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Trade & Policy Round-Up for February


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

U.S. Legislation

While not law yet, there are a few pieces of pending legislation in the U.S. that, if passed, would be relevant to the sewn products industry:

U.S. Footwear Duty Reclassification

A recent U.S. Customs and Border Protection (CBP) ruling published in the January 26th Customs Bulletin and Decisions notes the agency is reclassifying some girls’ and women’s fashion footwear, which previously had a 9% duty rate (HTSUS 6404.19.90), as athletic footwear, which has a duty rate of 20% (HTSUS 6404.11.90). The non-athletic fashion footwear items that will be affected by the higher athletic footwear duty rate include certain sneakers that have embroidery, sequins, are closed-toe, closed-heel, and below-the-ankle. The change will be reflected on goods entered or withdrawn from a warehouse for consumption on or after March 27, 2022. Read more.

Peru Weighs Apparel Import Duties

The government of Peru is considering the imposition of temporary safeguard duties on clothing imports to protect the country's domestic manufacturers against what it considers to be a glut of imports from countries such as China and Bangladesh. Peru’s Commission on Dumping, Subsidies and the Elimination of Non-Tariff Trade Barriers of the National Institute for the Defense of Competition and the Protection of Intellectual Property (Indecopi) reports that clothing imports between 2016 and 2020 rose by 253.8% and are rising still. Indecopi concluded that there is a reasonable indication of serious injury to the domestic apparel industry, including the country's wool and alpaca fiber producers. While an official investigation is still open, Indecopi can, at any time, recommend the application of provisional safeguard duties lasting 200 days. Read more.

Uzbekistan Subsidies for Apparel, Textile Equipment

The government of Uzbekistan has announced measures to “stimulate deep processing, production and export of finished products with high added value by textile and clothing and knitwear enterprises.” The decree establishes the Textile Industry Support Fund and mandates several steps to be taken between February 2022 and January 2025 related to subsidizing the purchase of equipment to be used within the domestic industry. Read more here or here.

Lithuania, China WTO Dispute The European Union recently filed a complaint at the World Trade Organisation (WTO) acusing China of exerting economic pressure on Lithuania and implementing discriminatory trade practices against Lithuania that it says threaten the integrity of the EU’s single market. The EU argues that importers of products from Lithuania have encountered numerous restrictions on securing customs clearance for their goods to enter Chinese territory. At the same time, entities established in Lithuania have encountered difficulties relating to goods due to be exported from China to Lithuania. As part of the WTO process, the two parties have 60 days to confer in order to reach a settlement. If none is reached, the EU may choose to launch a formal dispute that would set up a WTO panel to study its claims against China. In response, Chinese Foreign Ministry spokesperson Zhao Lijian stated “The so-called ‘coercion’ of China against Lithuania is purely made out of thin air.” Since the complaint was filed, a number of other countries/parties have requested to join in on the consultations including the United States, Canada, Australia, the United Kingdom, and Taiwan. Read more.

Egypt Raises Minimum Wage Again In January, Egyptian President Abdel Fattah el-Sissi announced an increase to the federal minimum wage: 2,700 Egyptian pounds (US$171.5) — a 12.5% increase from the current 2,400 Egyptian pounds (US$152.5). This is the third time el-Sissi has increased the minimum wage since he took office in 2014. The increase is expected to take effect with the start of the new fiscal year in July 2022. Read more.

Related: In response to the last Egyptian wage increase, Sourcing Journal published an interesting article highlighting progress in the country despite setbacks caused by Covid-19. As the article explains, “Egypt’s advantages include a strong vertical cotton sector, strategic access to the Mediterranean, the Red Sea and the Suez Canal, a competitive and skilled labor force, trade deals with key partners like the U.S., and an entrepreneurial zeal invigorating the apparel industry.”

