Trade & Government Round-up for October - Part 2

By SPESA

Below is a collection of stories related to trade and government that may impact the sewn products industry around the world.

U.S.-Brazil Mini Trade Deal The United States and Brazil reached an agreement this week on a limited trade deal aimed at facilitating commerce between the countries, strengthening regulatory practices, and cracking down on corruption. The new “Protocol relating to Trade Rules and Transparency” updates the 2011 Agreement on Trade and Economic Cooperation (ATEC). For now, the Protocol appears to outline ways the two governments can work together to facilitate trade, without providing a lot of details. The word textile does not appear. This is the latest in a series of mini trade deals signed by the Trump Administration that do not require congressional approval, and, thus, are much quicker to enact — this one took only seven months of negotiations.

Text of the U.S.-Brazil ATEC Protocol on Trade Rules and Transparency | U.S. Trade Representative Press Release | NY Times Article on the Agreement

CBTPA Extended

President Trump signed the “Extension of the Caribbean Basin Economic Recovery Act” into law October 10th, officially extending the Caribbean Basin Trade Partnership Act (CBTPA) for another ten years. In addition, the bill is retroactive and allows for the refund of duties paid by the importer on CBTPA-eligible goods entered during the lapse period, October 1, 2020, through October 14, 2020. The CBPTA provides preferential tariff treatment for textile and apparel products assembled (from U.S. fabric and yarn) in the Caribbean Basin Region and exported to the U.S. Read more.

WTO Says EU Can Levy Tariffs Against U.S. The World Trade Organization (WTO) has issued a ruling allowing the European Union to raise tariffs on up to $4 billion worth of imports from the U.S. as a countermeasure for illegal subsidies to the American aircraft maker, Boeing. This is part of a long-running trade dispute between the two parties and builds upon earlier WTO findings that both parties have provided prohibited subsidies in the past. While the EU is expected to formally announce its plan to impose tariffs on October 26, it will likely be a while before any new tariffs go into effect as the European Commission still has to consult with the 27 EU governments. In addition, according to The Wall Street Journal, EU officials may be hoping to negotiate a settlement with the U.S. The general consensus is that new tariffs are not likely to be enacted before the U.S. elections on November 3rd.

European Commission Press Release | Sourcing Journal Article on the Topic

UK Ends Tax-Free Shopping

Beginning January 1, 2021, the UK will no longer allow tax-free shopping for non-European customers. Currently, international visitors to the UK can reclaim the value-added tax (VAT) they pay on goods purchased but not consumed in the UK, in accordance with the VAT Retail Export Scheme. The UK government plans to abolish the scheme at the end of this year, when the Brexit transition period ends, arguing it offers little benefit to many parts of the UK and is inconsistent with international norms. Those against the decision, including the Association of International Retail, warn it will hurt the UK’s tourism, retail, and leisure industries. The UK will become the only European country not to offer VAT-free shopping for international visitors. Read More.

China-Cambodia FTA

Pulled together in less than a year, China and Cambodia signed a Free Trade Agreement (FTA) in October meant to reduce tariffs and boost market access between the two countries. No details from the agreement have been released yet. However, it has been noted to be, at least in part, a fulfillment of a previous promise from China to support Cambodia after the latter lost duty-free access to the European Union market in August over human rights concerns.

Read more about the FTA in Reuters | Read more about the significance for the apparel industry in Just-Style

Side note: The Garment Manufacturers Association in Cambodia (GMAC) has filed a complaint with the European Court of Justice, requesting that the EU’s withdrawal of the Everything But Arms (EBA) scheme be annulled.

New Indonesian Labor Law The Indonesian government passed new labor reform legislation early in October, sparking protests and worker strikes in many Indonesian cities (some turning violent). The Omnibus Law on Job Creation was reportedly introduced to increase foreign direct investment into the country. It makes changes to 79 other laws under the guise of improving bureaucratic efficiency, but in doing so also erodes labor and environmental protections. Opponents claim the legislation hurts workers by changing how the labor system regulates severance pay, outsourcing, and dealing with wages.

Read more about the law | Read more about the apparel industry response

New Indian Labor Codes A similar move seems to have occurred in India where parliament has pushed through three new labor codes which will streamline and simplify a previously complex web of laws. The new labor codes give more power to employers when it comes to layoffs, and change guidelines for collective bargaining and worker strikes. While labor groups have argued the new codes put the safety and rights of workers at risk, industry leaders state they are necessary to get the country’s GDP back on track. Read more.

House Resolution Opposes GSP Expansion

On October 6, 2020, U.S. Representatives Albio Sires (D-NJ), Mario Diaz-Balart (R-FL), Adriano Espaillat (D-NY), and Karen Bass (D-CA) introduced H.Res. 1178, a resolution opposing any inclusion of apparel, textile, and footwear products in the Generalized System of Preferences (GSP). GSP grants duty-free treatment to imports from developing countries in order to encourage economic growth. Those in support of expanding GSP could argue that it would allow apparel, textile, and footwear manufacturers to diversify their sourcing locations and import products into the United States at a lower price for consumers.

Our friends at the National Council of Textile Organizations (NCTO) support the resolution and do not want to expand GSP. NCTO argues it would “not only jeopardize the U.S. textile industry but also erode the critically negotiated trade preferences between the United States and our trading partners.” In fact, one of the key arguments from Congresswoman Bass — who is Chair of the House Foreign Affairs Subcommittee on Africa — is that expanding GSP would have a devastating impact on Sub-Saharan African countries that rely on the benefits and advantage they receive under the African Growth and Opportunity Act (AGOA).

H. Res. 1178 has been referred to both the House Committee on Ways and Means and the Committee on Foreign Affairs. For now, it only has five cosponsors. But the debate over GSP expansion has been going on for years. SPESA will keep an eye on it and provide updates if anything changes.

FTC Updates Textile Labeling Rules

The U.S. Federal Trade Commission (FTC) has amended the Rules and Regulations Under the Textile Fiber Products Identification Act to incorporate the most recent ISO 2076 standard for generic fiber names. Companies will now be able to market and label textile products using the generic names: chitin, ceramic, polybenzimidazol, polycarbamide, polypropylene/polyamide bicomponent, protein, and trivinyl.

Read the official FTC notice.

This month's round-up had two parts. Read the October Trade & Government Round-up Part 1.