White House Will Not Scrap NAFTA
What began as a scare for NAFTA adherents earlier this year when the Trump administration threatened to scrap the entire agreement seems to have abated recently. As some in the textile industry are breathing a sigh of relief, the current message from the White House seems to indicate that it will not scrap NAFTA, with the administration’s new direction offering a more conciliatory tone and talk moving away from abandoning NAFTA in favor of renegotiating American participation and presence within the well-established North American trade agreement between Canada, Mexico and the United States.
Much of the early rhetoric of the White House’s position on NAFTA had been about scrapping the 1994 NAFTA deal completely. As Trump himself put it to the Associated Press in April 2017, “I am very upset with NAFTA. I think NAFTA has been a catastrophic trade deal for the United States,” he continued, “it hurts us with Canada, and it hurts us with Mexico.” The recent about-face from the administration seems to have been largely welcomed by an American textile industry, their primary concerns are no longer what to do if Trump moves to scrap the deal entirely, but how to fix the many loopholes in NAFTA, enabling the wholesale exploitation of the advantages NAFTA provides North American-based textile companies.
SCRAP NAFTA LOOPHOLES
This optimistic view seemed evident from early on in the testimony of National Council of Textile Organizations (NCTO) CEO Augustine Tantillo before the U.S. Trade Representatives hearing on Negotiating Objectives Regarding Modernization of North American Free Trade Agreement with Mexico and Canada, which was presented in June 2017. Mr Tantillo demonstrated support for the administrations about-face on NAFTA and expressed solidarity with the possibility of renegotiating some of the loopholes apparent in an aging NAFTA agreement which he characterized favorably as having robust trade flows. However, Tantillo seemed to locate his principal concerns around the so-called loopholes in NAFTA, one example of which is the “rules of origin” regulations concerning textiles. In a recent press release the NCTO CEO presented a clear example where a garment, made from Chinese yarns and fabrics could, under the current NAFTA regulations, be cut and sewn in Mexico (for example), and then shipped duty-free to the U.S. or to Canada; a loophole which, seemingly defeats the purpose of NAFTA and shifts much of the benefit to those “willing to circumvent U.S. trade laws,” Tantillo asserted. The loopholes evident in the Tariff Preference Levels (TPLs) example above are just one aspect of how renegotiation and a little legal house-keeping could be of benefit to legitimate manufacturing concerns in NAFTA partner countries, by reinforcing the NAFTA commitment and doubling-down on ensuring that the benefits enshrined in NAFTA aren’t exported by unscrupulous producers willing to play the loopholes to their advantage.
Tantillo’s National Council of Textile Organizations represents more than half a million American textile workers across the entire spectrum of this sector, from the manufacturers of fibers, yarns and fabrics through to producers of finished garments, machinery producers and suppliers and affiliated stakeholders with a position in the industry. The NCTO’s recent press release is aligned with White House efforts to renegotiate the loopholes in NAFTA and to modernize its application.
SpectraTees is firmly committed to NAFTA compliance and regulation and their record for working within NAFTA regulations is exemplary. All of Spectra’s flagship garments, as well as many trusted favorites all meet NAFTA compliance and are made with American yarns by U.S. workers or, are produced in NAFTA partner Mexico, again, with U.S. produced yarns, with very few exceptions within their apparel range. The recent appearance of Augustine Tantillo at the USTR hearings seems to bode well, not only for SpectraTees, but for all U.S-based manufacturers who have been forced to compete with companies who have been exploiting the loopholes in NAFTA for their own benefit and to the detriment of legitimate manufacturing concerns. One remains hopeful for a positive and proactive outcome to the “sewing up” of the old NAFTA loopholes and more regulated forging ahead of this beneficial treaty between these North American neighbors.