The United States and European Union are continuing to negotiate on the proposed Transatlantic Trade and Investment Partnership (TTIP), and apparel organizations are seeking inclusions to the agreement that would directly benefit the global value chains of apparel and footwear retailers.
In a joint position paper released Wednesday, the European Branded Clothing Alliance (EBCA), the American Apparel & Footwear Association (AAFA) and the United States Fashion Industry Association (USFIA) outlined key priorities and recommendations for the U.S. and E.U. to pursue in negotiating the free trade deal.
If settled successfully, TTIP would reduce—and in some cases remove—tariffs or taxes applied to imports between the two markets.
According to the paper, a recent survey of the U.S. apparel industry showed that 70 percent of the retail value of U.S. apparel imports is created in the U.S., and similarly, an EBCA study found that 50 to 80 percent of the value of European apparel and footwear imports is created in Europe. And because both markets’ manufacturers rely on global value chains to sustain business, the organizations are calling for TTIP to include provisions to facilitate trade and eliminate barriers.
Regulatory convergence, or mutual recognition of regulations, the first recommended inclusion, would allow for an exchange between U.S. and E.U. authorities on how to address barriers to trade, according to the paper’s signees.
Full, immediate and reciprocal tariff elimination was also noted as necessary. “In the best-case scenario, TTIP would provide for the full, reciprocal, and immediate elimination of duties on apparel, without phase-out periods to reduce trade costs and barriers that disproportionately affect this industry, and which unnecessarily impose costs on consumers in both the U.S. and the EU,” the paper noted.
Julia K. Hughes, USFIA president said, “The TTIP is an unprecedented opportunity to negotiate a Free Trade Agreement that works for apparel and footwear brands and retailers.” She added, “Every year there are millions of dollars of trade between the U.S. and the E.U. So duty-free on Day One would be a tremendous opportunity.”
If rules of origin remain restrictive, tariff elimination can be rendered meaningless, according to the paper, so the organizations are seeking simple and flexible rules of origin to encourage development of trade and investment.
The E.U. and U.S. are also working to negotiate on other trade barriers like differences in technical regulations, standards and approval procedures under the TTIP. The paper emphasized the need to harmonize textile labeling regulations and eliminate duplicitous testing by moving toward one international standard test method.
According to the paper, “The number of compulsory labeling requirements affixed to the product should be minimized to allow product-labels to be kept as simple as possible to promote consumer understanding. This simplification should include an alignment of the names of textile fibers and care instruction symbols on the basis of ISO standards and eliminate requirements at Member State and U.S. State levels for chemicals substance labeling in favor of EU/U.S. Federal level requirements.” A common list of prohibited substances would also be created if TTIP were negotiated per the outlined recommendations.
In terms of customs, trade could flourish under TTIP and border costs could be cut back if a designated Customs chapter emphasized facilitation of trade and focused enforcement activities on traders more likely to present risk.
” One of the top priorities for brands and retailers is to create a process to facilitate mutual recognition, or even regulatory convergence, of regulations and standards,” Hughes said. “The proliferation of different standards for labeling, product safety and testing, and prohibited substances creates tremendous difficulties for companies doing business in both the U.S. and the EU. USFIA supports maintaining high standards and safety for consumers—but we think that we can achieve that goal and still harmonize. In this statement we already take a step in that direction by agreeing that labeling requirements should be aligned on the basis of ISO standards. We look forward to continuing that collaboration with our colleagues in Europe and here in the U.S.”