Recently, U.S. Deputy Secretary of Commerce Sanchez stated that China is welcome to join the Trans-Pacific Partnership Agreement (TPP Agreement) promoted by the United States. What role does the TPP agreement, which has been developed for 8 years, play in the global textile industry? What impact will it have on China’s textile industry? What is the underlying reason for the United States to extend the TPP olive branch to China this time? We interviewed Zhou Mi, deputy director and researcher of the Foreign Investment and Cooperation Research Institute of the Ministry of Commerce Research Institute, on these issues.
Tariff reduction is the main benefit
Zhou Mi said that although the TPP is not a trade negotiation for the textile industry, the current dozen member states attach great importance to the textile field, especially the United States and Vietnam. Therefore, the agreement has attracted widespread attention in the textile industry.
As far as the textile and apparel field is concerned, TPP member countries mainly enjoy import tariff reductions and exemptions. Textiles and clothing are generally products with higher tariffs. This preference has an important impact on the textile and clothing trade between TPP member countries and between member countries and other countries. In addition, the reduction of non-tariff barriers and market access barriers is another major preferential policy brought to member countries by the TPP, which will remove many obstacles for textile and apparel exporting countries within the TPP.
Taking Vietnam as an example, according to the preferential tariff policy of the TPP agreement, Vietnam’s textile industry can attract investment from companies from Chile, New Zealand, Singapore, Brunei, the United States, Australia, Japan and other countries. According to statistics from the Vietnam Textile and Apparel Association, textile and apparel companies from many countries have visited Vietnam to invest and open factories. After joining the TPP agreement, Vietnam’s import tariffs on thousands of textile products entering the U.S. market will gradually be reduced from 17.3% to zero tariffs. The total exports of textiles and clothing to the U.S. market will increase by 12% to 13%, with the average annual export total reaching 30 billion. Dollar. Improving the added value and competitiveness of the textile industry and promoting the development of the regional textile industry are the important impacts of TPP on the textile industry.
Zhou Mi said: “Without joining the TPP, China, as a major textile origin country, will indeed be greatly affected, and Chinese textile and apparel export companies will face more competition and certain difficulties. However, currently China It is still the world’s largest textile exporter, and it is not easy to ‘take away’ its share of the global market from China.”
The rules of origin are inconsistent
Zhou Mi pointed out: “The biggest impact of the TPP agreement on the textile industry should be the transfer of trade and capital. TPP member countries are facing different challenges from before in terms of textile export markets, import markets, production sites and raw material sources. choice and competition.”
According to the provisions of the TPP, if TPP member countries want to enjoy preferential tariffs on garment exports, their garment raw materials must be produced domestically or imported from other member states. A large part of the cotton in Vietnam’s garment industry is imported from China, so Vietnam either chooses to give up importing lower-cost raw materials from China, or gives up enjoying zero export tariffs.
However, at present, there has been no final conclusion on the issue of textile origin regulations. In principle, the United States requires that garments exported to the United States use products from TPP member countries starting from the yarn link. However, it plans to introduce flexible clauses at the same time and formulate a “supply shortage” list of textiles such as yarn and cloth. TPP member countries can supply goods to countries outside the TPP area. Clothes made from raw materials that are “in short supply” can also enjoy U.S. tariff preferences.
The reason why there is no conclusion is that the U.S. textile industry and clothing retail industry have not reached an agreement. The U.S. textile industry strongly advocates “post-spinning” origin regulations because many countries import yarn from China and other places. If China does not join the TPP, then these countries can only import yarn from the United States. U.S. apparel companies and retail companies are more supportive of loose “post-weaving” rules of origin, so that TPP members can import cheaper yarn and raw materials from outside the region, ultimately reducing product costs.
The implementation of the “after weaving” or “after spinning” regulations plays a crucial impact on trade diversion. Zhou Mi said that it can also be seen that China plays a vital role in the development of the global textile industry. If you want to inhibit the development of China’s textile industry, you are likely to inhibit the progress of the country’s clothing retail industry. Suppression is not the way to promote the development of the global textile industry chain. Only cooperation can achieve this goal.
