Textile Insight

IN THE MARKET | TRADE UPDATE NAFTA 2.0 14 • Textile Insight ~ July/August 2017 textileinsight.com Business Communities Weigh in on Policy Priorities. AFTA is back in the headlines and the consensus amongst business leaders is that the North American Free Trade Agreement can use an update. The world has changed drastically since the deal was signed over two decades ago, and a modernized NAFTA 2.0 is needed. A range of hot button issues are on the table for NAFTA negotiations going forward, including labor, e-commerce, customs, environment, trade facilitation and rules of origin. Deadlines are also fluid at this point. Says Steve Lamar, EVP, American Apparel and Footwear Association, "Some of the questions I'm getting are, 'Will negotiations be wrapped up before the Mexican election next July? Will a NAFTA 2.0 be seamless?' You certainly need time for supply chains to adjust." Following President Trump's announcement mid-May of his intent to renegotiate NAFTA, a 90-day consultation clock started ticking under Trade Promotion Authority (TPA) that allowed the industry to weigh in prior to a hearing scheduled for June 27th. Starting on that date the U.S. Trade Representative's office had three days of hearings, churning through more than 130 witnesses. AAFA provided oral testimony to the Office of the United States Trade Representative to offer insight on the importance of the trilateral agreement for the apparel and footwear industry. Key arguments emphasized 1) Doing no harm; 2) Implementing changes seamlessly; 3) Keeping the agreement trilateral; and 4) Using negotia- tions to fix other problems. National Council of Textile Organizations (NCTO) President & CEO Auggie Tantillo provided testimony also. In summarizing his official statement, Tantillo concluded, "We fully agree with President Trump that NAFTA can be improved through a set of reasonable adjustments to the current text designed to enhance U.S. textile manufactur- ing and exporting. Further, we believe that by closing unnecessary loopholes in the agreement and placing a greater emphasis on customs enforcement, all parties throughout the NAFTA region will benefit. Doing so will help to build on the vibrant textile and apparel production chain in North America that has evolved under NAFTA." The National Retail Federation (NRF) released a state- ment prior to the June 27th deadline, outlining priorities for NAFTA modernization: "Broadly, retailers encourage the administration to: first do no harm to the existing trade relationship, keep the pact trilateral, conclude negotiations quickly and provide a seamless transition for any changes that are agreed upon." The NRF noted that NAFTA has spurred economic activity, supporting 14 million U.S. jobs in farming, manu- facturing and a wide range of service sectors. Under TPA, negotiations with Canada and Mexico could begin in mid-August. O U.S. Textile and Apparel Exports (In Thousand Dollars) 2014 2015 2016 To Mexico $6,208,045 $6,510,071 $5,936,873 To Canada $5,595,784 $5,246,776 $5,160,422 NAFTA Total $11,803,828 $11,756,847 $11,097,296 U.S. Textiles and Apparel Trade Balance (In Thousand Dollars) 2014 2015 2016 With Mexico $332,734 $733,797 $279,876 With Canada $3,492,530 $3,204,811 $3,169,249 NAFTA Total $3,825,263 $3,938,608 $3,449,126 Source: NCTO (National Council of Textile Organizations) "We fully agree with President Trump that NAFTA can be improved through a set of reasonable adjustments to the current text designed to enhance U.S. textile manufacturing and exporting." Auggie Tantillo, National Council of Textile Organizations (NCTO) President & CEO

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