Toward a 21 st Century TPP Agreement for Apparel

1. Toward a 21st Century TPP Agreement for Apparel April 2013 Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 1

2. Who is the TPP Apparel Coalition Learn more about apparel in the TPP at www.tppapparelcoalition.org >> 2

3. Who is the TPP Apparel Coalition The TPP Apparel Coalition includes American retailers, apparel brands, apparel manufacturers, and importers, and the many millions of American workers the industry employs. The TPP Apparel Coalition is comprised of US-headquartered companies that together employ 3 million associates globally, including 2 million associatesin the United States, and aggregated total sales of $528 billion. Coalition member companies design, market and sell products manufactured in and imported to the United States. We also market and sell products throughout the TPP countries. Learn more about apparel in the TPP at www.tppapparelcoalition.org >> 3

4. Yarn Forward Has a Dismal Track Record in U.S. FTAs: U.S. Apparel Imports from Yarn Forward FTAs have declined while U.S. Apparel Imports from Other Countries Have Grown Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 4

5. Yarn Forward Can’t Work for Vietnam: Vietnam has diversified textile suppliers (but only about 2 percent come from current TPP countries). Note: Vietnam records textile imports from the following current TPP countries: Australia, Canada, Malaysia, Mexico, New Zealand, Singapore, and the United States. Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 5

6. Vietnam Will Need Actual Market Access to the United States to make a deal: 73 percent of all duties collected by the U.S. in 2012 were collected on woven and knit apparel. Distribution of Duties on U.S. Imports From Vietnam - 2012 Total Duties Collected - $1.75 Billion (Vietnam accounts for 70% of All Duties Collected ($2.501 billion) from current TPP Countries) Source: Annual 2012 Data, U.S. International Trade Commission's (ITC) Trade Dataweb - http://dataweb.usitc.gov Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 6

7. Yarn Forward Hasn’t Worked for CAFTA-DR: U.S. textile exports are uneven while U.S. apparel imports are way down. Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 7

8. Yarn Forward Hasn’t Worked for NAFTA: U.S. textile exports and apparel imports grew at first, but have declined over the last decade. Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 8

9. Recent Studies Highlight Substantial U.S. Value Added in U.S. Apparel Imports:Moongate Associates calculates U.S. value added for imported apparel equals 70 percent • Value-added as a portion of retail apparel purchase  LOW RETAIL PRICE Company/product response HIGH RETAIL PRICE  Courtesy: Moongate Associates Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 9

10. A typical apparel global value chain: 3 million U.S. jobs support apparel production, design, distribution, and sales. Courtesy: Moongate Associates Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 10

11. U.S. Textile Industry Doesn’t Need Yarn Forward to Export: U.S. textile exports have soared to Vietnam (even without an FTA or yarn forward rules). Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 11

12. U.S. Textile Industry Doesn’t Need Yarn Forward to Export: U.S. textile exports have soared to China (which now ranks as the 2nd largest market for U.S. yarn and 3rd largest market for U.S. fabric). Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 12

13. Yarn Forward Is An “All or Nothing Rule”: If the entire supply chain can’t line up with each style, each order, and each season, no trade occurs. Commonly covered components and operations in yarn forward rules in current US FTAs Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 13

14. Yarn Forward Requires Heavy Documentation: If a single document is missing, the entire order fails to qualify. Four inches of documents per style is too much. Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 14

15. Our Conclusion • The 20-year old Yarn Forward Rule Can’t Work for a 21st Century Trade Agreement. • It doesn’t drive exports or imports under U.S. FTAs • It no longer works for the agreement (NAFTA) for which it was tailor-made. • It doesn’t support the 3 million U.S. jobs that depend on global apparel supply chains. • Supply Chains in the ASEAN region extend beyond TPP. • Vietnam, for example, only sources 2 percent of its yarns, fibers, and fabrics from other TPP countries. • Flexible approaches will be needed to ensure trade and investment and bring TPP parties to the table. • U.S. textile exporters successfully export to Asian and Latin American markets and don’t need yarn forward to compete and export. Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 15

16. Thank you. For more information, visit www.tppapparelcoalition.org Learn more about apparel in the TPP at www.tppapparelcoalition.org>> 16