Streamlined Textile Enforcement in the Trans-Pacific Partnership

1. Streamlined Textile Enforcement in theTrans-Pacific Partnership Mike Hubbard, National Council of Textile Organizations Lima Round, 23 October 2011 Better for Business, Better for the Region

2. Snapshot of U.S. Industry • The National Council of Textile Organizations represents the U.S. textile industry – fiber, yarn, fabric, finishing, and support industries. • 238,000 people work in the U.S. textile industry (Aug 2011), which supports more than 700,000 indirect jobs. • Another 154,400 are employed in the apparel industry, supporting more jobs indirectly.

3. Exports Grow with Trade Deals*

4. * when originating inputs required • Textile industries and exports grow with trade agreements when originating inputs are required. • Trade agreements and preference programs that allow third country yarns and fabrics see little originating textile inputs in finished products.

5. Customs Rules Are AVital Part of the Process Strong and effective customs procedures are necessary to enforce the rules of trade. The U.S. industry has learned what does and does not work with textile enforcement in trade agreements. • Paper-based systems are more subject to fraud • Paper-based systems limit the ability of customs authorities to act quickly when problems arise • Customs needs authority to act decisively

6. U.S. Is Largest Apparel Importer in TPP • U.S. textile and apparel imports totaled US$93.7 billion in 2010 • $17 billion of these imports claimed duty preferences • 47 percent of total duties collected in the U.S. are from textile and apparel imports • Average duty rate is 16 percent • 68,000 importers of textiles and apparel

7. Intra-TPP Trade • Opportunity for the entire region to grow together – create a single supply chain • TPP countries (excluding the U.S.) exported $299 million in textile fibers, yarns and fabrics (HTS 50-55, COMTRADE) to each other in 2009. • The U.S. imported $7.6 billion in textiles and apparel in 2010 from the TPP countries. • Large geographic area requires rules-based trade and effective enforcement.

8. Focus on Customs and Rules of Origin • A tariff shift (yarn forward) rule of origin is easier for Customs to enforce and more transparent than a value-added rule. • Use of electronic documentation and tracking removes much of the paperwork for shippers and importers.

9. Necessary Elements • Require importer statement of eligibility • Maintain list of active textile factories in all TPP countries • An active registry makes account management possible • Electronic documentation and recordkeeping so goods can be tracked easily throughout the supply chain and customs can quickly verify shipments • Also creates more uniformity in customs throughout the TPP region

10. Customs Authority • Repeat offenders who intentionally break the rules should be denied duty benefits • Allow customs to focus investigations and penalties on actual law breakers, not just the importer of record • Educate the industry on the process!

11. Conclusion • Trade rules based on a tariff shift concept (yarn forward) work most efficiently for business and customs • Strong and effective customs rules must be crafted to enforce the rules of trade, leveraging current technology, allowing trade to thrive and grow

12. Thank You Mike Hubbard National Council of Textile Organizations www.NCTO.org