“Uncertainty” Over Trump Policies Makes Frenemies of Importers, Domestic Producers

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The domestic textile industry and apparel importers have often been on opposite sides of U.S. trade issues, but in today’s political climate they seem to have found some common ground–what they see as the confusing and corrosive policies of President Trump and his administration.

In a debate at the United States Fashion Industry Association (USFIA) Apparel Importers Trade & Transportation conference in New York on Wednesday, USFIA president Julia K. Hughes and Augustine Tantillo, president of the National Council of Textile Organizations, faced off in what would have been a more contentious debate in years past.

Tantillo, speaking on whether there is a Trump Doctrine on trade, specifically in the area of bilateral versus multilateral agreements, said, “I don’t know there really is a level of specificity on his views on trade. There are some broad outlines. Bilateralism over multilateralism is clearly an aspect, and there’s some points there that I would say make sense.”

[Read more about Trump trade policy: Trump’s Trade Policies Come Under Fire as Hurting US Standing]

For example, when the U.S. was negotiating the Trans Pacific Partnership, a 12-country deal from which Trump pulled the U.S. out, there were issues Tantillo saw as problematic with so many countries involved.

“So, there are some advantages to simplifying the process through a bilateral structure,” Tantillo said.

The domestic textile industry also agrees, at least on a theoretical level, with the administration on the issue of trying to bring the U.S. trade deficit into a more logical balance, Tantillo noted.

Hughes agreed that there is an emphasis from the White House on bilateral versus multilateral trade, “and almost ignoring or turning their back on the World Trade Organization.” But what has been seen, she said, “is an almost unhealthy focus on trade deficits as the major indicator of what trade means, and that represents a problem going forward because the solutions to trade deficits are not necessarily good for the economy.”

From her perspective, officials in the administration are “shockingly focused solely on manufacturing as part of the economy and not on the rest of the global value chain.”

“There are many jobs, from product development and design through logistics to the retail floor, that are related to trade that are really good U.S. jobs and those are more ignored than in past administrations in the current administration,” Hughes said.

What’s also difficult is to try to figure out what is real policy and what is political “bluster” coming out of the administration, she noted.

“I have to think at some point we will see actions that are reflected by that bluster,” Hughes said. “No administration wants to continue to not have victories in those areas where they set their sights, and for Trump it seems trade, anti-NAFTA, anti-China is really important.”

Tantillo agreed with that assessment and said, “We’re really learning on the job. There is no predictability. One thing that I do tell our members is that there’s nothing unique in what’s happening in the trade areas,” compared to other issues like health care. “It’s the same thing. People are confused and unsure about the direction,” so “Washington has truly been turned on its head.”

Tantillo said, to a degree, he can agree with someone coming in and questioning old approaches to trade and exploring new ways to do things.

“But I will also agree that the level of uncertainty and confusion has reached epic levels and has many people concerned,” he said.

On TPP, Hughes said she was pleased to see it going forward without the U.S., and, “I would like to think that if TPP really does go ahead and go into effect that the United States will eventually go back to the fold.”

On this Tantillo did not agree and said he was “a pessimist on TPP 11. I don’t think it’s going to happen” without the U.S. and its $19 trillion economy that is more than the other countries combined.

“From a U.S. standpoint, I don’t think the implications are that huge because the U.S. already has a free trade agreement with basically half of those counties,” he said. “I understand getting everyone at the same table, but from my standpoint there was as much detriment as there was potential benefit.”

On NAFTA, Tantillo stressed the implications are more serious.

“Pulling back from an agreement that’s been in place for 23 years has significant ramifications,” he said. “We support NAFTA, we support its continuation. It has changed the dynamic of the U.S. textile and apparel production chain.”

Through the North American Free Trade Agreement and the Central American Free Trade Agreement, Tantillo noted that the U.S. textile industry now partners with manufacturers in Mexico and Central America to supply yarn and fabrics.

“So, we want to see NAFTA continue and have expressed that vehemently to the Trump administration, and we’re glad to see that he has morphed his position from ‘rip it up’ to “let’s modernize it, let’s improve it,’” Tantillo said. “We do support modernization because we do think there are specific details within NAFTA that are disadvantageous to us as U.S. manufacturers.”

The implications for CAFTA, Tantillo noted, are also tricky because the NAFTA renegotiations could set a template for any attempt to make changes to CAFTA, and “it’s either going to be a roaring success or its going to be a disaster.”

Hughes and Tantillo agreed that there’s more hope that CAFTA, for which the U.S. holds a trade surplus, won’t be impacted or changed as much as NAFTA because there is no auto industry component to the Central American pact, and that’s been the biggest issue in the trilateral with Mexico and Canada.

“What I see as the issue in the NAFTA talks is that the U.S. has said ‘here are our proposals, take them.’ Commerce Secretary Ross has said the U.S. isn’t making concessions, we’re not negotiating, we’re telling our partners what we need, and that to me is not a way to get to an agreement,” Hughes said. “At some point, I think the Trump administration is going to say ‘we don’t have a deal, we’re walking away.’”

On trade with China, Tantillo said he “doesn’t have a lot of clarity,” and that Trump probably wants to be tougher on China’s trade policy, which he generally agrees with, but it’s tied up with the North Korean problem.

“What’s unfortunate is the Trump administration pulling back from the global stage and being a leader in multilateral negotiations and being a leader at the WTO,” Hughes said. “We’re going to find that’s going to put us in a weaker position over time.”

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