U.S. Resolves Steel Tariff Disputes Last week, the United States and Japan announced a deal to remove Trump-era Section 232 tariffs from about 1.25 million metric tons of Japanese steel imports annually. The new agreement will take effect April 1, 2022, and requires Japan to take "concrete steps" to fight global excess steel manufacturing capacity. Read more.

Meanwhile, the United States and the United Kingdom have agreed to start talks aimed at resolving their trade dispute over U.S. steel and aluminum tariffs. Read more.

WTO Approves Chinese Retaliatory Tariffs At the end of January, the World Trade Organization ruled in favor of China in a long-running tariff dispute between the United States and China. China’s original complaint cited tariffs imposed against certain Chinese manufacturing products, ranging from solar panels to pipes, between 2008 and 2012. At the time, the Obama administration argued the tariffs were needed to counteract China’s unfair market advantage from producing the goods with Chinese state subsidies. The recent decision allows China to impose up to $645 million in retaliatory tariffs per year against the U.S. We don’t know yet what products might be included if/when these new tariffs are put in place. Read more here or here.

Dutch Government Supports Vietnamese Garment Workers The International Labor Organization (ILO) and the Government of the Netherlands recently signed an agreement to support skills training in Vietnam’s apparel sector. As part of a two-year project, the ILO will support the Government, employers’, and workers’ organizations in Vietnam to understand what skills the industry and its workers will need now and in the future. Read more.

Sri Lankan Worker Agreement This one isn’t exactly government-related, but we thought it was interesting. Sri Lanka’s apparel sector and key industry trade unions have signed a “historic” memorandum of understanding to ensure business owners and employees work together to address human rights issues for hundreds of thousands of workers. The agreement is between Sri Lanka’s Joint Apparel Association Forum Sri Lanka (JAAF) and the Union Collective, which comprises three of the sector’s trade unions. Read more here or here.

Trade Agreement Updates

Let’s take a quick look at some of the trade maneuvers happening around the world:

  • Singapore has signed a free trade agreement with the Pacific Alliance — made up of Colombia, Mexico, Peru and Chile — to facilitate trade and closer ties between the region and Asia. The Pacific Alliance members will now ratify the agreement in their respective legislatures. Ecuador is also expected to join the agreement sometime in the future. Read more.

  • The Philippines missed the January 1st deadline to ratify and implement the Regional Comprehensive Economic Partnership (RCEP) when its Senate went into recess without concurring the ratification of the deal (it was approved by President Duterte last fall). The Senate is expected to continue conducting public hearings this year weighing the pros and cons of the agreement. Read more. You may also want to check out this article from the South China Morning Post explaining why the benefits of the world’s largest trade pact may not be as clear-cut as they seem.

  • In December, the United Kingdom signed a free trade agreement with Australia — its first “from scratch” agreement since leaving the EU — expected to unlock £10.4 billion of additional trade between the two nations and loosen work and travel restrictions.The agreement is due to come into force next year. Read more. The UK Government press release noted the deal is also a gateway into the fast-growing Indo-Pacific region and will boost the country’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

  • In January, the United Kingdom launched free trade agreement negotiations with India. News outlets report the two countries aim to wrap up the deal by the end of the year and expect the deal to double bilateral trade by 2030. Read more.

  • Also in January, Turkey and Greece signed a protocol to enhance collaboration on bilateral trade, investment, the energy sector, environmental protection, and transport. They will also reactivate bilateral cooperation on research and innovation. Read more.

  • The New Zealand-China Free Trade Agreement (FTA) upgrade, signed in January 2021, will enter into force on April 7, 2022, according to New Zealand’s Minister for Trade and Export Growth. Read more.

  • China and Ecuador recently signed a memorandum of understanding to launch negotiations for a bilateral free trade agreement. Ecuadorian President Guillermo Lasso stated he expects negotiations to be concluded by the end of 2022. Read more.

  • A new study on the economic and societal impact of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) has reignited arguments over the agreement’s rules of origins for textiles and apparel. Read more.

Bonus Reading:


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