The National Council of Textile Organizations (NCTO) welcomed the deal on the United States-Mexico-Canada Agreement (USMCA) trade pact reached between the U.S. administration and House Democrats on Dec. 10. The House and Senate must vote on USMCA and all three countries must ratify the trade deal before it can be implemented, a recent news release reported.
NCTO reports that U.S. textile exports to Canada and Mexico—the industry’s top two export markets—totaled nearly $12 billion in 2018. NCTO maintains that the USMCA will have a positive impact on the U.S. textile industry, bolstering the $20 billion in annual trilateral textile and apparel trade.
NCTO worked with the administration during negotiations on USMCA and lobbied for several provisions incorporated in the trade deal that may strengthen trade as well as U.S. Customs enforcement, according to the organization.
The USMCA includes the following provisions aimed at helping to bolster business among the three countries:
- Creation of a separate chapter for textiles and apparel rules of origin with strong customs enforcement language.
- Stronger rules of origin for sewing thread, pocketing, narrow elastics and certain coated fabrics. Under NAFTA, these items can be sourced from outside the region. The USMCA ensures these secondary components are originating from the region.
- A provision that ensures a significant amount the Department of Homeland Security spends annually on clothing and textiles for the Transportation Security Administration is spent on domestically produced products.
The NCTO interviewed four U.S. textile CEOs to get their views on the new trade agreement. For New York-based Cotswold Industries, which manufactures and distributes technical barriers, knitted and woven industrial fabrics and non-woven substrates, the new provisions in the trade pact will not only help provide certainty and stability in the Western Hemisphere but will also secure new opportunities.
James W. McKinnon, CEO, Cotswold Industries Inc., said his company exports a wide variety of fabrics to Mexico that account for more than 30-40 percent of its total exports. “For us, the NAFTA agreement itself—and now the USMCA—is absolutely critical to maintaining the jobs and the business that we currently have, and that runs the gamut from automotive to home furnishings to apparel,” McKinnon said.
Hamrick Mills, Inc., a textile company based in Gaffney S.C., is well positioned to take advantage of several new provisions in USMCA. The company is a producer of greige woven fabrics in both poly/cotton blends as well as 100 percent cotton for home furnishings and apparel. The company has built a strong business around the current NAFTA and anticipates new and expanded business with USMCA, said Cameron Hamrick, president of the company.
“I think there is a big desire to have certainty in the North American region. There is less of a geo-political risk of operating in North America for the US market. Without that certainty, it could easily drive more big end users to Asia,” said Hamrick.
Greenwood Mills, Inc., a textile producer based in Greenwood, S.C. has built a significant workwear fabric export business to Mexico, and on the apparel side, the company makes finished blue jeans in Mexico. The company believes that an updated provision in USMCA that could be a potential benefit is the strengthened rule of origin for pocketing, which will require pocketing fabric to be produced in the NAFTA region, as opposed to allowing the use of fabric from other countries such as China, which is the case under NAFTA.
Inman Mills, based in Inman, S.C., is a textile producer of a diverse range of products, from cotton yarn to highly technical fire-retardant fabric. Norman Chapman, president and CEO of the company, says, “From a pure capacity point of view, USMCA would lead to an increase in volume and I think that would make companies stronger,” he said. Chapman said the textile industry is a lot smaller since NAFTA took effect 25 years ago, but he noted that it is important to have a better free trade deal for the region, because it creates more volume for the industry overall.