U.S. Signs Trade Agreements With Singapore, Chile
The new U.S. free-trade agreements recently hammered out with Chile and Singapore go into effect at the beginning of 2004, but they probably will not have a significant impact on the textile and apparel industries in California or the rest of the country.
“The rules for participating in these two free-trade agreements are not very user-friendly,” said Brenda Jacobs, the Washington, D.C., counsel for the U.S. Association of Importers of Textiles and Apparel. “They use a lot of the same rules from NAFTA [North American Free Trade Agreement]. If the participants are makers of yarn or fabric, it helps them. But Singapore and Chile don’t have major spinning and mill capacities. In order to get the full benefit of the agreement, they would have to use U.S. yarns and fabrics. And that is pretty darn expensive, particularly for Singapore.”
Congress approved the freetrade agreements, the first under the Bush administration and the Trade Act of 2002, in July.
On July 23, the House of Representatives approved the Singapore Free Trade Agreement by a vote of 272-155 and the Chile Free Trade Agreement by 270-156.
On July 31, the Senate approved the Chile agreement by a vote of 66-31 and the Singapore agreement by 66-32.
President George W. Bush is expected to sign the two agreements some time in August. They will go into effect on Jan. 1, 2004.
Singapore, which has 4.1 million residents and is the United States’ 11th largest trading partner, is not a major apparel or textile powerhouse. However, the country replaced Hong Kong as the major banking and investment force in Asia after the region reunited with China in 1997.
Chile, which has 15 million people and is the United States’ 34th export partner, does have a small textile and apparel industry.
“Chile’s apparel industry is very high-quality,” said Bruce Berton, director of international business consulting for Stonefield Josephson Inc. in Santa Monica, Calif. “It’s not T-shirt stuff but quality twill bottoms, woven shirts, business suits and denims. I don’t think their things will put us out of business.”
In 2002, Chile’s exports to the United States accounted for $3.2 billion of the country’s $17.4 billion in total exports. Principal exports were copper, salmon fillets, fruit, wood products and timber. U.S. exports to Chile—comprising mostly office/electrical equipment and parts (including computers), motor vehicles and small aircraft—totaled $2.8 billion.
Trade in raw materials from Chile will increase only slightly because the country already enjoys low tariffs on goods coming into the United States. But small manufacturers of goods such as wooden furniture and processed foods see a chance to establish a foothold in the U.S. market.
Under the U.S.-Chile pact, more than 85 percent of bilateral trade in consumer and industrial products, including textiles, becomes tariff-free when the agreement takes effect. The remaining tariffs will be phased out in four years. The tariffs and quotas on agricultural goods will be phased out over 12 years.
The U.S.-Chile pact makes U.S. goods more competitive in Chile because the South American country already has free-trade agreements with Canada and the European Union. Trade negotiators estimate that U.S. businesses have been losing at least $20 million a week to Canadian and European competition.
The United States is Singapore’s largest trading partner. Singapore exports $21 billion worth of goods, 20 percent of the country’s exports, to the United States. Major exports from Singapore to the United States include disk drives, computer parts and printers.
U.S. exports to Singapore, which totaled $18 billion last year, include aircraft and aircraft parts, electronic integrated circuits and micro assemblies. —Deborah Belgum
