TPP is in trouble, but NOT dead
David Spooner, Partner at Barnes & Thornburg LLP, Former Chief Textile & Apparel Negotiator at the Office of the U.S. Trade Representative, and Former Assistant Secretary of Commerce for Import Administration: “it will be a tough road to pass it (the Trans-Pacific Partnership, TPP) during the Trump Administration…However, there may be opportunities for the (fashion) industry if Trump brings new faces to the Office of the U.S. Trade Representative (USTR) and takes a fresh look at trade agreements.” Source: https://www.usfashionindustry.com/news/off-the-cuff-newsletter/2803-recap-28th-apparel-importers-trade-transportation-conference
Jeffrey J. Schott, Senior Fellow of the Peterson Institute for International Economics: “What’s the future for TPP? Most likely, Trump will simply not implement it. Without US participation, the pact cannot definitively enter into force. It’s death by malign neglect.” “But the 11 other TPP countries may not sit idly on the sidelines waiting for US ratification. Instead, they could agree among themselves to extend the TPP benefits to each other on a provisional basis, leaving the door open for US participation in the future. If the United States subsequently ratifies the TPP, the pact would then enter into force on a permanent basis.” Source: https://piie.com/blogs/trade-investment-policy-watch/tpp-could-go-forward-without-united-states
Steve Warner, President/CEO BeaverLake6 Group LLC, former President and CEO of the Industrial Fabrics Association International (IFAI): “TPP was dead going forward. TPP isn’t actually bad for the technical textiles industry except in a few instances. The real bad culprit, though, is the passage of the Trade Promotion Authority (TPA), which I opposed when it was being hotly debated in 2015. TPA gave no wiggle room for lawmakers to make even slight changes in the TPP when it was presented by the Obama administration that could at least mollify a representative’s constituents. You couldn’t just like parts of the agreement; you had to like all of it. Thus, you were either with it entirely or have to go against it. It proved to be safer to go against it. As for T-TIP, it was going to be a tough deal to conclude when the European Union insisted a primary objective for them was the elimination of the Berry Amendment protection for US domestic manufacturers” Source: http://www.beaverlake6.com/in-my-opinion/
Face uncertainties but with hope
Michael Singer, vice president of customs compliance at Macy’s and chairman of the U.S. Fashion Industry Association (USFIA): “I do see some opportunities believe it or not, and I had to struggle really hard to come up with something positive. From the regulatory basis, there may be an opportunity for some easing of government laws and mandates.” “One of the key issues we now face is how the administration and Congress will handle trade issues in 2017… We all know how important trade and the access to world markets is in our ability to provide our customers the choices and products they expected, and yet there is no doubt the protectionist sentiment in our country is at historic levels. USFIA will be doing our best to make sure that this remains a top priority and we clearly communicate the importance and benefit of trade to U.S. consumers and the U.S. economy.” Source: http://wwd.com/business-news/government-trade/donald-trump-on-trade-taxes-and-regulations-10702130/
Julia Hughes, President of the U.S. Fashion Industry Association (USFIA): “A lot of folks were surprised by the (election) outcome… We can see we have our work cut out for us…We’re going to be dealing with a lot of unknowns even with the continuation of a Republican Congress.” Source: http://www.just-style.com/analysis/tpp-is-not-going-to-happen-in-a-trump-administration_id129272.aspx
Daniel J. Ikenson, director of Cato’s Herbert A. Stiefel Center for Trade Policy Studies: “If he (Trump) is able to expand and diversify the pool of people advising him, there is a reasonable chance that President Trump’s actions will be less bellicose than his rhetoric has been. After all, as someone who wants to make America “great again,” President-elect Trump will want the policies implemented by his administration to help grow the economy. Trade agreements have succeeded in that regard and, in addition to the TPP, there are plenty of countries and regions willing to partner, including the European Union and the United Kingdom (separately), and plenty of alternative negotiating platforms for accomplishing trade and investment liberalization. ” Source: https://www.cato.org/blog/shifting-gears-contemplate-trumps-trade-policies
David Spooner, Partner at Barnes & Thornburg LLP, Former Chief Textile & Apparel Negotiator at the Office of the U.S. Trade Representative, and Former Assistant Secretary of Commerce for Import Administration: “I think there’s some opportunity in a Trump administration…Assuming chaos provides opportunities, and if Trump brings in new faces to USTR, it might give us an opportunity to do new things in trade. We’ve been screwed by the yarn-forward rule for decades. Maybe there’s an opportunity to do things, even if it’s around the margins.” Source: https://sourcingjournalonline.com/tpp-ttip-wont-happen-trump-administration/
