Trade & Policy Round-up for December
Below is a collection of stories related to trade and government policy that may impact the sewn products industry around the world. This month we are focusing on the United States and the United Kingdom, both of which are facing year-end deadlines to make big moves.
Congressional Funding Bills
The U.S. Congress has a number of initiatives it needs to address before the end of the year and the current legislative session, including:
The National Defense Authorization Act (NDAA): The NDAA sets the annual budget for the U.S. Department of Defense (this year’s bill is $740 billion). The bill has now passed both chambers of Congress and is waiting for presidential approval. However, President Trump has threatened to veto the current version of the bill for a number of reasons including a) it’s not tough enough on China, b) it would strip the names of Confederate generals from military bases, and c) it does not repeal liability protections for social media companies. Because this bill, and similar funding legislation, is required to be passed every year, it is sometimes used as a vehicle to approve unrelated provisions. The U.S. apparel and textile industries have both come out in support of the current NDAA legislation because it includes updates to the Berry Amendment that could help boost domestic manufacturing.
Omnibus Spending Bill: Congress is also tasked with passing legislation this week to determine government funding for next year and avoid a shutdown. News reports indicate congressional negotiators are close to finalizing a deal and it could be announced any day now. As far as the sewn products industry is concerned, there has been an industry push to include the Miscellaneous Tariff Bill (MTB) within the spending package. The MTB temporarily reduces or eliminates duties on U.S. imports of inputs for domestic manufacturing and specific finished goods not made in the U.S. The current MTB expires December 31, 2020.
Vietnam Section 301 Investigation The Office of the United States Trade Representative (USTR) announced it will hold virtual hearings in December to accept comments on its Section 301 investigations into Vietnam’s policies and practices related to timber (December 28) and currency (December 29). Any tariffs to be imposed as a result of the investigations will now be pushed back to at least January. (Read more about the Vietnam probe in October’s round-up.)
USITC Polyester Anti-dumping Probe The U.S. International Trade Commission (USITC) has decided to move forward with an investigation into imports of polyester textured yarn from Indonesia, Malaysia, Thailand, and Vietnam after an initial investigation determined they are being sold in the U.S. at less than fair value (this was explained in last month’s round-up). The agency will announce its preliminary antidumping duty determinations in April.
New U.S. Trade Representative President-elect Biden has nominated former chief trade counsel for House Ways and Means Committee Democrats, Katherine Tai, to serve as the next U.S. trade representative. The nomination has been welcomed across the sewn products industry. Trade firm Sandler, Travis & Rosenberg, P.A. notes Tai’s selection highlights the importance of China to the incoming administration’s trade policy. Tai is fluent in Mandarin and previously served at USTR as chief counsel for China trade enforcement. STR goes on to explain: “If confirmed by the Senate, Tai will have to deal with a number of trade issues other than China as well, including enforcing existing trade agreements and rules, working to reform the World Trade Organization, and deciding whether to continue trade agreement negotiations with the United Kingdom, Japan, and Kenya.”
New California Worker Protection Legislation Workers’ rights advocates in California have launched a new campaign to pass the Garment Workers Protection Act (SB 62) next year, after the proposals failed to come up for a vote before this year’s deadline in September. The new bill, which centres on scrapping the piece-rate pay system, has been reintroduced by Senator Maria Elena Durazo and Assembly Members Lorena Gonzalez and Ash Kalra. Read more.
UK-Kenya Trade Deal
The United Kingdom and Kenya signed an Economic Partnership Agreement December 8, ensuring all companies operating in Kenya, including British businesses, can continue to benefit from duty-free access to the UK market post-Brexit. The new agreement is similar to the one between the European Union and the East African Community (EAC) and allows for other EAC countries to join in the future. Under the agreement’s rules of origin, apparel products are eligible for duty-free access as long as they are cut and sewn within the free trade region, but may use imported fabrics, yarns, and fibers. The agreement will go into effect January 1, 2021.
And if you really want to get down into the trade dirt, here is an interesting Politico article on why the UK-Kenya deal is causing tension with the rest of the EAC.
UK-Canada Trade Continuity Agreement At the end of November, the governments of Canada and the UK announced the successful conclusion of talks for the Canada-United Kingdom Trade Continuity Agreement — an interim deal that will be in place as the countries work towards negotiating a comprehensive free trade agreement. The new agreement mostly rolls over the terms of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), which will no longer apply to the United Kingdom beginning January 1, 2021. According to Global Affairs Canada, the new agreement will provide continued access to the benefits of CETA on a bilateral basis, including the elimination of tariffs on 98% of Canadian products exported to the United Kingdom.
UK Post-Brexit Trade In the last two years, the UK government has signed or agreed in principle trade agreements with 55 countries in its effort to maintain trade relations without the help of the European Union. Total UK trade with these countries was worth £170 billion in 2019. (There is also one in the works between the UK and the U.S.) The biggest sticking point however continues to be reaching an agreement with the EU itself. The BBC provides a good breakdown of the negotiations here.
Euratex, the organization representing the European textile and clothing industries, released a new study indicating a “no deal” Brexit would have a detrimental impact on the sector with job losses over 100,000 for the EU and over 27,000 for the UK. Output losses for the UK would be 41.8% of its value added in textile and clothing production, while the EU as a whole would lose about 9.7%. Read more.