It now appears that the Trans-Pacific Partnership (TPP) may actually come to pass.

Naturally garment industry professionals have jumped in to calculate just who will benefit from TPP and who will not.

Everyone agrees that Vietnam will be the big winner possibly followed Malaysia.

On the losing side, we have many to choose from.  These are my choices:

  • Thailand:  While the garment industry is relatively small by global standards, this country is home to a major textile industry that will be frozen out of TPP countries.  Better-late-than-never, the Thai Government is now looking into the possibility of joining.
  • Indonesia:  This country has both substantial garment and textile industries. Regrettably, this countries garment exports are in secular decline.  Without TPP that decline will accelerate. Indonesia too is joining the TPP wannabes.
  • India:  This country is home to one of the world’s largest textile export industries.  It also has a garment industry, which although doing relatively well faces serious long-term problems.  TPP can be the tipping point to decline.
  • Bangladesh:  This country is home to one of the world’s largest garment industries.  Nevertheless, it does face serious problems in compliance.  Here too TPP can be a killer.
  • DR-CAFTA:  T-shirts account for more than 52% of all garment exports from this free trade area.  Import tariffs current stand at 16.5% for cotton and a whopping 32% for man-made-fiber.  This FTA will find it very difficult to compete with TPP.

While exporting countries outside TPP stand to lose export market share, the greatest loser will almost certainly be the U.S. textile producers. Ironically this loss will be entirely due to the very policies they not only advocated but imposed on the USTR.

TPP regulations are virtually the same as those for DR-CAFTA.  To qualify for duty-free access, garments will have to be produced in TTP countries; from fabric woven (or knitted) in TPP countries; from yarn spun in TPP countries.

U.S. textile producers previously benefited substantially from these countries-of-origin regulations, with NAFTA and CAFTA becoming their primary market.  As of the 12 months ending 31 August 2015 total U.S. exports textiles were as follows:



U.S $ millions NAFTA & DR-CAFTA Austro-Asia
Yarn 5071 55.7% 20.4%
Fabric 9055 68.5% 14.1%

Without exaggeration, it is clear that without NAFTA and DR-CAFTA and their country-of-origin regulations, the U.S. entire U.S. textile industry would disappear.

As a result the senior textile-industry management together with their well-paid, highly competent lobbyists, and congressional supporters forced the U.S. Trade Representative (USTR) to impose the these same country-of-origin regulations on TPP.  In fact, despite the concerted effort of importers and retailers that offered more rational plans, which would have brought benefit to both U.S. industry and their workers, the USTR adamantly refused to consider any alternatives.

The assumption was and is:  What worked in Central America and Mexico will work in Asia

The problem is that Asia is neither Central America nor is it Mexico.  The industry in the Caribbean area does not have the capital required to build a competitive textile industry.  Mexico does not consider textiles or garments to be strategically important.  The result:  Everyone accepted that it was better and cheaper to import fabric from the U.S.

Asia is different. Industry in Asia has almost unlimited access to capital and is very interested in garment and textile production.  The result is that major corporations are literally standing in line — cash in hand — to build cutting edge textile industries in TPP.

The amount available is staggering.  The amount of capital is so great, that countries such as Vietnam are considering the possibility of creating operations to produce textile machinery.

TPP is a great opportunity for members.  In a real sense the imposed country rules-of-origin rules have created a subsidy for large-scale textile investment in Vietnam and other TPP countries, with high yields and no risk, all at the expense of the U.S. industry.

Good going guys.


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