Robert Antoshak, managing director at Olah Inc.: “First, (Trump) he’ll let TPP, the Trans-Pacific Partnership) just wither on the vine. It’s pretty easy to kill TPP by doing nothing; Congress hasn’t voted on it yet. Next, he may activate the escape clause in NAFTA (the North American Free Trade Agreement with Canada and Mexico), which gives signatories a six-month window to exit the agreement. During that time, he could use an exit for political gain in the media – imagine the headlines about the US pulling out of NAFTA – but in reality, he could use the time to renegotiate portions of the agreement. And then there’s T-TIP, the Transatlantic Trade and Investment Partnership free trade deal with the EU. Personally, I’m going to keep a close eye on relations between the White House and 10 Downing Street. The commonalities between the forces supporting Brexit and Trump are all too similar. Why negotiate with all of the EU, when it may be more politically expedient for Trump to negotiate a separate economic-trade deal with Theresa May?” “I am confident that he (Trump) will attempt to alter the global hierarchy. One way of changing the system will be to focus on trade. He can make tactical adjustments to trade policy that will not only give him the front-page news he craves, but will enact the kind of systemic change upon which he ran for president.” Source: http://www.just-style.com/comment/trump-trade-policy-who-knows-what-hell-do_id129295.aspx
US-China Trade War? Keep a close watch
Augustine Tantillo, president and chief executive officer of the National Council of Textile Organizations (NCTO): “(I) would be surprised if Trump does not take some steps to crack down on currency devaluation, particularly as it relates to China.” Source: http://wwd.com/business-news/government-trade/donald-trump-on-trade-taxes-and-regulations-10702130/
Chad Bown, Senior Fellow of the Peterson Institute for International Economics: “What he (Trump) has said is that they (China) manipulate their currency and he has threatened to impose tariffs upwards of 45%. The concerns with doing that is that we (USA) do have a trade agreement with 163 other economies of the world, the WTO. China is a part of that and by doing that (imposing tariffs upwards of 45%) unilaterally, would be violating our commitments, legal commitments to our trading partners under that deal and China would be authorized and probably would retaliate and strike back and probably do the same thing against the United States which would mean U.S. companies and exporters that make goods and agricultural products, and send those to China would suffer as a retaliatory response.” Source: https://www.c-span.org/video/?417891-3/washington-journal-chad-bown-trade-policy-trump-administration
Textile and apparel industry needs NAFTA
Steve Lamar, executive vice president for the American Apparel & Footwear Association(AAFA): “It is well established that CAFTA and NAFTA are critical for the U.S. textile and apparel industry. The things we have continued to argue is how to find ways to make it better… NAFTA was negotiated when there were no other free-trade agreements and the world was surrounded by quotas and rules of origin that catered to the United States. But the industry has evolved.” “Trump will renegotiate NAFTA and is only threatening to abrogate the free-trade accord… Trump likes to build up leverage to get the best possible deal, and he can view trade with that same lens.” Source: https://www.apparelnews.net/news/2016/nov/17/how-would-end-nafta-affect-la-apparel-industry/
Augustine Tantillo, president and chief executive officer of the National Council of Textile Organizations (NCTO): “there will be a ‘level of caution,’ when it comes to renegotiating NAFTA. This agreement has been in place for a while and it would be clearly disruptive to simply walk away from it at this point.” Source: http://wwd.com/business-news/government-trade/donald-trump-on-trade-taxes-and-regulations-10702130/
Leonie Barrie, Managing editor of Just-Style: “Will a Trump administration revisit NAFTA? Such a prospect is a concerning one because NAFTA’s free trade framework with Mexico has been at the heart of many sourcing strategies in North America. The US exported $6.5bn of apparel and textiles to Mexico last year and, in turn, Mexico shipped $4.2bn to the US. Earlier this year executives told just-style that if Trump went ahead with threats to build a 3,200-kilometre fence on the Mexican-American border to stem immigration, it could cut $2.2bn or 20% of the $11bn in US-Mexican textiles and apparel trade in its first year.” Source: http://www.just-style.com/comment/what-might-a-trump-presidency-mean-for-apparel_id129260.aspx
Please feel free to respond to any comments above or leave your thoughts.
