Trade & Policy Round-Up for April
Below is a collection of stories related to trade and government policy that may impact the sewn products industry around the world.
Section 301 Tariff Exclusions Reinstated On March 23rd, the Office of the U.S. Trade Representative (USTR) published a Federal Register notice reinstating tariff exclusions for 352 categories of products covered by the United States’ Section 301 tariffs on Chinese-made products. Read more in Behind the Seams.
U.S. Ends Normal Trade Relations with Russia, Belarus On April 8th, President Biden signed two bills into law:
The Suspending Normal Trade Relations with Russia and Belarus Act (H.R. 7108), which denies "most-favored nation" tariff treatment to products from Russia and Belarus (through January 1, 2024, or until the countries’ acts of aggression against Ukraine cease), and extends the president’s authority to impose sanctions; and
The Ending Importation of Russian Oil Act (H.R. 6968), which codifies into U.S. law a prohibition on the importation of oil, gas, and coal from Russia.
These measures will be implemented on top of the sanctions and trade restrictions the Biden Administration has already imposed on Russia through executive action.
JD Supra offers a great breakdown of the new bills here. The Washington Post analyzes the plan for long-term isolation of Russia by the U.S. and its allies here. And the “Two Minutes in Trade” podcast dives into the topic here.
We are keeping track of the current crisis in Ukraine’s impact on the global sewn products industry here.
U.S., UK Reach Deal on Section 232 Steel and Aluminium Tariffs In March, the United States and United Kingdom reached a deal to end a long-running dispute over U.S. steel and aluminum tariffs put in place by the Trump Administration. Under the agreement, the U.S. will replace the 25% tariffs on steel with a quota system allowing UK metal imports into the country duty-free up to a certain level before taxes kick in. In response, the UK will suspend rebalancing measures on U.S, products including whiskey, blue jeans, and motorcycles. The agreement will go into effect June 1, 2022.
SEC Climate Change Disclosure Proposal In March, the U.S. Securities and Exchange Commission (SEC) proposed a rule that would require public companies to disclose climate-related information. As National Law Review explains: “The proposed rule is significant because, for the first time, the SEC would mandate that companies (including foreign companies) publicly traded in the U.S. disclose climate-related risk and greenhouse gas (GHG) emissions information beyond the risk information currently required by existing SEC rules applicable to registration statements and annual reports.” The SEC is seeking public comments by May 20, 2022. Click on the Federal Register notice for more information on how to submit comments. SEC Press Release | Sourcing Journal Industry Analysis | The Washington Post Analysis | Investopedia Breakdown of the Cases For and Against the Rule
EU Due Diligence & Sustainability Proposals At the end of February, the European Commission (EC) adopted a proposal for a Directive on corporate sustainability due diligence. The Directive would establish uniform EU-wide requirements for large companies operating in the European Union to identify and prevent, end, or mitigate adverse impacts of their activities on human rights and the environment. This applies to the company's own operations, their subsidiaries, and their value chains (direct and indirect established business relationships). National administrative authorities appointed by EU Member States will be responsible for supervising the new rules and may impose fines for non-compliance. In addition, victims will have the opportunity to take legal action for damages that could have been avoided with appropriate due diligence measures.
The proposal will be presented to the European Parliament and the Council for approval. Once adopted, EU Member States will have two years to transpose the Directive into national law.
In March, the EC adopted a new Circular Economy Action Plan to “make our economy fit for a green future, strengthen our competitiveness while protecting the environment and give new rights to consumers.” The EC proposed new rules to make almost all physical goods on the EU market more “friendly to the environment,” circular, and energy efficient throughout their lifecycle.
A couple weeks later, the EC also published the EU Strategy for Sustainable and Circular Textiles, a new strategy to drive change in the textiles industry by focusing on eco-design, waste management, transparency, labeling, microplastics, and extended producer responsibility. The specific measures for textiles include eco-design requirements for textiles, a Digital Product Passport, and a mandatory EU extended producer responsibility scheme. All of these proposals will need additional approval and we are still working out what the end result may look like. We will keep readers updated.
Related: The European Council reached an agreement March 15th to introduce a carbon levy on imports of highly-polluting goods like steel, cement, and electric energy. Read more.
U.S. Shipping Reform Moves Forward
On March 31st, the U.S. Senate unanimously passed the Ocean Shipping Reform Act of 2022, a bill seeking to revise provisions related to ocean shipping policies and support the growth and development of U.S. exports. Among other things, the legislation would limit detention and demurrage fees, empower the Federal Maritime Commission to investigate unreasonable practices by ocean carriers, and improve valuable data collection and reporting requirements. A similar bill passed the U.S. House of Representatives late in 2021. The two chambers will now look to reconcile the two different versions before sending it to President Biden to sign. Read more.
