CRS Releases Updated Study on the U.S. Textile Industry and the Trans-Pacific Partnership (TPP)

crs-reportOn September 1, the Congressional Research Service (CRS) released its updated study on the U.S. textile industry and the Trans-Pacific Partnership (TPP). According to the report:

First, TPP is suggested to have a limited impact on U.S. domestic textile and apparel manufacturing, because:

1) Automation rather than imports is found to be the top factor causing job losses in the U.S. textile industry in the past decade;

2) U.S. is one of the very few TPP members whose textile output mostly went into home textiles, floor coverings and other technical textile products rather than apparel.

3) More than 90% of apparel sold in the United States is already imported. Some companies maintain U.S. manufacturing of high-value products or products requiring quick delivery, which are not likely to be supplied by other TPP members.

4) A quantitative assessment conducted by the U.S. International Trade Commission (USITC) in May also suggests that U.S. imports of textiles will only climb 1.6% by 2032 if TPP enters into force in 2017. Over the same 15-year period, both output and employment in the U.S. textile industry could slightly shrink by 0.4% as a result of the implementation of TPP.

Second, TPP could challenge the Western-Hemisphere supply chain and negatively affect U.S. textile exports to the region:

1) TPP will make apparel manufacturers located in Mexico and Central America lose one important advantage—duty free access to the U.S. market, when competing with Asian TPP members such as Vietnam and Malaysia.  The Central American-Dominican Republic Apparel and Textile Council also estimates the CAFTA-DR region could see a contraction of 15%-18% in industrial employment resulting from lost production orders in the first year after the TPP agreement is implemented.

2) The major products sourced by U.S. apparel companies from the Western Hemisphere region include basic, low-value knitwear garments such as shirts, pants, underwear, and nightwear, with a focus on men’s and boys’ wear. However, these products are with low time sensitivity but high price sensitivity, meaning Asian TPP members can easily offer a more competitive price and take away sourcing orders after the implementation of TPP.  

3) Because of physical distance and abundance of local supply, leading Asian TPP apparel exporters such as Vietnam seldom use US-made yarns and fabrics. Supported by foreign investments, Vietnam is also quickly building up its own textile manufacturing capacity, which is expected to reach 2 million metric tons for fabrics and 650,000 metric tons for fibers by 2020. This implies that TPP may help little creating new export markets for US textile products, despite the restrictive yarn forward rules of origin.

Additionally, TPP could result in intensified competition in the technical textile area, which is of strategic importance to the future of the U.S. textile industry:

1) If the proposed agreement is implemented, those segments of the U.S. textile industry that supply industrial textiles are likely to face greater competition from rising imports from Japan.

2) TPP will allow Japanese industrial textiles to newly get duty free access to Mexico and Canada, which are the largest export markets for U.S. industrial fabrics in 2015. However, TPP won’t help US companies get more favorable access to China, which is the top export market for Japanese industrial fabrics.

Author: Sheng Lu

Professor @ University of Delaware

6 thoughts on “CRS Releases Updated Study on the U.S. Textile Industry and the Trans-Pacific Partnership (TPP)”

  1. Surprised to note that study conducted by CRS does not say anything about possible favorable impact of Rule of Origin and Short Supply list for US domestic textile industry incl cotton.

  2. The first report issued August 28, 2014 includes a remarkable sentence (which I have not yet found in the update):
    “TPP seems likely to have less impact on those segments of US textile industry that do not supply apparel manufacturing. US manufacturers of household and technical textiles appear to be internationally competitive,…”. This implies that those of textiles for apparel are not. And it proves that the restrictive rules-of-origin are not free trade, but protectionism. IMHO

    1. Always enjoy your comment, Bernd! I find the new CRS report adds additional comments on the potential impact of TPP on US companies that make and export technical textiles (as summarized in the blog post). I understand the yarn-forward rules of origin is disappointing to most US fashion apparel companies which rely on global sourcing (for example, as we find in the latest US fashion Industry Bechmarking Study:, 90%+ of respondents strongly ask for abandoning the yarn forward rules). Like you said, the yarn-forward rule intends to protect those US companies which export yarns and fabrics to the western-hemisphere. US policymakers also don’t want to see non-TPP members such as China take advantage of the TPP benefits, should a less restrictive rules of origin were adopted.

  3. Something I found interesting about this is that US is one of the only TPP textile industries that goes into other products rather than apparel. I wonder why this is? How come the textiles from other countries don’t go into these and what makes the US textiles more suitable for this?

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