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THE CLOTHESOURCE GUIDE TO APPAREL

TRADE REGULATIONS

2012 Edition:

March 2011

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http://www.clothesource.net/

1 | P a g e CLOTHESOURCE GUIDE TO APPAREL TRADE RULES 2012 EDITION

Contents Contents .......................................................................................................................... 1

Introduction..................................................................................................................... 1

1. The Basic Principles .................................................................................................. 3

1.1 General Philosophies ..................................................................................... 3

1.2 Rules and the World Trade Organisation....................................................... 3

1.3 The effect of Rules of Origin (ROO) ............................................................... 4

1.4 For poorer countries ...................................................................................... 5

1.5 Programmes offering reduced duty ............................................................... 5

1.5.1 Using country -specific preference programmes ......................................... 5

1.5.2 Using home-country raw materials .............................................................. 5

1.5.3 Special cases for more concessions .............................................................. 6

2. The major incentives and barriers: ............................................................................ 7

2.1 Countries with exceptional duty free access ................................................. 7

2.1.2 The Champion ............................................................................................ 7

2.1.3 Near-universal duty free access ................................................................. 7

2.1.4 Other Double barrelled Duty Free Concessions ........................................ 8

2.2 General access to the US ..................................................................................... 9

2.2.1. Duty free: no significant restriction ............................................................. 9

2.2.2 Duty free- raw material restrictions ........................................................... 10

2.2.3 Trade concessions ....................................................................................... 11

2.2.4 Trade barriers ............................................................................................ 11

2.3 General access to the EU .................................................................................. 12

2.3.1 Duty free no significant restriction ............................................................. 12

2.3.2. Duty-free Least developed countries ........................................................ 13

2.3.3 Duty free: Raw material restrictions ........................................................... 14

2.3.4 Trade Concessions ...................................................................................... 15

2.3.5 Trade Barriers .............................................................................................. 15

3. The major incentives and barriers: General access to other major importers .............. 16

3.1 Access to Japan .................................................................................................. 16

3.2 Access to Canada ............................................................................................... 16

3.3 Access to Australia ............................................................................................. 16

4. Producer-Countries: Current options ........................................................................ 17

5. Country-specific trade barriers and trade preference agreements ........................... 21

5.1 US Agreements ............................................................................................ 22

5.2 EU Agreements ............................................................................................ 35

A quick summary, more detailed than here, is at ............................................................ 35

5.2.1 Countries with unrestricted duty free access ............................................. 35

5.2.2 Other poor country duty free access .......................................................... 36

5.2.3 EU members ................................................................................................ 37

5.2.4 EU’s rich neighbours ................................................................................... 37

5.2.5 Western Balkans ......................................................................................... 38

5.2.6 Mediterranean neighbours ......................................................................... 39

5.2.7 Other developing countries ........................................................................ 40


5.2.8 Duty free for other developing countries ................................................... 41

5.2.9 Individual Free Trade Agreements .............................................................. 42

5.2.10 Turkey ....................................................................................................... 43

5.3 Japan .................................................................................................................. 44

5.3.1 LDC Rate ...................................................................................................... 44

5.3.2 ASEAN Rate ................................................................................................. 44

5.4 Canada ......................................................................................................... 45

5.4.1 LDCs .......................................................................................................... 45

5.4.2 Free Trade Agreements .............................................................................. 46

5.5 Australia ....................................................................................................... 47

5.5.1 LDC Rate ...................................................................................................... 47

5.5.2 ASEAN rate .................................................................................................. 47

6. Likely Future changes to current arrangements ....................................................... 48

6.1 The effect of the recession on rich-country preferences and barriers........ 48

6.2 Effects on poor-country barriers ................................................................. 48

6.3 Specific programmes mooted or under development ................................ 49

6.3.1 Rules of Origin .......................................................................................... 49

6.3.1.1 EU ......................................................................................................... 49

6.3.1.2 US ......................................................................................................... 49

6.3.2 Other plans ............................................................................................... 49

6.3.3 Economic Partnership Agreements ......................................................... 50

6.3.4 Free Trade Areas ...................................................................................... 50

6.3.5 Doha Development Round ....................................................................... 50

6.3.6 Expiry Dates: ............................................................................................ 50

6.3.7 Threatened status .................................................................................... 51

6.3.8 Other Barriers .......................................................................................... 51

7 Likely effect on sourcing destinations ..................................................................... 53

7.1 China ............................................................................................................ 53

