With Senate passage of the U.S.-Mexico-Canada Agreement (USMCA) on Thursday, the National Council of Textile Organizations said U.S. textile executives are ramping up to take advantage of the modifications in the pact.
Some plan to build new businesses or expand existing ones in areas such as pocketing, sewing thread and narrow elastics, NCTO noted. In 2018, the top five states representing textile employment were Georgia, North Carolina, South Carolina, California and Virginia.
“We are pleased the Senate voted swiftly to approve USMCA, a trade deal that we expect to significantly bolster textile exports to Mexico and the Western Hemisphere,” NCTO president and CEO Kim Glas said. “USMCA is a win for the textile industry. The improvements it makes to the North American Free Trade Agreement (NAFTA) will only serve to generate more business for domestic producers and create more jobs and investment in the U.S.”
Mexico and Canada are the two largest export markets for the U.S. textile and apparel industry, totaling nearly $11.5 billion for the year ending Nov. 30, according to government data.
USMCA also drew support from apparel manufacturers and retailers.
“Once seamlessly implemented, this agreement will be a win for the textile, apparel and footwear manufacturing and retail industries, and the hundreds of thousands of American workers who rely on a vibrant North American trade partnership,” Steve Lamar, president and CEO of the American Apparel & Footwear Association, said. “With this in mind, we encourage the President to quickly sign this agreement, our trading partners to take the steps they need to implement the agreement, and all three countries to quickly enable it to enter into force.”
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Matthew Shay, president and CEO of the National Retail Federation, said the updated agreement will modernize commerce with the country’s closest trading partners in areas such as digital trade, customs procedures and trade facilitation, and “pave the way for continued prosperity across the borders of North America as the global economy continues to evolve.”
“This agreement will support the millions of U.S. jobs that depend on free trade with Canada and Mexico and will ensure the continued availability of affordable everyday necessities for American families,” Shay said.
While U.S. companies importing goods under USMCA will benefit by the duty-free nature of the pact, it’s the domestic textile sector’s export opportunities that might be the most critical.
“Our member companies, making some of the most advanced textiles in the world, have long supported USMCA and are eagerly awaiting implementation of the trade deal,” Glas said. “We urge quick implementation of USMCA and thank the administration and Congress for their hard work to get the deal across the finish line.”
For New York-based Cotswold Industries, a vertically integrated textile engineering and marketing company that manufactures and distributes knitted and woven industrial fabrics and non-woven substrates to the apparel, industrial, military commercial workwear and home sewing markets, the new provisions in the trade pact will not only help provide certainty and stability in the Western Hemisphere, but will also facilitate new opportunities.
The company exports a wide variety of fabrics to Mexico that account for more than 30 percent to 40 percent of its total exports, James W. McKinnon, CEO of Cotswold Industries, said.
“For us, the NAFTA agreement itself, and now the USMCA, is absolutely critical to maintaining the jobs and the business that we currently have, and that runs the gamut from automotive to home furnishings to apparel,” McKinnon said. “All of those sectors are critically important to maintaining the free flow of goods over the border and it’s mutually beneficial for not just the U.S. textile industry, but for workers in Mexico and ultimately the U.S. consumer.”
U.S. textile producers have also benefited from Mexico’s close proximity as brands and retailers invested in the just-in-time manufacturing model. With the explosion of online shopping, quicker deliveries have become even more critical with a greater reliance on manufacturing hubs closer to the U.S.
Hamrick Mills, a 119-year-old textile company based in Gaffney S.C., employing 470 people, is well positioned to take advantage of several new provisions in USMCA. The company is a producer of greige woven fabrics for use in home furnishings and apparel.
“I think there is a big desire to have certainty in the North American region,” Cameron Hamrick, president of the company, said. “There is less of a geo-political risk of operating in North America for the U.S. market. Without that certainty, it could easily drive more big end users to Asia.”
A portion of the company’s career uniform shirting fabric and hospital scrub material is exported to Mexico for cutting and sewing, and shipped back to the U.S. for consumption, he said. The stronger rule of origin for pocketing is also a significant component for Hamrick Mills.
Under NAFTA, South Carolina’s Greenwood Mills has built a significant workwear fabric export business to Mexico, and on the apparel side, the company makes finished blue jeans in Mexico, president and CEO James C. Self III noted.
“With the great growth in e-commerce, quick turn is going to be more critical to a lot of our retail partners,” he added.
NCTO worked with the administration during negotiations on USMCA and secured several provisions in the trade deal including stronger rules of origin for certain textile inputs and increased U.S. customs enforcement.
The USMCA updates and modifies NAFTA and makes significant improvements, such as creating a separate chapter for textiles and apparel rules of origin with strong customs enforcement language, and stronger rules of origin for sewing thread, pocketing, narrow elastics and certain coated fabrics. Under NAFTA, these items can be sourced from outside the region, while USMCA modernizes this loophole and ensures these secondary components are originating from the region.
The USMCA was approved by the House in December and with the Senate’s passage, it now goes to President Trump for his signature.