Home Trade industry Industry Voices: Sustainable, Resilient, Fair: How Western Hemisphere Trade Policy Matters

Industry Voices: Sustainable, Resilient, Fair: How Western Hemisphere Trade Policy Matters

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Beth Hughes is Vice President of Trade and Customs Policy for the American Apparel & Footwear Association, where she oversees the AAFA Trade Policy Committee and the AAFA Customs Group. | Photo courtesy of AAFA

Beth Hughes, AFOA Vice President, Trade and Customs Policy | Thursday, July 14, 2022

The United States hosted the Summit of the Americas for the first time in four years from June 6-10 in Los Angeles with the central theme “Building a Sustainable, Resilient, and Equitable Future.” For the apparel and footwear industries, these words resonate strongly.

AAFA galvanizes the industry to rely on strong supply chain and sourcing commitments, including the highest ethical and responsible standards. And the resilience of our industry is constantly being tested, most recently by the pandemic. Our industry sets worker protection, worker safety and worker welfare in the region and globally to the highest standards.

As the Summit agenda was defined, it became clear that a key ingredient was missing: trade. Without trade, how can we achieve these goals? Trade is the tool that will encourage the shift of supply chains from Asia to the Western Hemisphere, create well-paying garment jobs in Central America to address the root causes of migration, and expand the textile and clothing trade between the United States and Central America.

In some cases, U.S. trade deals in the region lack the necessary incentives to encourage expansion of supply and production in the Western Hemisphere. For example, the lack of a sufficient variety of fibres, yarns and fabrics in the United States and Central America means that the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) n does not reach its potential.

A recent economic study, Close Knit: Migration and Apparel Production in Central America, conducted by Raymond Robertson at the Mosbacher Institute for Trade, Economics and Public Policy at Texas A&M University, found that the United States can tackle the root causes instability in Central America. creating jobs, reducing poverty and contributing to economic growth through international trade. Mr. Robertson estimates that at least one hundred thousand additional jobs will be created in the region if there is access to more yarns and fibers to increase garment production.

To help kick-start growth and investment in the region, specific fibres, yarns and fabrics may be designated as being in short supply now in the current trade agreement text. Such a bold move would not only protect existing US trade and investment in the region, but also set a clear demand signal to attract new textile investment in the United States and Central America.

Another policy that already exists in CAFTA-DR as well as other US trade preference programs like Haiti HOPE/HELP is stacking. The cumulation provision already allows certain materials from Mexico to be used in woven garments produced in the DR-CFTA countries to receive the duty-free benefit. By linking all U.S. trade agreements, trade and investment framework agreements, and trade preference programs, more robust cumulation would create a virtuous network between U.S. trading partners without allowing textile and apparel products using from Asia to benefit from the advantages of the CAFTA- agreement DR.

The Summit was a great day of unity for the industry. On June 7, three key industry commitments were announced:

• Gap Inc. plans to increase its sourcing in Central America by approximately $50 million per year for a total growth commitment of $150 million by 2025 as part of its strategy to increase the resilience of the supply chain by moving more production to the Western Hemisphere.

• SanMar will increase its purchases of products manufactured in northern Central America by $500 million by 2025. The increased capacity required for this growth will lead to the creation of an additional 4,000 full-time jobs at Elcatex, a manufacturer clothing company based in Honduras partly owned by San Mar.

• Unifi is making significant investments in the footprint capacity and innovation of its El Salvador operation and has committed to invest $15 million over the next five years to increase capacity, improve efficiency and reduce waste. energy consumption. The investment includes innovative new texturing technology that will increase the company’s polyester yarn production in El Salvador by 40% and support continued training and job growth in the region.

On June 8, President Biden announced “the Partnership of the Americas for Economic Prosperity, a historic new agreement to spur economic recovery and growth in our hemisphere and serve our workers.” This new partnership is an opportunity for the U.S. apparel industry to offer several policy solutions that correlate with the policy goals of the Biden administration, the U.S. Congress, the domestic apparel industry, and our partners across the region, including bringing supply chains closer together, curbing migration, creating meaningful jobs and providing a demand signal to generate long-term sustainable investment.

By tapping into policies like scarcity and stacking, our trade agreements can work better as tools to increase investment, trade and jobs in the Americas. American apparel companies are eager to work on the many announcements from the Summit of the Americas that lead to a sustainable, resilient and equitable future.

Beth Hughes is Vice President of Trade and Customs Policy for the American Apparel & Footwear Association, where she oversees the AAFA Trade Policy Committee and the AAFA Customs Group. She is also the main spokesperson for the Coalition for Economic Partnership in the Americas (CEPA), which was launched in November 2021.