Here’s one for our U.S. retailers, the Postal Service Reform Act of 2022 became law April 6th. The bill requires greater visibility and accountability in USPS’s service, as well as mail delivery of at least six days a week, eliminating the possibility of future service reductions. Read more.
India Temporarily Suspends Import Duties on Cotton Last week, the government of India announced it would remove duties from imports of cotton through September 30, 2022. A drop in domestic cotton production has led to record high prices within India, and this move is intended to support the country’s textile sector. The president of the Cotton Association of India estimates that, with duty-free imports, textile mills could import around 2.5 million bales of cotton this year from places like Australia, Brazil, the United States, and countries in Africa. U.S. Department of Agriculture Report | Sourcing Journal Analysis | Analysis from the Nonwovens & Advanced Materials Laboratory at Texas Tech (Shared by eTextileCommunications)
Vietnam Increases Minimum Wage Last week, the government of Vietnam announced plans to raise its minimum wage by 6% beginning in July to help workers weather the impact of Covid-19. Pending approval from the country’s prime minister, the minimum monthly wage would be raised to between 3.25 million dong and 4.68 million dong ($142.00-$204.47). Read more.
However, as Sourcing Journal writes: “The move isn’t likely to bring much relief to Vietnam’s 2.5 million garment workers, 80 percent of whom are women. Workers who toil in the world’s third-largest garment exporter after China and Bangladesh face a 57 percent wage gap between the minimum and living wages…”
Mexico Updates Textile Labeling Requirements Earlier this year, the government of Mexico updated its labeling requirements for apparel and textile products. Labels must include:
Information of the person in charge of the product;
Country of origin;
The composition of fibers;
Care instructions; and
The sizes of garments and dimensions or measurements of household linen and textiles.
U.S.-Haiti Trade Investigation At the request of the U.S. House Committee on Ways and Means, under section 332(g) of the Tariff Act of 1930, the U.S. International Trade Commission (USITC) is launching an investigation on US-Haiti trade and the impact of U.S. trade preference programs on Haiti’s economy and workers. USITC will hold an online public hearing on the investigation May 26, 2022, and plans to present its report findings to the committee by December 22, 2022. Information on how to appear at the public hearing or submit written comments is available in the Federal Register notice.
Trade Agreement Updates
Let’s take a quick look at some of the trade maneuvers happening around the world:
The UK and New Zealand signed a free trade agreement at the end of February. Read more.
The UK-Singapore Digital Economy Agreement (DEA) is apparently “the most innovative trade agreement ever signed.” Read more.
Israel and the United Arab Emirates have concluded negotiations for a free trade agreement covering 95% of traded goods between the countries. The agreement includes regulation, customs, services, government procurement, and electronic trade, and will come into effect when signed by the countries’ economy ministers and ratified. Read more.
The UK and Canada have launched negotiations on a new, “modernized” free trade agreement. Building on the benefits of the UK-Canada Trade Continuity Agreement, the new agreement will go further than ever before in areas like innovation, digital, data, the environment, and women’s economic empowerment. Read more.
The Australia-India Economic Cooperation and Trade Agreement (AI ECTA) was signed at the beginning of April. The agreement will eliminate tariffs on 85% of Australian goods exported to India (rising to almost 91% over 10 years) and 96% of Indian goods imported into Australia. Notably, wool will have its current 2.5% tariff eliminated on entry into force, supporting Australia’s second-largest market for wool products. According to India’s Apparel Export Promotion Council, apparel is the largest product category exported from India to Australia. Read more.
The India-United Arab Emirates Comprehensive Economic Partnership Agreement (CEPA) is expected to boost trade between the countries from US$60 billion to US$100 billion in the next five years. The UAE is one of the top five destinations for Indian textile and clothing exports. Read more.
Canada and Indonesia recently announced the Indonesia-Canada Plan of Action for 2022-2025 to intensify economic cooperation, especially on trade, investment, and energy transition. Read more.
The South Korean government has announced plans to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The country will submit an official application after completing domestic procedures including a report to its National Assembly. Read more.
Australia and South Korea have agreed to enhance their cooperation on e-commerce and other digital trade issues. Read more.
Singapore and Vietnam signed a Memorandum of Understanding on Economic and Trade Cooperation. Read more.