7.1.1 General principles: ................................................................................... 53

7.1.2 China and the EU ...................................................................................... 55

7.1.3 China and the US ...................................................................................... 55

7.1.4 China and Japan ....................................................................................... 55

7.1.5 The net effect: .......................................................................................... 55

7.2 South East Asia ............................................................................................. 57

7.2.1 South East Asia and South East Asia ........................................................ 57

7.2.2 SE Asia and US .......................................................................................... 57

7.2.2.1 US and Trans Pacific Partnership ......................................................... 57

7.2.2.2 US and garment exporting countries ................................................... 58

7.2.3 SE Asia and the EU ................................................................................... 58

7.2.4 South East Asia and Japan........................................................................ 59

7.2.5 South East Asia and China ........................................................................ 59

7.2.6 South East Asia and Australia/New Zealand ............................................ 59

7.3 South Asia .................................................................................................... 60

7.3.1 India.......................................................................................................... 60

7.3.2 Bangladesh ............................................................................................... 60

7.3.3 Pakistan .................................................................................................... 60

7.3.4 Sri Lanka ................................................................................................... 60


7.4 Korea ............................................................................................................ 61

7.5 Africa ............................................................................................................ 61

7.6 Caribbean and Latin America ....................................................................... 61

7.6.1 The US and the Americas ......................................................................... 61

7.6.2 The EU and the Americas ......................................................................... 62

7.7 European Area ............................................................................................. 62

7.7.1 EU Enlargement ....................................................................................... 62

7.7.2 EU and immediate neighbours ................................................................ 62

7.7.3 Other Euro-neighbours. ........................................................................... 63

7.7.4 European area and other buying countries ............................................. 63

8 Summary of top hundred exporting countries’ duty concessions and those concessions’ value ......................................................................................................... 64

Appendix 1. Preference country lists .............................................................................. 70

Group 1: Generalised System of Preferences (GSP) ................................................ 70

Group 2: Least Developed Countries (LDCs) ............................................................ 70

Group 3: The EU ....................................................................................................... 71

Group 4: Association of South East Asian Nations (ASEAN) .................................... 71

Group 5: World Trade Organisation (WTO) ............................................................. 71

5.1 WTO Members ................................................................................................... 71

5.2 WTO Non-members ........................................................................................... 72

Appendix 2: EU Rules of Origin ....................................................................................... 73

Chapter 61 ................................................................................................................ 73

Chapter 62 ................................................................................................................ 74


Tables Table 1 Countries covered ............................................................................................. 1

Table 2 The best duty-free access to rich countries ...................................................... 7

Table 3 Exporting countries with significant duty concessions ..................................... 8

Table 4 Countries with origin-blind duty-free access to US .......................................... 9

Table 5 Countries with restricted duty-free access to US ........................................... 10

Table 6 Countries with other concessions for US access ............................................. 11

Table 7 Countries with unrestricted duty free access to EU ....................................... 12

Table 8 Least developed countries .............................................................................. 13

Table 9 Countries with restricted duty free access to EU ............................................ 14

Table 10 Duty rates and programmes for each producer country .............................. 17

Table 11 HELP, HOPE, and CPTDEA .............................................................................. 22

Table 12 America’s AGOA: Full Beneficiaries of the African Growth and Opportunity Act ................................................................................................................................ 23

Table 13 America’s AGOA: African Growth and Opportunity Act Partial .................... 24

Table 14 America’s ATPDEA (Andean Trade Promotion and Drug Eradication Act) ... 25

Table 15 America’s CBTPA: Caribbean Basin Trade Partnership Act ........................... 26

Table 16 America’s DR-CAFTA: Central America/Dominican Republic FTA ................. 27

Table 17 US Free Trade Agreements ratified as of February 15, 2011 ........................ 28

Table 18 Other American FTAs pending ...................................................................... 30

Table 19 US and the General System of Preference (GSP) .......................................... 31

Table 20 America’s Headnote 3a ................................................................................. 31

Table 21 US-Israel Free Trade Agreement ................................................................... 32

Table 22 America’s QIZ Programme :Qualified Investment Zone facilities in Jordan and Egypt ..................................................................................................................... 33

Table 23 NAFTA: North American Free Trade Area ..................................................... 34

Table 24 EU Economic Partnership Agreements ......................................................... 35

Table 25 Full EU membership ...................................................................................... 37

Table 26 European Free Trade Area ............................................................................ 37

Table 27 EU ABH Agreement ....................................................................................... 38

Table 28 Western Balkans Cumulation Matrix ............................................................ 38

Table 29 Non-EU Mediterranean countries ................................................................. 39

Table 30 Non EU Mediterranean Cumulation Matrix .................................................. 39

Table 31 The EU and the General System of Preference (GSP) ................................... 40

Table 32 The EU’s GSP+ programme ........................................................................... 41

Table 33 EU- Chile Agreement ..................................................................................... 42

