News on the go

VF Testifies in Support of growing NAFTA trade

VF Testifies in Support of growing NAFTA trade

According to apparel giant VF Corp , the US should seek to improve the North American Free Trade Agreement (NAFTA), instead of withdrawing from it. 

VF Corp, in a testimony added that any changes to textile and apparel rules should be aimed at increasing competitiveness and flexibility.

Randy Price, VF's vice president and managing director of product supply, has warned the 23-year-old trade deal is "critical" to its business,as companies and industry organisations attend public hearings ahead of formal re-negotiation talks on the deal between Canada, the US and Mexico next month.

 The apparel group, whose brands include Timberland, The North Face and Wrangler, pointed out that it depends on strong trade relationships across North America. With its own factories in Mexico, it sources and manufactures more products in the country than most of its peers, who predominately source in Asia.

"I see every day how NAFTA has supported an integrated textile and apparel supply chain that has helped VF grow and thrive and benefited our US suppliers," Price testified before the Office of the US Trade Representative (USTR). "NAFTA supports tens of thousands of VF jobs in the United States as well as tens of thousands of jobs at our US suppliers who grow the cotton and make the materials that go into our NAFTA-made products. NAFTA has been good for our industry."

The company employs 29,000-plus in the US and 38,000 including Mexico and Canada and over 70% of material used in VF's Mexico products originate from US companies, while almost 90m units of apparel were manufactured in Mexico for the US market in 2016. 

In terms of value, VF Corp says the customs value of its branded products imported into the US from Mexico in 2016 amounted to US$600m, creating "significant" demand for US materials and components that support US jobs and exports. It adds that additional duties VF would pay on NAFTA products that are zero-duty today amount to $110m per year.

In his testimony, Price recommended the US Administration use caution as they explore potential changes to aspects of the NAFTA textile and apparel rules and flexibilities. He added that while there is room for improvement in the agreement, any changes should increase competitiveness and flexibility. 

Price said, "We recommend focusing on growing NAFTA trade, not contracting it. If you look at potential changes to NAFTA, any changes you make will impact existing business and trade built over decades and impact jobs in the United States." 

Price has testified along with a host of business leaders, including those from the US Fashion Industry Association, the National Council of Textile Organizations and the American Apparel and Footwear Association.

NAFTA came into force in 1994. Its implementation brought the immediate elimination of tariffs on more than one-half of Mexico's exports to the US and more than one-third of US exports to Mexico.

To ensure that no harm is done to the existing trade relationship between the US, Canada, and Mexico retailers are encouraging the administration. They also want to keep the pact trilateral, conclude negotiations quickly, and provide a seamless transition for any changes that are agreed upon.

Meanwhile, the US apparel industry has urged the USTR to take a cautious approach to renegotiating NAFTA and ensure re-negotiation does no harm to existing supply chains.

Related Articles
Leave a Comment