PwC Report Looks at TPP's Textiles and Apparel Provisions
PricewaterhouseCoopers outlined the Trans-Pacific Partnership provisions that apply specifically to the textile and apparel industry in a Dec. 17 report (here) . While the "vast majority of textile and apparel goods covered under the TPP are subject to a 'yarn forward' rule of origin," the trade deal "includes a de minimis exception whereby goods can still qualify for TPP benefits if the total weight of nonoriginating materials is not more than 10 percent of the total weight of the good," said PwC. Also, "some apparel goods, such as [brassieres] and baby garments, are subject to a less restrictive 'cut and sew rule' whereby the yarn or fabric can be sourced from anywhere but must be cut and sewn within a TPP participating country for the final goods to qualify," it said. The agreement also includes a "short supply list of products" that "allows fabrics, yarns and fibers not commercially available in the TPP participating countries to be sourced from non-TPP countries and still qualify for benefits, provided they meet any specified end-use requirements."
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The TPP also includes language that specifies phased-in levels of duty reductions, said PwC. "For example, while some textile and apparel goods will immediately be duty-free the first day the TPP enters into force, others will have the duty rate cut in half that first day but not become duty free for another ten years," it said. Members of the TPP can also create "safeguard measures" to "re-impose tariffs on specific textile and apparel goods in the event there is a surge of imports into the country" that could harm domestic producers, the company said. The obligations under the TPP are consistent with other FTAs, which means importers will be able to continue use of other FTAs, said PwC. "This is crucial for textile and apparel companies who have made investment decisions, and strategic partnerships/joint ventures based on existing FTA frameworks," it said.