The Percent of U.S. Apparel Imports Entering under Free Trade Agreements Fell to a Record Low Level in 2015

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Latest statistics from the Office of Textiles and Apparel (OTEXA) show that the share of U.S. apparel imports entering under free trade agreements (FTAs) fell to a record low level of only 15.4 percent in 2015. This figure was not only lower than 16.2 percent in 2014, but also was THE lowest one since 2006, despite the implementation of a few new FTAs during that period.  

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Among the major FTAs reached by the United States, the U.S.-Bahrain has the highest utilization rate of 99.7 percent in 2015 (note: utilization rate =value of imports entering under FTA from a particular country/value of imports from a particular country), whereas a couple of FTAs whose utilization rate is below 80 percent, such as CAFTA-DR (75.8 percent), U.S.-Korea FTA (75.2 percent), U.S.-Israel FTA (65.5 percent), U.S.-Australia FTA (53.7 percent) and U.S.-Morocco FTA (34.6 percent). A low utilization rate implies that U.S. companies did not claim the preferential duty benefits while importing apparel from these FTA regions.

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On the other hand, CAFTA-DR and NAFTA altogether account for around 76 percent of U.S. apparel imports entering under FTAs in 2015. This result is consistent with the findings in the 2015 U.S. Fashion Industry Benchmarking Study which also finds that CAFTA-DR and NAFTA were the two most frequently utilized FTAs reported by the survey respondents.

As a result of the lower share of apparel imports entering under FTAs, the American Apparel and Footwear Association Apparelstat 2015 released this week found that the effective average U.S. apparel import duty reached 13.54 percent in 2014, which is even higher than 11.97 percent in 2001. In comparison, over the same period, the average U.S. import duty on ALL products dropped from 1.64 percent in 2001 to 1.40 percent in 2014.

by Sheng Lu

Author: Sheng Lu

Professor @ University of Delaware

8 thoughts on “The Percent of U.S. Apparel Imports Entering under Free Trade Agreements Fell to a Record Low Level in 2015”

  1. Why are the apparel imports dropping so low?
    Based on the information provided in this article it looks as though the US is not utilizing many if the FTA approved countries and are not claiming preferential duty benefits fairly. The US need to better utilize these places as well as spread out there usage more evenly because if they are utilizing one place over the other everyone in the agreement will not be benefited evenly.

    1. The graph above is not about the value of US apparel imports, instead it is about the share of US apparel imports that were entered under free trade agreements (such as NAFTA and CAFTA-DR). Theoretically, free trade agreements (FTA) should significantly boost trade flows between FTA members, however, actual trade data suggests the opposite. If you have any further thoughts or explanations for the phenomenon, please feel free to leave your comment.

      1. I find it extremely surprising that with the implementation of free trade agreements (FTA), trade between the U.S. and other countries are not flourishing. As you stated, the graphs and statistics above clearly show a decrease in trade flows between all members of the FTA. This data seems inaccurate based on all the articles we have read as a class and the case studies we’ve worked on. Free trade agreements such as NAFTA/CAFTA, MFA, etc. have had significant impacts on international trade for the U.S. These policies have stimulated many developing economies outside of the U.S. and have created benefits for both parties. These graphs show a very different side of what I had previously believed for these free trade agreements. Overall, I’ve been given a new perspective on free trade for the U.S. based on this article and these eye-opening statistics.

  2. It is confusing to see a decrease in trade between the U.S. and other countries, especially with the enactment of so many free trade agreements. You would expect an increase in trade among participating countries included in these free trade agreements. As you stated above, free trade agreements should cause an increase in trade flows among FTA members, however this graph is indicating the opposite. It is very concerning to see these numbers.

  3. It is really interesting to me that this data clearly indicates a decrease in trade between the U.S. and other countries. This goes against the general intent of enacting FTA’s. The main question that comes to mine is, what are we doing wrong that is causing these numbers? Why did U.S. companies not claim the preferential duty benefits while importing apparel from these FTA regions? What changes need to be made so that the apparel import duty does not keep rising?

  4. I am surprised to see a drop in trade with the United States, especially with all of the trade agreements the US is a part of. Why is this so? Looking at these graphs it seems as though the US isn’t even taking full advantage of several of it’s trade agreements. What is the main reason behind this? I wonder if there are alterations we could make to certain trade agreements so that the US can get more use out of their agreements. Something to look for in the future!

  5. This data in the graph shows how there is an increase in trade between the United States and the other countries. There are definitely some changes that need to happen so that the apparel import duty does not keep rising. Why are the apparel imports dropping so low? And how can we fix this?

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