How TPP Treats Textiles & Apparel


How TPP Treats Textiles & Apparel

By: Steve Craven

Hawaii, known for its aloha wear, has some proud and successful apparel companies. You can find Reyn Spooner shirts or Surfline board shorts in resort areas around the world. Some Hawaii companies make their apparel in Hawaii and export it. Others do their design work at home, but have the actual garments made elsewhere and shipped in. Some do both. Chapter 4 of the Trans Pacific Partnership may impact all of them, for positive or negative.

Virtually all textile and apparel customs duties are slated to go to zero for TPP-made goods. Most will go to zero on day one of the TPP coming into effect, though some will be phased in. Given that much of the apparel we see in our stores today comes from factories in India, China or other non-TPP countries, it is important to understand what makes a garment a TPP product to qualify for the lower duties.

Textiles and apparel must meet a higher rule-of-origin standard than most other products if they are to considered a TPP product. Not only must they be made in a TPP country, but the yarn or fabric of which apparel is made must also be sourced in the TPP. This is referred to as the “yarn forward” rule of origin. So, even if the majority of the final product’s value comes from within the TPP, it is not a TPP product unless its basic yarn or fabric is from a TPP country. Thus, a shirt made in Vietnam from Bangladeshi fabric does not qualify for TPP’s zero duties.

There is an exception to the yarn forward rule, to be used in the event that a particular type of yarn or fabric is not available from TPP sources. The agreement establishes a “short supply” list of yarns or fabrics that may be obtained outside the TPP countries, but may be incorporated in a final TPP product and still get the reduced tariffs. There is also a special provision that links Vietnam’s duty-free access to the U.S. market to use of U.S.-sourced fabric in Vietnam-made cotton pants.

Given the economic and political sensitivity of the textile and apparel industries, there are several safeguard clauses that go beyond the usual rules for movements of TPP-origin products. For instance, the United States will be able to temporarily suspend TPP-level tariffs – raising duties –  for textiles and apparel if imports from TPP countries injure or threaten to injure domestic textile or apparel producers.

While much of Chapter 4 deals with imports, the benefits of falling apparel tariffs in the other TPP countries should not be ignored. This could prove significant for Hawaii’s apparel exporters to buyers in Japan or Malaysia, where customs duties can currently go up to 30%.


Steve Craven advises companies on international business strategies and how to overcome problems encountered in foreign markets. He is a former consultant, American diplomat and a U.S. trade negotiator. He served as a Career Diplomat and Senior Foreign Service Officer, member of the U.S. Commercial Service, U.S. Department of Commerce. Mr. Craven also previously served as Chair of the Hawaii Pacific Export Council.