Trade & Policy Round-up for November

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. Election Results

Despite ongoing challenges from the Trump Administration, it looks like the United States is likely to have new leadership come January 2021. Read more in Behind the Seams.


RCEP: World’s Largest Trade Agreement On November 15th, leaders from 15 nations signed the world’s largest trade agreement to date. The Regional Comprehensive Economic Partnership (RCEP) includes Australia, China, Japan, New Zealand, South Korea, and 10 Association of Southeast Asian Nations (ASEAN) members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The participating countries account for about 30% of the global GDP and 30% of the world population. The objective of RCEP is to reduce tariffs over a 20-year period, streamline customs procedures, and replace a number of bilateral trade agreements in the region with one set of rules. The agreement is also seen as a way to strengthen Asian supply chains and boost their competitiveness in global markets. Read more in Behind the Seams.


ASEAN Official Summary of the Agreement (needs to be downloaded) | BBC News Explainer | Washington Post Analysis

EU Tariffs

As part of the long-running fight over aircraft subsidies, the European Union (EU) moved forward in implementing higher tariffs on $4 billion worth of U.S. imports November 10th. However, an EU trade official said Joe Biden's election could help "reboot" talks.

European Commission Notice | U.S. Trade Representative Response

Interestingly, last month the EU created a new enforcement law to protect its interest in cases that would normally be handled by the World Trade Organization (WTO). (If you recall from the last trade round-up, the WTO is the trade dispute settlement body that approved the EU’s right to levy the retaliatory tariffs against the U.S.) The new law will extend to possible trade measures for services and for intellectual property rights and could also be used in disputes over bilateral trade agreements, such as the deal the EU is trying to strike with the UK. Read more.

EU Hazardous Chemical Restrictions

On November 1st, the EU introduced new restrictions on 33 carcinogenic, mutagenic, or toxic for reproduction (CMR) chemicals used in clothing, textiles, and footwear. The restriction specifies maximum concentration limits established for substances potentially present in these products, such as polycyclic aromatic hydrocarbons (PAHs), cadmium, chromium, lead, and phthalates, among others. The restriction is based on the EU's REACH Regulation. Just-Style reports that expanded restrictions on chemicals coupled with the “regulatory complexity and trade barriers within Europe because of Brexit” will be a significant hurdle for the European textile industry. Read more.

UK/US GSP

On November 10th, Britain’s Department for International Trade affirmed that the UK’s Generalised Scheme of Preferences (GSP) post-Brexit will cover all the same countries that are currently eligible for trade preferences under the EU’s scheme. According to the UK Government press release, imports from 47 of the world’s least developed countries will not face any tariffs – thus supporting their economic development through business and trade. Low-income and lower-middle income countries will also benefit from lower tariffs compared to the UK Global Tariff. In 2019, the UK imported approximately £8 billion-worth of textiles and apparel products from countries which are part of the EU GSP. This accounted for 30% of all textile and apparel imports into the UK. The UK's GSP will take effect January 1, 2021. Read more about the UK’s trade plans in Just-Style.

Related News:

  • The garment industry in the Philippines is reportedly preparing to petition the European Commission, asking it not to consider revoking the country’s duty-free access. Read more.

  • The government of Bangladesh has kickstarted a process to amend its labor laws in hopes of maintaining its EU GSP benefits. Read more.

U.S. GSP

The Office of the United States Trade Representative (USTR) announced in October that it is suspending $817 million in trade preferences for Thailand under its Generalized System of Preferences (GSP) program based on lack of sufficient progress providing the U.S. with market access for its pork products. USTR also announced the closure of GSP eligibility reviews with no loss of benefits for Georgia, Uzbekistan, and Indonesia, as well as the launch of new GSP eligibility reviews into Eritrea and Zimbabwe. Read more.

Hong Kong Fights U.S. Labeling Change Hong Kong has launched a trade dispute with the WTO against the U.S. over a recent U.S. requirement that goods from Hong Kong be marked as coming from China. Hong Kong argues that the rule breaches WTO rules of non-discrimination because the United States generally allows goods originating from a territory of other WTO members to be marked as coming from that territory. Under WTO rules, the two sides have 60 days to try to settle the dispute through consultations, after which time Hong Kong could ask the WTO to adjudicate. Read more.

China 301 Tariffs Update The WTO certainly has its hands full at the moment. At the end of October, the U.S. lodged an appeal against the WTO ruling that found the U.S. Section 301 tariffs imposed on China in 2018 breached global trade rules. Read more.

Meanwhile, a coalition of trade groups known as the Americans for Free Trade Coalition wrote to U.S. Trade Representative Robert Lighthizer last week seeking an extension of the Section 301 tariff exclusions currently in place for hundreds of goods imported from China that are slated to expire December 31st. Read more.

Watch Nicole Bivens Collinson’s trade update from the 2020 SPESA Virtual Executive Conference

Switzerland Due Diligence Legislation Swiss citizens will vote on the Responsible Business Initiative (RBI) (“Konzernverantwortungsinitiative”) November 29th, a civil society-backed plan to hold companies accountable for human rights and environmental misconduct abroad. The Swiss government actually opposes the initiative and offered a counter-proposal in June that calls for less stringent requirements. If the RBI is not supported by a majority of the population during the popular vote, the counter-proposal will automatically be put in place. Either way, Swiss companies will be required to disclose nonfinancial information and at least some selected companies will have to conduct human rights and environmental due diligence, while the scope of requirements and liabilities depends on the outcome of the vote.

Just-Style article on the legislation | A good overview of what it means for businesses

U.S. Polyester Antidumping Investigation On October 28th, Unifi Manufacturing, Inc. and Nan Ya Plastics Corporation, America filed a petition with the U.S. Department of Commerce and the U.S. International Trade Commission alleging polyester textured yarn (PTY) from Indonesia, Malaysia, Thailand, and Vietnam is being sold in the U.S. at less than fair value. The petitioners seek the imposition of antidumping duties on imports of PTY from these four countries. Under U.S. law, a domestic industry can petition the government to initiate an investigation to determine whether an imported product is sold in the U.S. at less than fair value (aka dumped). Additional duties can be imposed if it is determined that the domestic industry is materially injured by the imports. Read more.

Ethiopia Apparel Industry Boost U.K., German, and Ethiopian authorities have established a “landmark” $6.5 million vehicle to help safeguard thousands of jobs in Ethiopia’s embattled garment and textile industry and preserve its manufacturing capacity for a post-Covid-19 future. The six-month Jobs Protection Facility fund brings together multiple collaborators from the public and private sectors. Read more.


Related: Ethiopia is also receiving an investment from a Singapore-based consulting firm by means of a "Textile Pilot Plant" that will include spinning, weaving, and finishing, along with the machinery needed for these processes. Read more.


India Manufacturing Incentives

India’s cabinet recently approved a proposal to provide production-linked incentives totaling approximately 2 trillion rupees (US $27 billion) over five years to create jobs and boost manufacturing and attract investment in the country. The incentives will be given to manufacturers in 10 sectors including automotive and textiles. The textile sector is expected to receive about $1.48 billion. Read more.


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