Table 34 EU-Mexico Agreement .................................................................................. 42

Table 35 EU-South Africa agreement........................................................................... 42

Table 36 EU and Turkey ............................................................................................... 43

Table 37 Japan-LDC rates ............................................................................................. 44

Table 38 Japan-ASEAN rates ........................................................................................ 44

Table 39 Canada-LDC rates .......................................................................................... 45

Table 40 Canada FTAs .................................................................................................. 46

Table 41 Australia-LDC rates ........................................................................................ 47

Table 42 Australia-ASEAN rates ................................................................................... 47

Table 43 Top hundred exporting countries: concession summary ............................. 64


Table 44 Countries qualifying for GSP/GPT rates ........................................................ 70

Table 45 Least Developed Countries (LDCs) ................................................................ 70

Table 46 EU Members .................................................................................................. 71

Table 47 ASEAN members ........................................................................................... 71

Table 48 Countries in the WTO .................................................................................... 71

Table 49 Countries not in the WTO ............................................................................. 72


Introduction Why this Guide is more important than ever As the world’s clothing trade started slowing at the end of 2008, “growing protectionism” has become as widely spread a myth in the apparel trading community as “China will take over the world” was when quotas were removed at the end of 2004. In fact, the opposite seems to be the case. As the myths were becoming conventional wisdom, the EU and US were extending duty-free access to more and more countries. Japan offered duty-free access to its South East Asian neighbours: Australia slashed import duties and started on a process that would also eliminate import duty from its SE Asian neighbours by 2015, the EU in effect extended full duty-free access to almost all garments from Bangladesh, Cambodia and Laos and the US extended no-question duty free access to virtually all garments made in Haiti. The EU nudged further to eliminating all restraints on trade with the 20 countries surrounding it. In 2009, the US removed the remaining restraints on Chinese and Vietnamese apparel imports. And since then, the EU and US has started to discuss free trade areas with mainstream garment exporters such as India, Korea and Vietnam. Even on currency: while US and European politicians shout ever louder about the damage China’s “manipulation” of its currency is doing, both traders’ leaders quietly refuse to so anything that might rock relations. Already, the US and EU offer a complicated range of duty concessions, and retain limited capacity to reimpose outright limits on the amount of clothing or textiles that can be imported from a given country. Changing these concessions, or imposing new limitations, is a complicated, prolonged, rule-bound process. In our view, it is difficult to see any serious interest in imposing new restrictions. “Protectionism” in the EU and US is currently limited to a few subsidies, a bit of window-dressing (like the US ban on foreign-made airport security uniforms) and a modest amount of ill-informed complaining by a few lobbyists. Our judgement on this might prove wrong. But businesses concerned about the possibility of growing protectionism need to understand what is actually feasible. In sections 1-5 of this survey, we review the rules and concessions currently available, and the value these concessions offer. In Section 6, we review the processes for withdrawing these concessions or adding new restrictions. Whether they accept out judgement or not on this, businesses need to understand the very narrow limits within which US and EU governments can currently act. Countries featured This report looks at:

- Trade rules imposed by the US, EU, Canada, Japan and Australia - On all exporting countries. But we look in specific detail at the price

implications and the trading strength of:

P a g e SAMPLE FOR CLOTHESOURCE GUIDE TO APPAREL TRADE RULES 2012 EDITION

Introduction Why this Guide is more important than ever As the world’s clothing trade started slowing at the end of 2008, “growing protectionism” has become as widely spread a myth in the apparel trading community as “China will take over the world” was when quotas were removed at the end of 2004. In fact, the opposite seems to be the case. As the myths were becoming conventional wisdom, the EU and US were extending duty-free access to more and more countries. Japan offered duty-free access to its South East Asian neighbours: Australia slashed import duties and started on a process that would also eliminate import duty from its SE Asian neighbours by 2015. In 2009, the US removed the remaining restraints on Chinese and Vietnamese apparel imports. And since then, the EU and US has started to discuss free trade areas with mainstream garment exporters such as India, Korea and Vietnam Already, the US and EU offer a complicated range of duty concessions, and retain limited capacity to reimpose outright limits on the amount of clothing or textiles that can be imported from a given country. Changing these concessions, or imposing new limitations, is a complicated, prolonged, rule-bound process. In our view, it is difficult to see any serious interest in imposing new restrictions. “Protectionism” in the EU and US is currently limited to a few subsidies, a bit of window-dressing (like the US ban on foreign-made airport security uniforms) and a modest amount of ill-informed complaining by a few lobbyists. Our judgement on this might prove wrong. But businesses concerned about the possibility of growing protectionism need to understand what is actually feasible. In sections 1-5 of this survey, we review the rules and concessions currently available, and the value these concessions offer. In Section 6, we review the processes for withdrawing these concessions or adding new restrictions. Whether they accept out judgement or not on this, businesses need to understand the very narrow limits within which US and EU governments can currently act. Countries featured This report looks at:

