Below is a collection of stories related to trade and government policy that may impact the sewn products industry around the world.
Myanmar Sanctions On February 11th, the White House issued an Executive Order authorizing sanctions in response to the military coup in Myanmar (Burma). In addition, the U.S. Commerce Department’s Bureau of Industry and Security announced new restrictions on certain exports to Myanmar as well as the revocation of specific export licenses. While the sanctions and restrictions are limited to the defense sector for now, the U.S. government has not ruled out taking additional action depending on how the political situation unfolds. SPESA will continue to monitor the situation and alert our members if any new restrictions are imposed that would directly impact the sewn products industry.
White House Fact Sheet on Administration Actions in Response to the Coup | ABC News Article Explaining the Current Sanctions | Overview from Law Firm Steptoe & Johnson Outlining Possible Future Actions | Dr. Sheng Lu on Why Companies Source Apparel from Myanmar
In general, the coup is expected to increase the risks associated with sourcing apparel in Myanmar. According to Sourcing Journal, “the military’s wide-ranging influence may mean that brands sourcing from Myanmar will not be able to avoid working with military-affiliated local partners, which is likely to eventually expose them to reputational risks or even sanctions.”
Ethnic Conflict in Ethiopia While this doesn’t exactly fit into the trade and government bucket, we wanted to point out another part of the world where garment manufacturing is on shaky ground due to political unrest. Violent conflict in Ethiopia’s northern Tigray region, “where ethnic tensions have erupted into a humanitarian crisis,” is threatening the country’s stability — not to mention its citizens — and potentially scaring away foreign investment in the country’s apparel industry. Read more.
Cambodia and South Korea Finalize Free Trade Agreement
After less than a year of formal negotiations, Cambodia and South Korea concluded talks February 3rd for the Cambodia-Korea Free Trade Agreement (CKFTA). The bilateral agreement will set zero tariffs for a broad range of goods, and aims to aid both countries in swift economic recovery from Covid-19. The Cambodian Commerce Minister stated the deal “will buoy exports of, inter alia, garments and textiles, footwear, travel bags, spare parts, electronic equipment, as well as agricultural products.” The official signing is expected to occur later this year. Read more.
UK Applies to Join CPTPP
The United Kingdom made a formal request February 1st to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — the eleven country, $9 trillion agreement that was established after the U.S. pulled out of negotiations for the Trans-Pacific Partnership. UK International Trade Secretary Liz Truss announced “CPTPP membership is a key part of the Government’s plan to position the UK at the centre of a network of modern free trade deals that support jobs and drive economic growth at home.” And the official UK government press release argued: “unlike EU membership, joining does not require the UK to cede control over our laws, borders, or money.” The CPTPP removes 95% of tariffs between its members: Japan, Canada, Australia, Vietnam, New Zealand, Singapore, Mexico, Peru, Brunei, Chile, and Malaysia. Read more.
Brexit Retail Challenges
Meanwhile, the UK-EU break-up fondly known as Brexit has not gone as smoothly as many had hoped in relation to retail and cross-border trade. New proof of origin declaration forms, courier charges, and taxes imposed on product returns are reportedly cutting into retail companies’ profit margins. In addition, the abolition of the UK’s VAT (value-added tax) rebate is said to be hurting the competitiveness of British brands. Read more.
China and New Zealand Update Trade Agreement
New Zealand and China signed a deal January 26th to “upgrade” their existing free trade agreement. The update is meant to widen the previous trade deal to ensure it remains relevant for another decade and to grant New Zealand exports greater access to the Chinese market. The new(ish) agreement could be seen as further evidence of China’s growing interest in multilateralism. Read more.
Biden’s Trade Plans In the last issue, we reported on President Biden’s Buy American plan to boost domestic manufacturing. For those of you also keeping tabs on the new administration’s international plans, here are a few good insights from the past couple weeks: