The
National Council of Textile Organizations (NCTO)
appreciates this opportunity to share our views
regarding the free trade agreement (FTA) that has been
negotiated between the
United
States
and Australia.
NCTO
was recently established to represent
the entire unified spectrum of the
U.S.
textile sector, from fibers to finished products,
including yarn,
fabric, man-made fibers, cotton, textile machinery and
chemicals and others concerned with the prosperity and
survival of the
U.S. textile
industry.
NCTO
is more broadly based than any previous domestic textile
organization and we are very interested in the details
of all potential and proposed FTAs, including the one
recently negotiated between the
U.S.
and Australia.
The
United
States
textile industry has experienced a wave of plant
closings and job losses in recent years unlike any
comparable period of time in our history. In the last six
years – a mere seventy-two months – we have lost nearly
230,000 U.S.
textile jobs, over 35 percent of our entire
workforce.
These job losses have accelerated in the past
three years, with 50,000 jobs having disappeared in 2003
alone. It
is against this backdrop of plant closings and mass
layoffs, due mainly to an unrelenting wave of
unfairly
traded imports from
China and other Asian
countries, that we have viewed each new proposed FTA
with a critical eye.
Our
industry has vigorously sought to develop trading
partnerships with apparel producers in
Caribbean
and other nations with which we have a preferential
trading arrangement. Such
arrangements which promote the use of
U.S.
yarn and fabric present tremendous export opportunities
for U.S.
textile manufacturers. For example, as a
result of the Caribbean Basin Trade Partnership Act
(CBTPA), which grants duty-free treatment to garments
made in the region of
U.S.
yarns and fabrics, our industry has been able to
significantly expand our exports to CBTPA
countries.
But such export opportunities can only
materialize in an FTA if a strict, yarn-forward rule of
origin without any exceptions is included. The United
States textile industry has strongly and consistently
urged the United States government to insist that the
benefits of any free trade agreement must be limited to
the participating countries, and that textile
manufacturers in China, India and other third party
countries should not be allowed to reap the benefits of
the agreement at the expense of U.S. textile
producers.
Further,
last fall, over 170 members of Congress wrote to the
President urging him to maintain the yarn-forward
position that the U.S. had taken earlier that year in
the Central America Free Trade Agreement (CAFTA)
negotiations, with no tariff preference levels (TPLs) or
other exceptions.
Regrettably, this position was not maintained,
and massive loopholes to the rule of origin were
included in the final agreement. The same is true
with respect to the recently negotiated FTAs with
Morocco
and Bahrain,
both of which contain enormous and unwarranted
exceptions to the rule or origin. As a result,
NCTO will be opposing all three of these agreements and
urging their rejection by
Congress.
However,
we were pleased to see that the final U.S.-Australia FTA
includes a strict yarn-forward rule of origin with no
(zero) exceptions.
No tariff preference levels, no cumulation
provisions, no loopholes of any kind to the yarn-forward
rule of origin.
We further applaud the
U.S.
negotiators for rejecting
Australia’s
original effort to include a rule of origin that would
have required only 55 percent of the declared value of
an export to be accomplished in the exporting
country.
This would have created huge opportunities for
“free riders” – i.e., textile producers in
China,
Vietnam,
India
and other non-participating, third party countries. – to ship fabric
to Australia
at the expense of fabric and yarn manufacturers in the
United
States
and Australia.
The U.S.-Australia FTA is the first such
agreement to contain a strict, yarn-forward rule of
origin with no exceptions, carve-outs or loopholes of
any kind.
Accordingly, NCTO supports the agreement and
urges Congress to adopt legislation to implement the
agreement so long as such the language of the
legislation adheres to the provisions negotiated between
the two countries.
Further,
NCTO urges that the U.S.-Australia FTA serve as a
template for any future free trade agreements that the
United
States
might negotiate, including any agreements currently
being negotiated.
If future FTAs do not adhere to this strict
yarn-forward rule of origin requirement, NCTO and very
likely many of our allies in the textile and fiber
sector will be forced to oppose such agreements, and we
will urge their defeat in
Congress.
