The Fundamentals of Global Textile Trade and the TPP

The textile industry has seen extensive news coverage recently for a number of reasons, especially as it relates to the ongoing negotiations of the Trans-Pacific Partnership on international trade policy between some 12 countries, and several more key interested observers. The effects of these negotiations for textile trade between these countries are significant. For the purposes of this blog, we’ll only examine an overview of the issues, and perhaps expound upon our findings in a follow up blog as the negotiations develop, so our readers can come to appreciate some the subtlety and the stakes of these talks.

Foremost among the concerns for the textiles industry in the TPP is the reaffirmation of a version of the “yarn-forward” rule, which has been present in most U.S. Trade agreements since NAFTA. The yarn forward rule outlines rules of origin for textiles manufacturers, and specifies that in every stage “from the yarn forward” of the manufacturing process, the materials and processes must be sourced from a member of the partnership agreement. This “puts the spotlight” on Vietnam, which, if the negotiations move forward without the yarn forward rule, could act as a conduit for duty-free Chinese access to the U.S. Textile market.

This opens the door to another, highly contentious debate about global trade policy: fair trade vs. free trade. To avoid the risk of becoming too much of an economics lecture, we’ll note that generally, Jason Mills falls on the side of fair trade, which we see as taking advantage of the ideal that is a robust and healthy global trade network, and seeking to account for the fundamental imbalance in working conditions, wage scale, and economic and environmental responsibility of participating nations. Having said that, global trade is an increasingly complex machine, and we think that attitudes and positions need to be accordingly complex.

As policy discussions like the TPP and similar initiatives from the WTO and other organizations emerge, we think it’s a part of our job here at Jason Mills to be informed and aware of the implications of pending discussions not just for our business, but for our industry as a whole. We’ll be sure to continue to give our readers a window into the textile manufacturing world, and provide our perspectives here on our blog, so make sure to stop back soon!