump’s unexpected success in the U.S. presidential election will cause chaos and uncertainty, but it may also present an opportunity for the American textiles and apparel industry.

That was the message to attendees at the 28th Apparel Importers Trade and Transportation Conference in New York City Wednesday, hosted by the United States Fashion Industry Association (USFIA) and the American Import Shippers Association (AISA), the morning after the shocking result that sent global markets into a tailspin.

“I think there’s some opportunity in a Trump administration,” posited David Spooner, partner at Barnes & Thornburg LLP in Washington, D.C., and former chief textile and apparel negotiator at the Office of the U.S. Trade Representative (USTR). “Assuming chaos provides opportunities, and if Trump brings in new faces to USTR, it might give us an opportunity to do new things in trade. We’ve been screwed by the yarn-forward rule for decades. Maybe there’s an opportunity to do things, even if it’s around the margins.”

John Pellegrini, counsel at New York City-based McGuireWoods LLP, put things more bluntly: “The only good thing that happened yesterday was a full employment act for international trade specialists.”

That’s because Trump’s campaign centered on a pledge to “Make America Great Again” by renegotiating trade agreements, imposing tariffs as high as 35 percent on imports from countries like China and preventing companies from manufacturing overseas.

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“This is the first election year since Ross Perot heard the giant sucking sound from Mexico,” noted Jon Fee, senior counsel at Alston & Bird LLP in Washington, D.C., referring to Perot’s comments during the 1992 presidential campaign that NAFTA (North American Free Trade Agreement) would send U.S. jobs south to Mexico. “In this election, trade became the proxy, the scape goat for everything people felt was wrong with America. As The New York Times pointed out, trade isn’t the main force destroying jobs but it serves as a good target.”

All three panelists agreed: The Trans-Pacific Partnership (TPP) won’t happen with a Trump administration.

“Obama has been pushing really hard for a lame-duck vote,” Spooner said. “But the votes aren’t there. “Both [House Speaker] Paul Ryan and [majority leader] Senator Mitch McConnell say the votes aren’t there.”

“It will never happen because Mitch McConnell would rather act against his country’s interests than allow TPP to be a part of Obama’s legacy,” Fee added, joking that TPP might pass about two to three months after hell freezes over.

The Transatlantic Trade and Investment Partnership (TTIP), a proposed trade agreement between the U.S. and the European Union that’s already on rocky ground, likely won’t happen either.

“Talks have not been going well. Negotiation rounds have not been very productive,” Spooner said. “The German vice chancellor and the French trade minister have both called for the talks to end.”

NAFTA could be walking into a buzz saw, too. Not to mention, if Trump wants to raise tariffs on China, the U.S. will have to withdraw from the World Trade Organization (WTO)—something that the president has the authority to do all by himself.

“The effects of leaving the WTO would be that the U.S. would enjoy the same economic status as Syria, North Korea and Iran,” Fee pointed out. “The U.S. would lose binding dispute resolution process, lose protection against non-tariff barriers, protection of its intellectual property and it might engender mutually retaliatory trade wars.”

But back to the opportunities a Trump administration potentially holds for textiles and apparel. One of the president-elect’s main advisors is Wilbur Ross, the billionaire who bought Cone Mills out of bankruptcy in 2004, combining it with Burlington Industries to create International Textile Group. Spooner’s hope is that Ross has the industry’s best interests at heart.

“Just because TTIP is falling apart and TPP is not going to pass anytime soon, frankly I think that means we have to be more active and proactive,” Spooner said. “If Trump rips up NAFTA, at least it allows us to get in there and say get rid of yarn-forward, or we might see a free trade agreement with the U.K. We’ll have a clean slate and maybe some different thinking so it might not be all bad.”