- Trade rules imposed by the US, EU, Canada, Japan and Australia - On all exporting countries. But we look in specific detail at the price

implications and the trading strength of:

Table 1 Beneficiary countries surveyed

Albania

Argentina

Armenia

Australia

Bahrain

Bangladesh

Belarus

Bolivia

Bosnia

Botswana

Brazil

Brunei

Bulgaria

Burma

Cambodia

Canada

Cape Verde

Chile

China

Colombia

Costa Rica


Croatia

Cyprus

Czech

Dom Rep

Ecuador

Egypt

El Salvador

Estonia

Ethiopia

Ghana

Guatemala

Haiti

HK

Honduras

Hungary

India

Indonesia

Iran

Israel

Jamaica

Japan

Jordan

Kazakhstan

Kenya

Korea

Laos

Latvia

Lebanon

Lesotho

Lithuania

Macao

Macedonia

Madagascar

Malawi

Malaysia

Malta

Mauritius

Mexico

Moldova

Mongolia

Montenegro

Morocco

Namibia

Nepal

Nicaragua

North Korea

Norway

Oman

Pakistan

Panama

Peru

Philippines

Poland

Qatar

Romania

Russia

Saipan

Serbia

Singapore

Slovakia

Slovenia

South Africa

Sri Lanka

Swaziland

Switzerland

Syria

Taiwan

Tajikistan

Tanzania

Thailand

Tunisia

Turkey

Turkmenistan

UAE

Ukraine

USA

Uzbekistan

Vietnam

Venezuela

How to use this Guide The rules surrounding duty, quotas and all the other techniques for encouraging and discouraging trade are complicated. This Guide does not attempt to spell every sub clause of every rule out in detail. It:

- Chapter 1 sums up the general principles of trade incentives and barriers

including the “double-barrelled” countries which potentially have duty-free access to both the EU and US.

- Chapter 2 shows, as of March 2010, which countries among the major apparel suppliers have particular barriers or incentives for entry to the US and EU. The text is hyperlinked to the appropriate detailed explanation in Chapter 5

- - Chapter 3 shows, as of March 2010,, which countries among the major

apparel suppliers have particular barriers or incentives for entry to the other major importers.

- Chapter 4 analyses the impact of these trade rules and countries’ overall pricing structures on each supplying country’s total competitiveness, and


summarises the access arrangements enjoyed by every trading nation in the world to the EU and US

- Chapter 5 explains how the most important principles underlining each programme the EU or US discriminate for and against individual countries, and gives programme-by-programme references to websites with more detailed information still

- Chapter 6 reviews the likelihood of changes to the programmes from 2010

- Chapter 7 reviews the net effect on individual sourcing locations - Chapter 8 summarises

The information needs to be treated with one major caution A caution To aid decision-making, we have simplified the rules surrounding access to the EU and US. In many cases this simplification risks someone slightly misunderstanding a key point, and we strongly recommend that:

- Understanding is checked before being acted upon - In some special cases, specialised advice is sought on the ground before

taking any decisions The rules surrounding duty-free access are complex. To be effective, they often rely on agreements between third governments (such as between Mexico and Guatemala, or Tunisia and Turkey) that the EU or US has no influence over - and often no interest in. While Clothesource has exercised every best endeavour to ensure the information here is correct as at April 10, 2009 we cannot take responsibility for its accuracy, and the information is supplied on this basis. We do not just say this to avoid legal liability. In a number of cases, the effectiveness of duty-optimising strategies depends on the progress of minor administrative measures through under-reported legislatures. It is important traders check that each country involved in as transaction is able to produce the appropriate documentation to enable the next stage to get the tax treatment intended


1. The Basic Principles 1.1 General Philosophies

Major importing countries have a standard rate of import duty on any product they import. They will have a different rate for – say – computers from the rate for blouses, and often have a range of different rates for different kinds of blouse. But each will have a standard rate for, say, a blouse made from man made fabrics (MMF). They will, however, have concessionary rates for certain kinds of country – and occasionally punitive rates for certain countries they have a problem with. How they select those favoured and punished countries is subject to rules they have all agreed at the World Trade Organisation (see 1.2 below). Most commonly, they will:

- Have a full rate (in the case of the EU, 12% on MMF blouses) - Have a lower rate (in the EU’s case for MMF blouses, 9.6%) for most

developing countries (such as India or Thailand) under a WTO rule called the Generalised System of Preferences (GSP). China rarely qualifies for this: the US, Japan and Australia and do not have a GSP concessionary rate on textiles or clothing

