The Section 301 Investigation against China Divides the U.S. Textile Industry and U.S. Fashion Brands and Retailers

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On April 3, 2018, the U.S. Trade Representative Office (USTR) released the proposed list of Chinese products to be subject to the retaliatory tariff under the Section 301 action. The proposed list covers approximately 1,300 separate tariff lines, including textile machinery. However, textile and apparel (HS chapters 50 to 63) were not on the list.

USTR says it will make a final decision on whether to implement the proposed tariff action after a public hearing process scheduled at around May 15, 2018. Most U.S.-based textile and apparel industry associated have submitted their public comments regarding the section 301 investigation. Because of their respective commercial interests, not surprisingly, the U.S. textile industry favors the retaliatory tariffs on imports from China whereas U.S. fashion brands and retailers oppose the action strongly. Specifically:

National Council of Textile Organizations (NCTO)

  • NCTO applauds the Trump Administration’s formal initiation of a Section 301 case designed to address China’s persistent and highly damaging actions in the area of intellectual property theft. NCTO argues that illegal activity on the part of the government of China has gone on for far too long, at the direct expense of U.S. manufacturers and the loss of millions of U.S. manufacturing jobs.
  • The U.S. textile industry is severely disappointed that the retaliation list published by USTR on April 3 does not contain a single textile or apparel product.
  • NCTO argues that China’s illegal IPR activities have damaged the U.S. textile industry and recommend that textile and apparel products be added to the retaliation list.

The United States Fashion Industry Association (USFIA)

  • USFIA opposes adding apparel (items classifiable under chapters 61 and 62 of the HTSUS) and other fashion products (such as footwear, handbags, and luggage) to the retaliation list against China.
  • USFIA argues that tariffs are NOT the appropriate mechanism to redress the activities outlined in USTR’s report to the White House. Imposing tariffs on imports of fashion products would do nothing to solve the concerns about China’s IP policies and practices outlined in USTR’s Section 301 report.
  • USFIA believes that the best way to address concerns about China’s IPR practices is action at the multilateral level that includes other US trading partners.

American Apparel and Footwear Association (AAFA)

  • AAFA strongly opposes the proposed imposition of tariffs on textile, apparel, and footwear equipment and machinery as this will result in increased costs for AAFA members who are making yarns, fabrics, clothes, and shoes in the United States.
  • AAFA believes that a tariff on textile and apparel products would be a hidden tax on U.S. consumers, particularly since China represents such a large source of U.S. imports of these products.
  • AAFA strongly supports the Trump Administration’s efforts to improve the protection of intellectual property rights in China.

Author: Sheng Lu

Professor @ University of Delaware

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