Now that the U.S.-Mexico-Canada Agreement (USMCA) has passed the House of Representatives, with the backing of the domestic textile sector and apparel importers, and appears headed to enactment, it will replace the North American Free Trade Agreement (NAFTA), the 26-year-old pact with Mexico and Canada.
It will also join free trade agreements (FTAs) in force with 20 countries, accounting for about 15 percent of all apparel and textiles imports. The largest two pacts for the apparel and textiles industry are NAFTA and the Central American Free Trade Agreement (CAFTA).
The FTAs eliminate or reduce tariff rates, improve intellectual property regulations, open government procurement opportunities and ease investment rules. They are meant to help level the global playing field and encourage foreign governments to adopt open and transparent rule-making procedures, as well as non-discriminatory laws and regulations.
NAFTA
Implemented Jan. 1, 1994, NAFTA is said to be responsible for more than 12 million through trade with Canada and Mexico. U.S. manufacturers export more Made in America manufactured goods to its North American neighbors than they do to the next 11 largest export markets combined, and the two countries account for nearly one-third of U.S. agricultural exports, including cotton.
According to the Commerce Department’s Office of Textiles & Apparel, the U.S. imported $6.52 billion worth of apparel and textiles in the first 10 months of 2019. About two-thirds of this amount was apparel from Mexico. The U.S. exported $9.63 billion in apparel and textiles under the pact in the same period.
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CAFTA
The agreement entered into force on March 1, 2006 between the U.S. and five Central American countries–Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, and the Caribbean nation of the Dominican Republic.
Prior to CAFTA, the textile and apparel trade with Central America and the Dominican Republic benefited from the Caribbean Basin Trade Partnership Act (CBTPA), a unilateral trade program.
The U.S. imported $7.59 billion in apparel and textiles in the first 10 months of 2019, with approximately 75 percent of those goods meeting the criteria for duty-free treatment. U.S. exports to the region were $3.02 billion in the period, that vbast majority in fabric and yarn.
Additional FTAs are in place with:
Israel
The first FTA the U.S. signed was the U.S.-Israel Free Trade Area Agreement (USIFTA) in 1985. Under the accord, the U.S. and Israel agreed to phased tariff reductions culminating in the complete elimination of duties on all products by Jan. 1, 1995.
Most tariffs between the U.S. and Israel have been eliminated as agreed, although tariff and non-tariff barriers continue to affect a certain portion of U.S. agricultural exports, OTEXA noted. The U.S. imported $237.76 million in apparel and textiles in the year to date through October and exported $66,574 worth of goods.
Australia
Entered into force on Jan. 1, 2005. The U.S. imported $38.2 million in qualifying goods in the first half of 2019 and exported $241,547 worth.
Bahrain
Entered into force Aug. 1, 2006. The U.S. imported $57.18 million in industry goods in the period and exported $7,538 worth.
Chile
Entered into force on Jan. 1, 2004. The U.S. imported $18.752 million in textiles and apparel in the period and exported $150,224 in goods.
Colombia
The agreement was implemented on May 15, 2012. The U.S. imported $258.33 million in apparel and textiles under the accord in the first half of 2019 and exported $122,332 in goods in the period.
Jordan
Entered into force on Dec. 17, 2001. The U.S. imported $1.66 billion in industry goods in the period and exported $8,249 worth.
Morocco
Implemented on Jan. 1, 2006. The U.S. imported $128.39 million in apparel and textiles in the period, but only $4.04 million qualified under the FTA criteria due to the use of third-party fabric. U.S. exports were $38,894, nearly all yarn.
Oman
Implemented on Jan. 1, 2009. There is little trade between the two countries.
Panama
Implemented on Oct. 31, 2012. The U.S. imported $6.93 million worth of apparel and textiles in the period, but almost none of it qualified for duty-free status. U.S. exports were valued at $37,057.///
Peru
The United States-Peru Trade Promotion Agreement (U.S.-Peru TPA) entered into force on Feb. 1, 2009. The U.S. imported $610.78 million in industry goods in the period and exported $66.337 in goods, mostly yarn and fabric.
Singapore
Entered into force Jan. 1, 2004. Only about 25 percent of the $16.82 million worth of U.S. imports qualified for duty-free status in the period. Exports totaled $99,290.
South Korea
Entered into force on March 15, 2012. The U.S. imported $1.16 billion in apparel and textiles in the first half of 2019 and exported $269,552 in apparel, yarn and fabric.