Congressional Members Urge Strong Textile Rules in the TPP Agreement

May 2, 2012
For Immediate Release
Media Inquiries: Sarah Faye Pierce (NCTO)(202) 822-8026 spierce@ncto.org

76 Members of Congress Urge Strong Textile Rules in the Trans-Pacific Partnership Agreement

WASHINGTON, DC – The Textile and Apparel Alliance for the TPP (TAAT) expressed its deep appreciation to the seventy-six (76) U.S. Representatives, led by Congressmen Trey Gowdy (R-SC) and Larry Kissell (D-NC), who sent a letter today to U.S. Trade Representative (USTR) Ambassador Ron Kirk stressing the need for job-creating textile rules in the Trans-Pacific Partnership Agreement (TPP).The signatories pledged to work with the USTR to ensure a positive outcome for the textile and apparel chapter in the negotiations.

TAAT spokesman and NCTO President Cass Johnson said, "Members of Congress have sent a strong message that they want textile rules in the TPP agreement that support U.S. jobs, develop new export markets, increase opportunities for private investment and entrepreneurship, and reinforce strong trade ties with existing FTA partners."

The TAAT coalition was formed in February after Vietnam, a TPP participant, proposed country-of-origin rules for textiles and apparel that are far weaker than those in current U.S. free trade agreements (FTAs) and preference programs.

If adopted, the weak rules would allow Vietnam's state-owned enterprises (SOEs) to export textiles and apparel made from subsidized inputs produced by China's massive textile SOEs duty free to other TPP countries.

The competitive advantage gained by Vietnam's SOEs would shift business to them at the expense of privately-owned and financed textile and apparel producers in the United States and elsewhere in the NAFTA, CAFTA and AGOA trade blocs, thereby harming potential for new textile and apparel export markets for U.S. producers and those of FTA partners.

Moreover, China, the largest textile and apparel exporter in the world and a country not participating in the TPP, would gain substantial new access to the U.S. market without having to make trade concessions in return.

In contrast, the TAAT coalition is supporting rules proposed by the U.S. government which build on the free trade agreements that have been negotiated over the past 25 years.These include the "yarn forward" rule of origin, responsible market access provisions and strong customs rules and enforcement.A yarn-forward rule of origin means that all yarn, fabric, and assembly production stages must be done in a TPP country for a textile or apparel product to be eligible for duty-free treatment, unless an exception applies. The U.S. government has also insisted that the TPP agreement ensure "that state-owned enterprises compete fairly with private companies and do not distort competition in ways that put U.S. companies and workers at a disadvantage."

Johnson noted that the TPP will be the most significant U.S. trade agreement since the negotiation of China's 2001 accession to the World Trade Organization, if approved by Congress.This is in part because the agreement is a 'plug and play' where other countries which wish to negotiate an FTA with the U.S. will plug into the agreement and agree to its existing rules.

In addition to Vietnam, the TPP agreement also includes Chile, New Zealand and Singapore, Brunei, Australia, Vietnam, Peru, and Malaysia.Vietnam, a non-market economy, exported $7.2 billion in textiles and apparel to the United States in 2011, making it America's second largest supplier of those products.The Vietnamese government both owns and subsidizes textile and apparel production.Vinatex, Vietnam's state-owned textile and apparel conglomerate, is one of the largest garment producers in the world.In addition, Vietnam depends on China for much of its yarns and fabrics, importing $4.4 billion of textile components from that country in 2010.

The TAAT coalition includes textile and apparel associations from the United States and 26 other free trade and trade preference countries.Coalition members represent nearly two million workers in the textile, apparel, and fiber production sectors, thousands of privately owned factories, and nearly $25 billion in two-way textile and apparel trade.

For More Information on TAAT and a list of Alliance Members please visit – www.taa-tpp.com

The next round of TPP negotiations is scheduled to take place May 8^th – 18^th in Dallas, Texas.

A copy of the congressional letter and list of signatories by state follows this release.

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May 1, 2012

Ambassador Ron Kirk
600 17^th Street, N.W.
Washington, DC 20508

Dear Ambassador Kirk:

As members of the United States House of Representatives representing substantial domestic textile and apparel industry interests, we write to underscore the economic imperative of a strongly negotiated Trans-Pacific Partnership (TPP).In particular, we stand ready to work with USTR to ensure that the textile and apparel chapter reflects the trade sensitivities of an agreement with Vietnam and that the TPP respects the economic investments that past trade and preference agreements have made in the establishment of global textile and apparel supply chains and the nearly two million textile and apparel jobs created as a result.

The TPP negotiations are particularly important because they include Vietnam, which is the second largest exporter of apparel to the United States.Vietnam's exports have grown dramatically – up 15,000 percent over the last ten years.This enormous growth has been fueled by Vietnam's large state-owned, state-subsidized apparel sector.Without strong textile rules in the TPP, state-subsidized producers in Vietnam could easily overwhelm U.S. and other producers in the Western Hemisphere and around the world, destroying billions of dollars worth of export markets and causing job losses in the hundreds of thousands.