- In most cases, offer duty-free access to the UN’s list of the world’s 49 poorest countries, known as Least Developed Countries, or LDCs. Though most of these are unable to provide significant quantities of clothing, LDCs include Bangladesh, Laos, Cambodia, Haiti, Burma (suspended from some countries’ LDC rates), Nepal, Lesotho, Madagascar, Uganda, Tanzania and Ethiopia, and these all have export-oriented garment industries. The US does not routinely automatically offer duty-free access to all LDCs, though a number of LDCs get US duty-free access under geographic preference programmes

- Offer duty-free access, or further reductions, to countries with which they have special arrangements

1.2 Rules and the World Trade Organisation

The overwhelming majority of the world’s clothes are exported from countries belonging to the World Trade Organization (WTO) to other members. All agree to:

1.3 The effect of Rules of Origin (ROO)

- All of these concessionary rates depend on the raw materials used in garment production meeting detailed Rules of Origin (ROO). In an industry where most clothing uses raw materials imported from another country (and often from many other countries), each importing country has complex rules about what raw materials have to be used to make the garment eligible for concessionary rates. Rules of Origin can vary from garment to garment, and/or between garment exporting countries. A garment made in say, Bangladesh but not meeting the importing country’s Rules of Origin will usually need to pay the full import duty Typically, these rules are designed either to protect the importing country’s fabric and yarn industry, or to prevent Chinese fabric from


getting access to an importing country by being made up in another country. For most poorer countries – though there are some crucial exceptions – the ROO imposed by the US, EU and Japan are currently complicated, and generally devised to exclude garments made from Chinese raw materials. Australia and Canada, however, have simpler rules that make it possible, with some research, to get duty free access with garments made in the very poorest countries (like Cambodia or Bangladesh) with almost any raw materials

1.4 Programmes offering reduced duty

There are three different ways a garment can get duty-free, or duty-reduced, access to an importing country These options are explained in the sources given after each major programme. To help easy understanding of the overall picture, we do not go through these details in this survey, but provide references to where fuller information can be found


2. The major incentives and barriers:

2.1 Countries with exceptional duty free access Some countries obtain duty-free access to the EU, US, Japan, Canada and Australia. There is also a different, but heavily overlapping, group which gets duty-free access to the EU and US using broadly identical raw materials

2.1.1 Near-universal duty free access

This group of countries has significant garment-making capacity, and gets duty-free access to the US, EU, Canada, Japan and Australia. For this group, duty-free status for the US and EU is not affected at all by the source of raw materials, and Canadian and Australian rules allow substantial content from China or South East Asia (see details at Australia and Canada LDC pages) :

Table 2 The best duty-free access to rich countries

Country EU Programme

US Programme

Duty-free in EU and US if fabric from

Duty-free in Canada, Australia, Japan if:

xxx yyy yyy explained explained


2.1.2 Widespread duty-free access

These countries have significant garment-making capacity, and get duty-free access to most rich countries, providing ROO are met

Table 3 Exporting countries with free access to most customers

EU Duty Free?

US Duty Free?

Japan Duty Free?

Canada Duty Free?

Aus Duty Free?

xxx yyy yyy yyy Yyy yyy


2.1.3 Other Double barrelled Duty Free Concessions

An overlapping group has a significant apparel industry, and is eligible for duty-free access to both the EU and US, provided ROO are met. Under some circumstances, the same raw materials may be used for both the US and EU, but generally ROO rules differ. None of this group gets duty-free access to Japan or Australia, though some do to Canada

Table 4 Exporting countries with significant duty concessions

EU Programme

US Programme

Zero rated in both EU and US if fabric from

Canada DF?

xxx yyy yyy yyy yyy


2.2 General access to the US The US charges xx% on an MMF blouse

2.2.1. Duty free: no significant restriction

Table 5 Countries with unrestricted duty-free access to US

Grouping Major Trading Partners

Duty free conditions

Agreement giving this status, and topline summary of limitations or possible major modifications

xxx yyy yyy yyy


2.2.2 Duty free- raw material restrictions

Clothes from xxx other groups of countries have duty-free access to the US, provided they are made from raw materials from the country concerned or their neighbours.