29 thoughts on “Outlook for Trade Policy in the Trump Administration and Impact on the Textile and Apparel Industry: A Summary of Views from Experts”
It is scary to me that after all of the negotiation and hard work put in to the TPP that Donald Trump is going to get rid of it. After discussions in class I feel that it is beneficial to the US and our relationships with the other countries involved. Do you think this will hurt the american economy greatly? Also it is frightening that even the NAFTA agreement might not be in place anymore. The US exported $6.5bn of apparel and textiles to Mexico last year and, in turn, Mexico shipped $4.2bn to the US. However, if Donald Trump goes ahead and builds this wall he is talking about it could cut $2.2bn or 20% of the $11bn in US-Mexican textiles and apparel trade in its first year. This is negatively going to effect the US reputation as well as the fashion industry. I am interested to see what actually unfolds while he is president
Great thinking and glad that you follow the news! Indeed, many pro-trade medias have expressed deep disappointment about Trump’s announcement to withdraw from the TPP on day one. I just wrote an op-ed which will be published soon in Just-style about the world without NAFTA and what that could mean for the US textile and apparel industry. One point I made is free trade agreements not only offer preferential duty treatment, but also shape supply chains. My study shows the dismantlement of NAFTA does not reflect the interests of the US textile and apparel industry. Nevertheless, I don’t think TPP is officially dead yet. There are other 11 TPP members out there and let’s see how creative and pragmatic they can be…
I too think it is unfortunate that Trump is withdrawing from the TPP. The TPP does not simply remove tariff and non-tariff barriers, but also aims to improve social standards around the world such as labor, environmental, and intellectual property rights protection. As protectionism rises in the U.S. rises, it is unfortunate that the U.S. will not get to participate in such a “21st century trade agreement”. With that being said, I am happy to hear that it is not “officially dead yet”.
Personally I feel the same way. Anyway, it is very encouraging to see our FASH students start to care about these topics after taking FASH455 🙂
To be a sound voice in trade negotiations, I’d believe one would have to be extremely neutral, as the class has heard from key role players like Gail Strickler. It’s difficult to try and stay in between when I feel as though cutting off or removing the USA from existing trade agreements undermines everything that this country has worked towards. I’m worried that Trump will make it incredibly difficult for manufacturers to find diverse sourcing bases if he decides to remove us from NAFTA or TPP. These negotiations are set so that everyone gets the best benefits allowed, whether it be a guaranteed market or reduced/non-existent tariffs on trade goods. I understand that Trump wants more jobs in America, but by having FTAs with different global markets we are indeed creating high-corporate positions that will deal with sustainability and social relations.
I hope, if anything, this stimulates discussion on whether or not the FTAs can at least be improved or adjusted (and simply not taken away). If TPP does continue to form without the US involved, it may be a great opportunity for them to grow and get a good grasp on the routine of the FTA until the US decides to take the step forward. Our entire industry would change based on Trump’s decisions. Is this the kind of change we need?
