Apparel Would Benefit From Propose U.S. Free-Trade Agreement With EU

Import/Export

As of Thursday, August 2, 2018

After months of talking about slapping tariffs on various imports from China, Canada and Mexico, the Trump administration announced it would like to start negotiations with the European Union to eliminate tariffs between the two regions.

The result would mean cheaper imports of French fashion, such as Chanel and Christian Dior, and cheaper exports of U.S.-made blue jeans. Think about the price reduction to import Italian denim that goes into many premium-quality blue jeans made in Los Angeles. It carries an 8 percent duty rate.

“At the luxury level, we use a lot of fabric from Italy and France, and the cost of those goods, if duties were off, would be down significantly,” said Ilse Metchek, president of the California Fashion Association in Los Angeles. “If you are going to a textile show such as Première Vision in France, you have to figure in how much extra it would cost for duties.”

On July 26, Trump stood with European Commission President Jean-Claude Juncker in the White House and announced that the European Union and the United States would start negotiating a free-trade agreement.

If this sounds like déjà vu, it is. Under the Obama administration, U.S. trade representatives in 2013 started to negotiate what was called the Transatlantic Trade and Investment Partnership, or TTIP.

“This is certainly a step in the right direction,” said Rick Helfenbein, president and chief executive of the American Apparel & Footwear Association, a Washington, D.C., trade group that represents major clothing manufacturers and importers.

In 2017, the United States exported $2.6 billion in textiles and apparel to the European Union while importing $5.5 billion in textiles and apparel from the EU.

When Trump took office in early 2016, he shelved those EU negotiations and said the United States would not be participating in the Trans-Pacific Partnership agreement between the U.S. and 11 Pacific Rim countries.

Eliminating tariffs would put U.S. companies on par with countries such as South Korea, which already has a free-trade agreement with the EU.

In addition, Japan just signed a free-trade agreement with the European Union, and in April, Mexico and the European Union agreed in principle to an updated free-trade agreement, putting U.S. manufacturers at a disadvantage.