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Analysts see challenges for Asian suppliers under USMCA

10
Oct '18
Asian manufacturers may find it tougher to sell in American markets under the United States-Mexico-Canada Agreement (USMCA) and may face long-term isolation in key industries, say some Asian analysts. Tighter country of origin rules and labour standards for the car and garment sector mean production could shift back to North America, affecting Asian businesses.

The new agreement announced recently includes tougher regulations that say raw materials used in garment manufacturing like sewing thread must be sourced from suppliers in one of the three signatory countries.

If supply chains shift towards North America, it will be harder for countries elsewhere to break into the North American market, a top Hong Kong-based English-language daily quoted Henry Gao, professor of trade policy at Singapore Management University, as saying.

The rules may limit Vietnamese firms’ ability to fill demand for inputs in the textile sector, says Maxfield Brown, head of Dezan Shira’s business intelligence unit for the Association of Southeast Asian Nations (ASEAN).

Vietnam exported about $60 million worth of sewing thread, pocketing fabric, narrow elastic bands and coated fabric to the three North American countries, according to Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm, providing legal, tax and operational advisory to international corporate investors.

China might also be affected by conditions that prevent USMCA members from signing deals with ‘non-market economy’ countries. (DS)

Fibre2Fashion News Desk – India


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