Great points. Two follow up comments: 1) I feel more work needs to be done to help the public AND politicians better understand international trade and why it matters in the 21st century. 2) Free trade agreements like TPP not only offer preferential duties, but also shape supply chains. Plus, trade is never a pure economic issue–it is also about national security, geopolitics and even world peace. You might be interested in reading this blog post too: https://shenglufashion.wordpress.com/2014/11/20/think-big-about-international-trade/
Thank you for sharing that link–I enjoyed the post! I agree that we need a big, open mind when discussing international trade. It sounds SO much easier said than done; understanding that there are so many more discussion points like “yarn-forward” versus “fabric-forward” ruling gives light that while both sides want it their way, there has to be a common ground from “big thinking” to satisfy the majority requests from each party.
I wonder what the implications on the cost of apparel in the US would be if Donald Trump were to withdraw from the TPP. He is looking to “make America great again” by producing apparel and textiles more domestically to create jobs but with high minimum wage rates and the need for new production facilities inside our borders wouldn’t cutting these trade deals drive the price of apparel up immensely for U.S. citizens? I also wonder if the opportunities gained from backing out of these deals could outweigh the negatives. according to David Spooner, Partner at Barnes & Thornburg LLP, “If Trump brings in new faces to USTR, it might give us an opportunity to do new things in trade. We’ve been screwed by the yarn-forward rule for decades. Maybe there’s an opportunity to do things, even if it’s around the margins.” I wonder what he means by doing things around the margins and how this would benefit the United States. I would also like how many benefits would come from easing government laws and mandates in terms of trade and if these being lifted could possible outweigh the negatives of cutting these important trade deals.
You raised a good question. Indeed, I think there is a risk there that Trump will use trade protection as a means to “create more manufacturing jobs” in the US. But history tells us that the cost of trade protection is much higher than the jobs that are actually protected. For example, according to a recent WSJ article, “the cost to Argentina’s taxpayers to protect a factory worker a year, including tax breaks and other incentives totaled $72,000”. http://www.wsj.com/articles/how-latin-america-pays-the-price-of-protectionism-1480089781
Likewise, if Trump does decide to levy punitive tariff rates on imported textile and apparel, especially from China, which account for about 40% of the market shares, US consumers will be the losers.
It is very obvious that TTP has given the U.S. a lot of benefits even though there are some disadvantages. Donald Trump states “making America great again”, and getting ride of TPP would not be a good idea. TPP has increased various careers and market shares in the U.S.. NAFTA has built a good relationship with Mexico. The U.S. could raise the export of textiles due to it, and Mexico could also raise the export of apparel. If the wall would be built, the market share of exporting textiles for the U.S. would be declined. How would the government reverse that negative effect?
I am interested to see who the president elect chooses for his administration. It will be very important in moving forward with many topics, one of the most important being the TPP. So much hard work has gone into the creation of the TPP that it would truly be a shame if it was not implemented. I think the it would greatly benefit the US citizens to have a government cabinet that favored the TPP and could help better explain the great advantages it would give us as a world economy. I think it is also important for the president elect to carefully select his staff in order to get more of the public’s support that he does not yet have. Selecting cabinet members that appeal to those that are protesting him might help lessen some of the hate towards him as a president.
The election results caused me great worry for the future of our trade agreements with various foreign nations. Donald Trump has made it very clear that he doesn’t support the TPP and has reservations about NAFTA. With his election, America industries are in trouble. Donald Trump has expressed his want to bring back jobs to the U.S. and limit foreign trade, but I’m not sure how this is going to be possible. Many of our apparel goods and priced the way that they are due to low labor costs abroad. Bringing these jobs back to the U.S. would only increase the amount of income that we as American consumers are spending. I also think it’s important to note that many people in the U.S. go to college to get a degree in some kind of specialty. I believe there would be a lack of American people who would want to opt into being factory workers for a low minimum wage. Our relationship with foreign countries is very delicate and should be respected. The TPP allows for us to maintain fair relations with countries who are labor intensive as compared to the U.S. as we are capital intensive. I think it is important to note though, that Jeffery Schott said that even if Trump pulls us out of the TPP for his term, that is not to say that the other 11 countries would not allow the U.S. to rejoin come a new leader in office.
