Trade & Policy Round-Up for July
Updated: Aug 3, 2022
Below is a collection of stories related to trade and government policy that may impact the sewn products industry around the world.
301 Tariff Hearing As we noted last month, two U.S. government agencies are currently investigating the impact of the Section 301 tariffs on Chinese products imported into the United States. On July 21st, the U.S. International Trade Commission (USITC) will hold a public hearing to learn more about the economic impact of the Section 301 tariffs as well as the Section 232 tariffs on steel and aluminum. The agency will accept written comments through August 24, 2022.
Strategy to Prevent Import of Goods Made with Forced Labor
Also in last month’s Round-Up, we reminded readers that the Uyghur Forced Labor Prevention Act was set to take effect June 21st. After our update went out, the U.S. Department of Homeland Security (DHS) announced its “Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China.” As trade firm Sandler, Travis & Rosenberg, P.A. points out: “While the strategy leaves many questions unanswered, there are some points worth noting as businesses whose supply chains include Chinese materials begin to incorporate it into their planning and operations.”
U.S. Expands Sanctions and Tariffs on Russia At the end of June, the U.S. Government announced it would impose a number of additional sanctions against Russia in response to the ongoing war in Ukraine. Via Executive Order, and pursuant to Congress’s revocation of Russia’s trade status in the United States, the U.S. will increase tariffs to 35% on more than 570 groups of Russian products worth approximately USD$2.3 billion. The full list of products is available in the annex of the official proclamation. The increase will go into effect July 27, 2022. Read more in the White House Fact Sheet.
What’s the EU Up To?
If you are not a citizen of the European Union and have ever been confused about how its laws work, you are not alone. In the simplest of explanations, the European Commission proposes legislation then sends it to the Council of the European Union and the European Parliament which both have to approve it with input from individual member states that are then responsible for implementing laws. There are also different types of legislation including regulations, which are binding across the EU, and directives, which set goals that all EU countries must achieve through their own means. So, why the civics lesson? There are a few initiatives currently making the rounds in the EU that could affect the sewn products industry:
Minimum Wage Directive (Fibre2Fashion Summary; Just Style Analysis) - this initiative would also strengthen collective bargaining and trade union power
While these are not yet law, they are important to keep an eye on as they continue through the legislative process.
French Textile Industry Raises Wages This isn’t a government policy, but still important to know: France’s L'Union des Industries Textiles (UIT) and several other trade unions recently concluded an agreement to raise the minimum wage in the textile industry from May 1, 2022. The agreement provides for a 2.7% increase in minimum wages for all professional categories in the industry. Read more.
Interestingly, France’s Finance Minister has instructed all companies in a position to increase wages to do so amid rising inflation. Read more.
Bangladesh Reduces VAT on Man-Made Fibers
India Extends Cotton Duty Suspension
UK Extends Steel Tariffs
On June 29th, the UK Government announced it would extend tariffs on five categories of steel by two years to protect domestic producers, acknowledging the move could breach international trade rules. We will have to wait and see what the fallout from this decision may be. Just a few months ago, the United States and the United Kingdom reached a deal to end a long-running dispute over U.S. steel and aluminum tariffs. Read more here or here.
Global Tax Plan Delayed Back in November, we provided an update on a sweeping global tax deal under the Organization for Economic Cooperation and Development (OECD) establishing a 15% global minimum corporate tax. The agreement was planned to take effect in 2023, however, the OECD recently announced that the proposed rules for how the world’s largest companies would be taxed would not be unveiled until the middle of next year, thus pushing its enactment back to at least 2024. Read more.
Trade Agreement Updates
Let’s take a quick look at some of the trade maneuvers happening around the world:
On July 14th, the United States and Kenya launched the United States-Kenya Strategic Trade and Investment Partnership (STIP) to increase investment; promote sustainable and inclusive economic growth; benefit workers, consumers, and businesses; and support African regional economic integration. Read more.
Indonesia and the United Arab Emirates signed a free trade agreement in July which will remove or sharply reduce duties on most goods traded between the countries, including apparel. Read more.
The Philippines and the United Arab Emirates signed an investment promotion and protection agreement (IPPA). Read more.
The European Union concluded negotiations for a free trade agreement with New Zealand at the end of June to slash much of the remaining tariffs between the two trading partners while keeping protections for specific agricultural products. Read more.
The governments of Canada and India signed a Memorandum of Understanding to collaborate on climate action and environmental protection, working toward effective, long-term solutions that will also provide opportunities to advance economic growth. Read more.
The Bangladesh-Bhutan Preferential Trade Agreement (PTA), which came into effect July 1st, will give duty-free market access to more products from both nations. Read more.
Want to learn more about free trade agreements in the United States? Summaries of the provisions and rules specific to textiles, apparel, footwear, and travel goods can be found on the International Trade Administration’s Office of Textiles and Apparel (OTEXA) FTA page. You can also quickly find tariff and rule of origin information for specific products using the FTA Tariff Tool.
In a recent op-ed, our friends over at the American Apparel & Footwear Association discuss the importance of trade policy to building a sustainable, resilient and equitable future for the Western Hemisphere.