Table 6 Counties with restricted duty-free access to US


Duty free conditions

Agreement giving this status, and topline summary of limitations or possible major modifications

xxx yyy yyy yyy


2.2.3 Trade concessions

Table 7 Countries with other concessions for US access

2.2.4 Trade barriers

The US continues to charge government agencies OTEXA and USITC to monitor Chinese textile imports


Concession/Conditions Agreement giving this status, and topline summary of limitations or possible major modifications

xxx yyy yyy yyy


2.3 General access to the EU The EU charges 12% on an MMF blouse 2.3.1 Duty free no significant restriction

The EU automatically gives virtually border-free and documentation movement of goods among its 27 members and the three EFTA members. But there are fifteen others around the world with substantial garment making facilities

Table 8 Countries with unrestricted duty free access to EU


Concession/ Conditions

Agreement giving this status,

xxx yyy yyy yyy


2.3.2 Duty free: Raw material restrictions

Table 9 Countries with restricted duty free access to EU

Four groups of countries get duty-free access with clothes made from local raw materials, or from raw materials from countries immediately surrounding them. 2.3.3 Trade Concessions

Most other countries in the world are eligible for reduced duty (typically 9.6% rather than 12% on an MMF blouse) under the Generalised System of Preferences (GSP). 2.3.4 Trade Barriers

In theory, the EU can impose quotas on these non-members of the WTO:

Grouping Major Trading Partners Conditionality Agreement giving this status, and topline summary of limitations or possible major modifications

xxx yyy yyy yyy


3. The major incentives and barriers: General access to other major importers 3.1 Access to Japan 3.2 Access to Canada 3.3 Access to Australia Australia imposes no quotas


4. Producer-Countries: Current options The table below shows, for the 100 leading garment exporting countries:

- Its share in 2007 of all apparel sales (by volume) to Japan, the US and EU combined (JUSEU), as well as its share of sales to the EU and US

- Its price competitiveness as an index. China’s index of 70 to the EU means the average price of a weighted basket of clothing exported to the EU in 2006 was 75% of the average price of the same basket from all exporting countries

- Minimum duty payable on a woven MMF blouse if the most favourable duty preference programme is used

- The most favourable programme available for each exporting country to the EU and US. Those programmes offering duty-free access are in bold

This table shows relative pricing from each exporting country (world average = 100), assuming the lowest possible import duty is imposed.

Table 10 Duty rates and programmes for each producer country

EU US

Share Price Min Duty Programme Share Price

Min Duty Programme

Albania

Argentina

Armenia

Australia

Bahrain

Bangladesh

Belarus

Bolivia

Bosnia

Botswana

Brazil

Brunei

Bulgaria

Burma

Cambodia

Canada

Cape Verde

Chile

China

Colombia Costa Rica

Croatia


EU US


Min Duty Programme

Cyprus

Czech

Dom Rep

Ecuador

Egypt

El Salvador

Estonia

Ethiopia

Ghana

Guatemala

Haiti

Honduras

Hong Kong

Hungary

India

Indonesia

Iran

Israel

Jamaica

Japan

Jordan

Kazakhstan

Kenya

Laos

Latvia

Lebanon

Lesotho

Lithuania

Macao

Macedonia

Madagascar

Malawi

Malaysia

Malta

Mauritius

Mexico

Moldova

Mongolia

Montenegro


EU US


Min Duty Programme

Morocco

Namibia

Nepal

Nicaragua

North Korea

Norway

Oman

Pakistan

Panama

Peru

Philippines

Poland

Qatar

Romania

Russia

Saipan

Serbia

Singapore

Slovakia

Slovenia

South Africa

South Korea

Sri Lanka

Swaziland

Switzerland

Syria

Taiwan

Tajikistan

Tanzania

Thailand

Tunisia

Turkey

Turkmenistan

UAE

Ukraine

USA

Uzbekistan

Venezuela


EU US


Min Duty Programme

Vietnam

*Suspended from programme concerned


5. Country-specific trade barriers and trade preference agreements

This section provides greater detail on how the major importers’ key preference (and discrimination) agreements work A typical concession– for example a US Free Trade Agreement (FTA) – will allow imports from a partner country under concessionary terms, usually provided:

- The import concerned conforms to certain rules of origin (that is, there will often be limits on where raw materials can be sourced from). Sometimes these rules allow cumulation (that is, raw materials may be sourced from another partner with as free trade agreement)

- The country conforms to some stipulated partner conditionality (that is, the country has certain general rules and ensures they are adhered to)

- In some cases, the import concerned conforms to some product conditionality (there may be some restrictions on the eligibility of some kinds of product)

- Or the concession may be limited to a certain volume of the import concerned: the tariff preference level

- In the descriptions below, we summarise each agreement under each of the headings above.