As chief negotiator for the United States, we encourage you to incorporate important criteria for the textile and apparel chapter that will stimulate private investment, exports and job growth within free trade partnering countries, including the United States.To date, we are pleased at the strong position the United States has taken regarding Rule of Origin issues and we urge USTR to likewise take a strong stance in support of other key textile and apparel negotiating objectives regarding market access and customs enforcement.We hope you will focus on the following objectives:

1) Yarn-forward rule of origin. This rule has been the cornerstone of the textile and apparel provisions for nearly all U.S. free trade agreements dating back to North America Free Trade Agreement (NAFTA). A comprehensive yarn forward rule ensures that the benefits in the agreement accrue to workers and companies in the United States and other TPP partner countries. Moreover, inasmuch as Vietnam has one of the largest and most competitive apparel industries in the world, there is no reason to depart from the traditional rule of origin.

2) Market access rules. Special rules should be negotiated under the TPP given Vietnam's non-market economy status and the anti-competitive advantages Vietnam provides to its state-owned textile and apparel sector. Various approaches for sensitive products should be considered, including extended duty phase-down/phase-out periods, new safeguard procedures and prohibitions on goods from state-owned enterprises, etc.

3) Customs enforcement rules. The enforcement rules should be updated to include electronic tracking of yarn and fabric inputs as well as other measures that target fraudulent activity.  Given Vietnam's heavy reliance on China for yarns and fabrics, strong customs rules are mandatory if illegal activity is to be contained.

The domestic textile and apparel industry has built a competitive and integrated supply chain in the Western Hemisphere through the NAFTA, Central America Free Trade Agreement and regional preference programs.This supply chain supports hundreds of thousands of agricultural and manufacturing workers in the United States and more than one million workers in countries on our border. Without strong textile rules in the TPP, this trade will shift out of the Hemisphere.In addition, many textile and apparel workers in Africa would see their export markets to the United States devastated.Strong textile rules are important to ensure the U.S. textile industry will not lose any export opportunities the TPP might otherwise offer.

Thank you for your consideration of our views, and we look forward to your response on this important matter.     

Signatories of the May 1, 2012 Gowdy/Kissell TPP Letter by State (76 – 35 Republican, 41 Democrat)

Alabama

Martha Roby (R-02)

Mike Rogers (R-03)

Mo Brooks (R-05)

Terri Sewell (D-07)

Arizona

Raul Grijalva (D-07)

Arkansas

Rick Crawford (R-01)

California

Linda Sanchez (D-39)

Connecticut

Joe Courtney (D-02)

Rosa DeLauro (D-03)

Georgia

Jack Kingston (R-01)

Sanford Bishop (D-02)

Lynn Westmoreland (R-03)

Hank Johnson (D-04)

Tom Graves (R-09)

Austin Scott (R-08)

Paul Broun (R-10)

Phil Gingrey (R-11)

John Barrow (D-12)

David Scott (D-13)

Illinois

Dan Lipinski (D-03)

Danny Davis (D-07)

Jan Schakowsky (D-09)

Jerry Costello (D-12)

Iowa

Bruce Braley (D-01)

Maine

Chellie Pingree (D-01)

Mike Michaud (D-02)

Massachusetts

Jim McGovern (D-03)

Barney Frank (D-04)

Niki Tsongas (D-05)

Michigan

Thaddeus McCotter (R-11)

Mississippi

Alan Nunnelee (R-01)

Bennie Thompson (D-02)

Missouri

William Lacy Clay (D-01)

Jo Ann Emerson (R-08)

New Jersey

Chris Smith (R-04)

Bill Pascrell (D-08)

New York

Louise Slaughter (D-28)

North Carolina

G.K. Butterfield (D-01)

Renee Ellmers (R-02)

Walter Jones (R-03)

David Price (D-04)

Virginia Foxx (R-05)

Howard Coble (R-06)

Mike McIntyre (D-07)

Larry Kissell (D-08)

Sue Myrick (R-09)

Patrick McHenry (R-10)

Heath Shuler (D-11)

Mel Watt (D-12)

Brad Miller (D-13)

Ohio

Marcy Kaptur (D-09)

Dennis Kucinich (D-10)

Marcia Fudge (D-11)

Betty Sutton (D-13)

Tim Ryan (D-17)

Pennsylvania

Robert Brady (D-01)

Tom Marino (R-10)

Tim Holden (D-17)

Rhode Island

David Cicilline (D-01)

James Langevin (D-02)

South Carolina

Joe Wilson (R-02)

Jeff Duncan (R-03)

Trey Gowdy (R-04)

Mick Mulvaney (R-05)

Jim Clyburn (D-06)

Tennessee

Phil Roe (R-01)

John Duncan (R-02)

Chuck Fleischmann (R-03)

Stephen Fincher (R-08)

Texas

Michael Conaway (R-11)

Mac Thornberry (R-13)

Ruben Hinojosa (D-15)

Randy Neugebauer (R-19)

Virginia

Robert Hurt (R-05)

Morgan Griffith (R-09)

Wisconsin

Tom Petri (R-06)