I also agree with the above statements. However, I think that Donald Trump is trying to get manufacturing back to the U.S., the only problem is, for the apparel industry, that should not be done. As for the textile industry, he should be fighting for their jobs. As for the TPP, I think it is sad that it has been stopped for now but I also am worried about the future of TPP. I’ve heard that we could potentially be left out and China might have an in. If that is the case, what would happen to our economy? After learning about the TPP in class, it sounds like a great idea. However, there would be ‘losers’ and i’d be interested to see what happens to those developing countries.
I think you bring up a good point about whether or not China will replace us in the TPP negotiation considering the fact that Donald Trump will most likely not approve of it. This brings up an interesting topic about the rising competition between China and the U.S. I believe that with financial benefits of the TPP, China will have more of a competitive advantage over the U.S. if it continues with the TPP and the U.S. does not. Do you think if China is able to move forward with the TPP negotiation, they will begin to see improvements in their issue of rising labor costs? And if China begins to lower labor costs again, will countries start to go back to trading their and thus hurting trade with other developing countries like Vietnam?
It is concerning that many industry leaders believe that Trump will renegotiate NAFTA, considering it is so essential to the North American textile and apparel industry. I wonder what this administration’s plans to improve the U.S. textile are if they cut the trade within NAFTA. NAFTA is a main contributor to the U.S. textile and apparel industry, and it will be industry to see what plans are proposed to increase jobs and/or exports in this industry without emphasizing this deal.
If the U.S. does not participate in TPP anymore, the first one that comes to my mind is other participants will not happy like Japan. First, Japan will lose the opportunity to dominate the world trade rules. The GDP of 12 TPP participating countries accounts for about 40% of the global economy. TPP should actually become the global trade rules. If TPP is miscarried, Japan will be under the control of China and other leading world trade rules. ASEAN and six FTA partner countries Australia, China, India, Japan, South Korea and New Zealand announced Regional Comprehensive Economic Partnership (RCEP) which is the competitor of TPP. RCEP has half of the world’s total population. Because the U.S. is not one of the participants, China’s GDP is the largest. Once the RCEP is formed, China’s global trade rules increase the power of speech, which is very reluctant to see for Japan. Japan will be under the control of China and other leading world trade rules.
Over all I agree that the US should not withdraw from the TPP. With the apparel and textile industry being such a global industry, I feel bring infrastructure back to the US will not be effective economically. But in reading this article I feel that many industry leaders agree with me. But on the bright side some of these industry people are positive and it is good to know that if president elect Trump picks his cabinet wisely there might be a possibility for positive growth of industry jobs without totally withdrawing from international trade.
even though we don’t have an answer yet, but hopefully students will have a solid understanding of these important topics after taking FASH455.
I agreeing with what other students have said that it is really scary that Trump wants to withdraw from the TPP and I think it will have scary and damaging effects on the industry and change things as we know it. The US is a huge driving force in the industry and it is important that we maintain global relations and I think withdrawing from the TPP is not the smartest choice. I think that the US will have huge regrets after withdrawing. As we learned in class, while it is good to have jobs created/brought to the US, sometimes outsourcing and trade is actually just as/if not more beneficial to the US people and economy especially within the textile industry. It will be interesting to watch as things play out hopefully resulting in a good choice for the industry and for the country.
I believe that with Trump in office due to the fact that he is not knowledgeable enough on these matters because he hasn’t held a lifelong career in politics to understand the vast destruction that detaching from the TPP will have on our economy it will result in an untimely halt on many businesses that depend on the agreement of the TPP
As we discussed in class, one major issue that Donald Trump is overlooking is that of mechanisation. Low skill jobs are not mostly being lost to trade, but are being replaced with machine that can do the same job for cheaper and in much less time. It is unforunate to see the TPP become a casualty of his lack of knowledge on the subject. Once the US pulls out of the TPP, the whole deal will likely fall apart.
