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Trade & Government Round-up for September


Below is a collection of stories related to trade and government that may impact the sewn products industry around the world.

California Wage Bill Fails Proposed legislation in California intended to prevent “wage theft” in the Los Angeles apparel industry will not become law as it failed to come up for a vote before the state’s legislative deadline for the year. The bill, SB 1399, would have required apparel factories to pay workers an hourly wage rather than use the piece-rate system. Opponents of the bill argued it would have driven business out of the state and further damaged the Los Angeles industry. Read more.

U.S. Apparel Industry Calls for CBTPA Renewal The American Apparel and Footwear Association (AAFA), along with a dozen trade associations representing the apparel, footwear, and textile industries are calling on the U.S. Government to renew the Caribbean Basin Trade Partnership Act (CBTPA) ahead of its September 30, 2020 expiration. CBTPA entered into effect in 2000 to help U.S. businesses facilitate trade within the region and with Haiti in particular. The trade agreement extends preferential tariff treatment to textile and apparel products assembled from U.S. fabric and yarn.

New Rules of Origin for the Pan-Euro-Mediterranean Region On August 24, 2020, the European Commission adopted a package of proposals aimed at increasing trade between the European Union (EU) and neighboring countries in the Pan-Euro-Mediterranean (PEM) region and aiding economic recovery following the Covid-19 pandemic. The proposals modernize the preferential trade agreements between the EU and 20 PEM countries — including key textile and clothing producers Turkey, Egypt, Israel, and Jordan — by making the relevant rules of origin in those agreements more flexible. Specifically, the provisions seek to make it easier for products to benefit from trade preferences through:

  • Simpler product-specific rules, such as the elimination of cumulative requirements, thresholds for local value added, more adapted to EU production needs, and new double transformation for textiles;

  • Increased thresholds of tolerance for non-originating materials, from 10% to 15%;

  • The introduction of “full” cumulation, under which the manufacturing operations needed to acquire origin for most products can be split among several countries;

  • The possibility of duty-drawback (repayment of duties on imported components) for most products to help EU exporters compete.

The European Council (the institution that determines political priorities for the EU) will review and likely adopt the new proposals, enabling the EU to then agree with each of the trading partners on the introductions of the rule changes and protocols. The new rules could come into force in some countries as early as the first half of 2021.

Just-Style reports that the European Apparel and Textile Confederation (Euratex) welcomes the proposals, but is calling for an ambitious information campaign to ensure companies can benefit fully.

Hong Kong Products Not Subject to 301 Tariffs Last month, we noted a change to the U.S. country of origin label requirements for products originating from Hong Kong. Since then, U.S. Customs and Border Protection (CBP) has confirmed that even though Hong Kong products will now be required to indicate China as their country of origin, they will not be subject to the Section 301 tariffs on Chinese products.

In addition, CBP has extended the enforcement deadline for the country of origin rule change. Read more.

U.S.-China Trade Tension Speaking of China, a new report indicates U.S. companies operating in China fear the trade tensions between the two countries will continue for years and negatively affect their ability to retain staff. Read more.

Possible U.S./India Trade Deal Several news outlets are reporting the possibility of a “mini trade deal” being finalized between India and the United States before the U.S. elections in November. Much of the discussion is based on August 31 remarks by Deputy Secretary of State Stephen Biegun at the U.S.-India Strategic Partnership Forum, during which he stated: “I think there’s a chance. It’s going to take a little more energy.” Read more.

Related: Garment manufacturers in India say they expect a 25% spike in sourcing this quarter as apparel companies pivot orders away from China. Read more.

Cambodia Coal Plans Face Judgement Earlier this year, the Cambodian government approved plans to build two new coal-fired power plants to meet the country’s growing electricity needs. The decision has prompted backlash from several prominent apparel brands and could cause the country to fall out of favor with sustainability-minded companies. Read more.

Unrelated, but in the same country: Cambodia’s Ministry of Labor recently announced garment workers will be receiving two extra dollars per month beginning Jan. 1, bumping up the minimum wage by 1.05%. The country’s labor unions originally asked for a $12 increase. Read more.

Proposed Changes to Canadian Labeling Regulations Canada’s Competition Bureau is inviting feedback on proposed changes to the Textile Labeling and Advertising Regulations (TLAR), which relate to upholstered and stuffed articles. The proposed changes are intended to simplify the labeling of upholstered and stuffed articles and provide greater clarity for businesses. The Canadian Apparel Federation is pressing to eliminate labeling requirements for stuffed articles which it sees as a nuisance for companies making outerwear and other stuffed articles.

And speaking of our friendly Northern neighbors, Canada saw a remarkable recovery in ready-made garment (RMG) imports in July 2020, up 53.93% from June. Read more.

German Government Teams Up with ILO

The German Federal Ministry for Economic Cooperation and Development (BMZ) is giving €14.5 million to an International Labor Organization (ILO) multi-donor program to help garment sector workers in seven countries who have been affected by COVID-19. Read More.


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