TPP Seen as a Positive for Fashion Industry, Impact of Other Trade Measures Unclear, Survey Says
The Trans-Pacific Partnership (TPP), Trade Promotion Authority (TPA) and the Generalized System of Preferences (GSP) were listed as the top policy issues expected to have a positive impact on the clothing business, said respondents in a U.S. Fashion Industry Association survey. TPP, GSP and TPA, which would give Congressional pre-approval to the executive branch for trade agreement negotiations, were the only issues to garner a majority of responses saying that passage or renewal would positively impact business. Other areas of trade policy, including the African Growth and Opportunity Act (AGOA), the Transatlantic Trade and Investment Partnership (TTIP) and customs reauthorization legislation were largely viewed as "Hard to say/Neutral" in the survey.
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The uncertainty within the industry towards the issues at the bottom of the list may be partially a result of regional sourcing that doesn't involve the areas included within the free trade agreements (FTAs), said the study's author, Dr. Sheng Lu, Assistant Professor in the University of Rhode Island Department of Textiles, Fashion Merchandising and Design. "Some respondents report that they are 'neutral' on some FTAs/preference programs because, currently, they are not sourcing from the regions covered by the respective trade agreement(s)," he said. "This once again illustrates the necessity of increasing the relevance of FTAs/preference programs to the sourcing pattern of the U.S. fashion industry today so that those hard-won trade agreements do not become missed opportunities. On the other hand, the result implies that more studies illustrating the fashion-specific sectoral impact of these trade agreements/initiatives can be provided in the future to help companies better understand the potential impact, too."
Specifically, there's very strong support for more flexible rules of origin and the reduction of import tariff rates on apparel, fashion accessories, and textile products, including fiber, yarn, and fabrics, it said. Additionally, some 85 percent of respondents expressed strong support or support for abandoning the yarn-forward rules of origin within the TPP agreement, while seven percent said they oppose abandoning the yarn-forward rules of origin, the report said. "The majority of respondents also support the inclusion of environmental and labor clauses in future FTAs and preference programs between the United States and its trading partners," the study found. "This reflects the importance of compliance with corporate social responsibility and sustainability to fashion businesses today, and the overall positive attitude of the respondents toward working on these issues."
The survey provides some insight into the important policy issues for the industry, said association president Julia Hughes. “What’s clear is that our mission to eliminate those barriers to trade remains a high priority for fashion brands and retailers,” said Hughes. “While we were successful in getting rid of the quotas in 2005, there is a lot more to do. Fashion brands and retailers must juggle ever more complicated challenges related to cost, compliance, and competition. And the Free Trade Agreements and preference programs that should cut costs and minimize the impact of high duties simply don’t work for most companies.”
Lu also found that China is expected to remain the dominant supplier, while Vietnam and Asia as a whole are seen as having more growth potential, and companies are increasingly diversifying their sourcing, though "current FTAs and preference programs remain under-utilized or don’t represent a major component of respondents’ sourcing," the association said. The study was based on a survey of executives at more than two dozen fashion companies from March 2014 to April 2014, with about 70 percent of respondents coming from retail businesses, 67 percent from import/wholesale businesses, 11 percent from manufacturers/suppliers, and 4 percent from providers of related services, it said. In terms of business size, 96 percent of respondents report having more than 100 employees, which "suggests that the findings well reflect viewpoints of the most influential players in the U.S. fashion industry. "