5.1 US Agreements

US trade sanctions: The US forbids virtually any trade with…. Barriers invoked against the rest of the world: 5.1.1 Low-income Africa

Table 11 America’s AGOA: African Growth and Opportunity Act

Countries

Benefit

Duty

Lasts till

Rules of Origin

Partner Conditionality

Quantitative Limits

Usage

Further Information

Comments


5.1.2 Higher income Africa

Table 12 America’s AGOA: African Growth and Opportunity Act Partial

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.1.3 Andean Countries

Table 13 America’s ATPDEA (Andean Trade Promotion and Drug Eradication Act)

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.1.4 Caribbean countries

Table 14 America’s CBTPA: Caribbean Basin Trade Partnership Act

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information


5.1.5 Central America

Table 15 America’s DR-CAFTA: Central America/Dominican Republic FTA

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.1.6 Free Trade Agreements

Table 16 US Free Trade Agreements ratified as of November 1, 2008

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments

Morocco has an item-specific quota for duty-free access of certain apparel categories to the US, irrespective of where the raw materials come from. The table showing the amounts per item is on the following page

Square Metre Equivalents, per category, permitted duty-free admission with non-US, non-African, fabric


Table 17 Other American FTAs pending

Countries

Benefit

Duty

Lasts till

Rules of Origin Partner Conditionality

Quantitative Limits

Usage

Further Information

Comments


5.1.7 Other developing countries

Table 18 US and the General System of Preference (GSP)

Full Apparel Concessions:

Partner Benefit:

5.1.8 Saipan

Table 19 America’s Headnote 3a

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.1.9 Haiti

Table 20 America’s HOPE (Hemispheric Opportunity through Partnership Encouragement) Act

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments

5.1.10 Israel

Table 21 US-Israel Free Trade Agreement

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information


5.1.11 Jordan and Egypt

Table 22 America’s QIZ Programme :Qualified Investment Zone facilities in Jordan and Egypt

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.1.12 Mexico and Canada

Table 23 NAFTA: North American Free Trade Area

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.2 EU Agreements

A quick summary, more detailed than here, is at 5.2.1 Western Balkans

Table 24 EU ABH Agreement

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments

5.2.3 Countries with unrestricted duty free access

Table 25 EU Economic Partnership Agreements

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.2.4 Other poor country duty free access

Table 26 The EU’s Everything But Arms programme

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.2.5 EU members

Table 27 Full EU membership

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments

5.2.6 EU’s rich neighbours

Table 28 European Free Trade Area

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.2.7 Mediterranean neighbours

Table 29 Euromed countries

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.2.8 Other developing countries

Table 30 The EU and the General System of Preference (GSP)

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information


5.2.9 Duty free for other developing countries

Table 31 The EU’s GSP+ programme

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments

5.2.10 Individual Free Trade Agreements


Table 32 EU- Chile Agreement

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments

Table 33 EU-Mexico Agreement

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments

Table 34 EU-South Africa agreement

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.2.11 Turkey

Table 35 EU and Turkey

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.3 Japan Japan’s basic duty on an MMF blouse is xx%, though for WTO member countries this reduces to yyy%%. Japan ‘s GSP reduction on most garments is zzz.

5.3.1 LDC Rate

Table 36 Japan-LDC rates

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments

5.3.2 ASEAN Rate

Table 37 Japan-ASEAN rates

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


5.4 Canada Canada’s basic duty is xx% on an MMF blouse: its reduced GSP rate for garments is yyy

5.4.1 LDCs

Table 38 Canada-LDC rates

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments

5.4.2 Free Trade Agreements

Table 39 Canada FTAs

Countries Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information


5.5 Australia

Australia’s basic duty on an MMF blouse is xx%, dropping to yy in 20xx. Duty on garments or textiles for GSP countries is aa% 5.5.1 LDC Rate

Table 40 Australia-LDC rates

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments

5.5.2 ASEAN rate

Table 41 Australia-ASEAN rates

Countries

Benefit

Duty

Lasts till

Rules of Origin


Quantitative Limits

Usage

Further Information

Comments


6. Likely Future changes to current arrangements

From pages 47-51 we review in detail likely future changes, looking at:

6.1 The effect of the recession on rich-country preferences and barriers It is worth repeating that there is no evidence of any increase in rich-country protectionism during the recession against developing-country garment and textile imports. Between the collapse of Lehman Brothers in autumn 2008 and March 10, 2010:

6.2 Specific programmes mooted or under development 6.2.1 Rules of Origin

Most poorer countries have limited raw material availability. The EU and US are prepared to encourage a garment assembly business in neighbouring countries, or in overseas countries for which they feel some responsibility. But they are rarely prepared to undermine their upstream textile businesses by allowing Chinese or Taiwanese fabric in through the back door, and their Rules of Origin restrict the origin of raw materials used in garments getting duty-free access.