I believe this is concerning to see Trump has the ability to no longer implement the TPP. I dare to ask, do some of the positives of the TPP outweigh any of the negatives? TPP does more than reduce tariffs, but it also helps with environmental protection, labor protection, e-commerce, and much more. The TPP is not like any other partnership we currently have, would Trump ever look to continue TPP if we could get it to use “yarn-forward?”
I agree with David Spooner in his assertion that if Trump brings new faces to the USTR, it will give us opportunities to do new and different t things in trades. Steve Lamar makes a good point that NAFTA was negotiated when there were not other free trade agreements catering to the US. That said, I feel it is highly likely for Trump’s non-NAFTA/CAFTA mindset to be less of an abandonment and more of a modification outlook. To create new opportunities in trade, Trump could utilize the positives from the TPP proposal and positives from NAFTA/CAFTA to create a new, best-deal plan.
Many people are concerned with the future of trade as it will be run by Trump. Experts are concerned that trade will be increasingly stricter, and because of that TPP is pretty much off the table while Trump is in office. But some experts believe it could still be an option for the U.S. in the future; some even believe that Trump will bring in the best people (whoever will help make America Great Again) to the office of the U.S. Trade Representative, and through them there may be some ease in implementing TPP, and if not TPP negotiating other trade agreements. I also have hope that Trump will recruit the best and execute his initial plan of creating more jobs in America, but also keeping global trade alive. Realistically speaking, it will probably be extremely difficult for Trump completely eliminate or drastically decrease the percentage of imports into our country without having an economic catastrophe. If trade was completely moved domestically, retail prices of everything would increase, hence why we outsource because it gives the U.S. market low prices that even the lowest class can afford. This is why I have hope that global trade and trade agreements will still be around once he is in office. As for his view on China, even if Trump were to decrease the imports from China, yes it would be tough for many companies to comply, but it would not completely hurt them. China is no longer considered the best country to get the best value from due to an increase in labor costs and advancements into technology. Because of this companies will look to other countries that provide economic benefits, mainly from LDC’s. Decreasing imports from China will increase imports from other countries and It will allow LDC’s the chance to expand their export market. If Trump still considers advocating for trade, there may be benefits to his reduction of China imports.
Trump is known to raise uncertainties and therefore many countries around the world could feel hesitant as we all wait for the future of TPP. Although Jeffrey J. Schott shares a point: “Instead, they could agree among themselves to extend the TPP benefits to each other on a provisional basis, leaving the door open for US participation in the future.” How possible is this outcome? And how would this be negotiated?
Overall, I completely agree with a majority of the other students that the prediction of Trump withdrawing from the TPP is quite unsettling. I think many people under Trump’s cabinet should be educated on the importance of global relations and trade though I have confidence that the transition between presidencies and beyond will be smooth.
This is a concerning topic because I personally do not agree that the U.S. should withdraw from TPP. In FASH455, we have learned a lot on what TPP is. Although it is a trade policy with some disadvantages, it is still one of the best trade policies that will benefit the U.S. in many different aspects. As we all know, nowadays, almost everything are produced by global division of labor. Focusing on protectionism, which means that try to shift manufacturing industries back to the U.S. is surely not a sustainable way to improve the local T&A industry in order to “make America great again”.
I think leaving TPP might not have that much impact for the United States, but the countries that in TPP beside the U.S will try to extend their benefit without the United States, which might make them to be more competitive.
This is an interesting point, but needs more explanations. Sufficient reasoning is expected for the blog comment assignment
To put it mildly, the US needs NAFTA. Trump may believe he can negotiate terms regarding NAFTA, but to threaten to withdrawal altogether if his terms are not followed through is drastic and risky to the apparel and textile industry. There are obviously positive and negatives to all agreements, NAFTA being an example, however, ridding the US of NAFTA altogether will result in deep declines in manufacturing revenue and companies will also decline. TPP will be hard to pass because of Trump’s administration and outlooks on matters, however, bringing in new faces who provide controversial opinions about the matter (not only one-sided) will result in refreshing views and possible negotiations.