FTAs and preference programs remain underutilised. The top FTAs and preference programs among respondents—CAFTA-DR, NAFTA, and the U.S.-Jordan FTA—are utilized by more than 50 percent of respondents. The fourth-ranked program, AGOA, is utilized by 37 per cent of respondents.
The US fashion industry is a critical stakeholder in the Trans-Pacific Partnership (TPP), as close to 80 per cent of respondents expect implementation will impact their business practices. However, the restrictive rules in the agreement limit the potential.
Respondents currently source from five TPP partners: Vietnam, US, Peru, Mexico, and Malaysia. According to the study, 72 per cent of respondents indicated they will source more textiles and apparel from TPP partners after the implementation of the agreement. Additionally, 48 per cent expect to strategically adjust or redesign their supply chain based on TPP. But the restrictive rules limit TPP’s potential. In fact, 45 per cent of respondents say the TPP Short-Supply List should be expanded, and comments indicate the proposed “yarn-forward” Rule of Origin is a major hurdle to the industry realizing real benefits from TPP.
For companies to increase sourcing from the African Growth and Opportunity Act (AGOA), long-term renewal as well as renewal of the “third-country fabric” provision are critical, the study found.
Respondents currently source from five AGOA beneficiaries: Mauritius, Kenya, Lesotho, Madagascar, and South Africa. Around 37 per cent believe AGOA’s renewal will benefit their companies while 26 per cent will source more from AGOA if the program is renewed for a longer term.
American fashion companies continue to express interest in expanding sourcing in the US in the next two years as they further diversify their sourcing. However, the study found no evidence that companies are shifting their business models back to manufacturing. (SH)
Fibre2fashion News Desk – India
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