6.2.1.1 EU

6.2.1.2 US

6.2.1.3 General Lessons

6.2.2 Other plans

6.2.3 Economic Partnership Agreements

6.2.4 Free Trade Areas

6.2.5 Doha Development Round

6.2.6 Expiry Dates: 6.2.7 Threatened status

6.2.8 Other Barriers


7 Likely effect on sourcing destinations From pages 51-61 we look in detail at the effect of Customs rules, and their likely changes, on:

7.1 China 7.1.1 General principles:

7.1.2 China and the EU

7.1.3 China and the US

7.1.4 China and Japan 7.1.5 The net effect on China

7.2 South East Asia

7.2.1 South East Asia and South East Asia

7.2.2 SE Asia and US

7.2.2.1 US and Trans Pacific Partnership

7.2.2.2 US and Garment exporting countries

Vietnam Other garment exporters

7.2.3 SE Asia and the EU 7.2.4 South East Asia and Japan

7.2.5 South East Asia and China

7.2.6 South East Asia and Australia/New Zealand

7.3 South Asia 7.3.1 India

7.3.2 Bangladesh

7.3.3 Pakistan

7.3.4 Sri Lanka

7.4 Korea


7.5 Africa

7.6 Caribbean and Latin America 7.6.1 The US and the Americas

7.6.2 The EU and the Americas

7.7 European Area

7.7.1 EU Enlargement

7.7.2 EU and immediate neighbours

Euro-Mediterranean cumulation The table below shows countries around the Mediterranean whose raw material may be used in another to gain duty free access to the EU.

Table 42 EU Cumulation around the Mediterranean

Western Balkans cumulation The table below shows countries in the Western Balkans whose raw material may be used in another to gain duty free access to the EU.

Table 43 EU Cumulation in the Western Balkans

7.7.3 Other Euro-neighbours.

7.7.4 European area and other buying countries

8 Summary of top hundred exporting countries’ duty concessions and those concessions’ value

Table 44 Top hundred exporting countries: concession summary

Import duty on MMF blouse

US Min

US max

EU Min

EU max

Japan Min

Japan Max

Canada Min

Canada Max

Aus Min

Aus Max

Albania

Argentina

Armenia

Australia

Bahrain



US Min

US max

EU Min

EU max

Japan Min

Japan Max

Canada Min

Canada Max

Aus Min

Aus Max

Bangladesh

Belarus

Bolivia

Bosnia

Botswana

Brazil

Brunei

Bulgaria

Burma

Cambodia

Canada

Cape Verde

Chile

China

Colombia

Costa Rica

Croatia

Cyprus

Czech Republic



US Min

US max

EU Min

EU max

Japan Min

Japan Max

Canada Min

Canada Max

Aus Min

Aus Max

Dominican Republic

Ecuador

Egypt

El Salvador

Estonia

Ethiopia

Ghana

Guatemala

Haiti

Hong Kong

Honduras

Hungary

India

Indonesia

Iran

Israel

Jamaica

Japan

Jordan

Kazakhstan



US Min

US max

EU Min

EU max

Japan Min

Japan Max

Canada Min

Canada Max

Aus Min

Aus Max

Kenya

South Korea

Laos

Latvia No change

foreseeable Lebanon

Lesotho

Lithuania

Macao No change

foreseeable Macedonia

Madagascar

Malawi

Malaysia

Malta

Mauritius

Mexico

Moldova

Mongolia

Morocco

Namibia



US Min

US max

EU Min

EU max

Japan Min

Japan Max

Canada Min

Canada Max

Aus Min

Aus Max

Nepal

Nicaragua

North Korea

Oman

Pakistan

Panama

Peru

Philippines

Poland

Qatar

Romania

Russia

Saipan

Serbia

Singapore

Slovakia

Slovenia

South Africa

Sri Lanka

Swaziland



US Min

US max

EU Min

EU max

Japan Min

Japan Max

Canada Min

Canada Max

Aus Min

Aus Max

Switzerland

Syria

Taiwan

Tajikistan

Tanzania

Thailand

Tunisia

Turkey

Turkmenistan

UAE

Ukraine

USA

Uzbekistan

Vietnam


Appendix. Preference country lists Group 1: Generalised System of Preferences (GSP)

Table 45 Countries qualifying for GSP/GPT rates

, Group 2: Least Developed Countries (LDCs)

Table 46 Least Developed Countries (LDCs)

Group 3: The EU

Table 47 EU Members

Group 4: Association of South East Asian Nations (ASEAN)

Table 48 ASEAN members

Group 5: World Trade Organisation (WTO) WTO membership means quotas cannot be imposed. It also means a fifth off Japan’s import duty. In practice, it is easier to note which countries are not members 5.1 WTO Members

Table 49 Countries in the WTO

5.2 WTO Non-members

Table 50 Countries not in the WTO

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