Economic Integration

Weiqiao Textile Company Limited, the world's largest cotton textile producer, has announced its first half 2012 financial position, and the results reaffirm news reports this summer detailing how the Chinese economy has struggled across many sectors.

The company’s exports continued to rise, albeit at a slower pace than during the same six months in 2011, but weak demand throughout the global textile market held revenue to remembi 7,709 million, about 4 percent below the January-June 2011 period.  Gross profit fell to remembi 419 million, which representated a decline of no less than 58.8 percent on the year.

In its semi-annual financial report Weiqiao noted that the textile industry in China was significantly affected by the weak global macroeconomic situation. Factors such as soft demand in both overseas and domestic markets, the cotton price gap between domestic and overseas markets, and intensified international competition caused a decline in the textile industry in China. Consequently, the entire industry experienced a slowdown in production growth and domestic sales, greater downward pressure on exports and declining earnings.

The report noted that exports of China's textile products during the first six months of the year continued to increase, though at a much lower rate. It cited statistics from the Administration of China Customs that showed exports of textile products in the first half of 2012 were approximately 1.3 percent higher, compared with the corresponding period of 2011, at around US$46.5 billion. The growth rate declined by approximately 27.5 percentage points from approximately 28.8 percent in the corresponding period of 2011.

During the first half of 2012, Weiqaio's production volume of cotton yarn, grey fabric and denim were approximately 206,000 tonnes, 498 million meters and 42 million meters, respectively, which represented a declince of about 37.6 percent, 14.1 percent and 16.0 percent, compared with the corresponding period a year earlier. 

Commenting on the first half of 2012 interim results performance, Ms. Zhang Hongxia, Chairman of Weiqiao Textile, said: 

"During the period, cotton prices in the domestic market remained at a low level while declining sharply in overseas markets, making overseas cotton much cheaper than domestic cotton, which led to greater competition pressure on the domestic textile industry. Therefore, it was difficult to lift the prices of textile products, which significantly affected the Group's overall profitability."

In the future, Ms. Zhang said the company will continue to face challenges, but there is reason for a modicum of optimism.

"Looking ahead, we expect the global economy to continue to pose challenges, and this will likely cause demand from international markets to remain weak,” she said. “On the domestic front, surging labor and other production costs, funding difficulties, and other issues are not expected to be resolved in the near future. The trend for the cotton price gap between domestic and overseas markets remains uncertain. As such, the operating environment for the textile industry in China will most likely remain challenging. 

“With growing domestic consumption, demand for various middle and high-end textile products and apparel is expected to grow. And following recent reserve requirement ratio and interest rate cuts, it is expected that more favorable policies to stabilize the economy will be issued in the second half of 2012, which would support the steady development of the textile industry in China,” said Ms. Zhang. 

“Although the operating environment for China's textile industry in the second half of 2012 will remain challenging, we believe the industry will show low, but positive growth."

In it’s latest issue, TextileWorld.com’s Associate Editor Sarah Thomasson reports on a survey of corporate executives throughout the apparel supply chain, which covered a variety of issues contributing to success or failure.

Among those, officials acknowledged that technology has become a critical aid in consumer purchasing, with goods available at any time via the internet.  The use of technology also has contributed to the following:

• Product research on-line by the consumer,
• Price comparison in retail stores with the use of smart phones,
• Immediate product feedback (positive and negative) by consumers, and
• The use of video-sharing and social networking websites that can be advantageous or disadvantageous.

Meantime, unlimited selection of products vying for the consumer dollar means brands and retailers must understand buyers and their desires.  Additionally, American consumer selectivity and attention to value have grown in recent years, as well as emphasis on sustainability across the supply chain and the desire to purchase products made in the United States.

Ms. Thomasson reports that attention to strict inventory control has become critical in the retail community, which has affected the entire supply chain.  Consequently, this has produced a greater need for flexibility and focus on consumer trends.  Speed of supply has become paramount.

Partnering along the textile and apparel supply chain has become a relatively new innovation as brand manufacturers and retailers recognize the improvement in cost/benefit ratios.  

With respect to product sourcing, rising labor and transportation costs in Asian countries, which for years have enjoyed the position of No. 1 supplier to the US and Europe, have prompted companies on the two continents to look closer to home.  Moreover, ‘local’ sourcing aids in the monitoring of sustainability at the manufacturing level.

Finally, the article notes that those along the supply chain who embrace change are better positioned to succeed over the long term.  Although there are those who choose to react to events as they occur along the supply chain, who will not realize the greatest returns, the broader outlook is positive, and enthusiasm continues to grow.

The entire articles can be read here.

Questions:  In addition to the internet, what other technological or other innovations are on the horizon that will help improve efficiencies along the supply chain?

Considering the high cost of labor was one reason textile and apparel manufactures in the US moved sourcing to Asia and Indian Sub-continent, what are the chances latest efforts to source locally will succeed?

An organization within the federal government charged with strategic, long-term thinking  is in the process of completing a comprehensive report aimed at the state of the world in 2030.  Some of the forecasts, revealed by Mr. Christopher Kojm, head of the National Intellengence Council (NIC), may appear overly optimistic.

Speaking at the Aspen Security Conference in Colorado last week, Mr. Kojm suggested that global poverty could almost vanish, as the middle class doubles to 2 billion people worldwide and the 1 billion people around the world who currently live on less than US$1 per day is halved.

"We see the rise of the global middle class going from one to two billion," Mr. Kojm told forum participants in a preview of the report.  The unclassified version is scheduled for release by the end of the year, according to the Associated Press, which reported from the forum.

"Even if some of the most dire predictions of economic upheaval" in the coming years prove accurate, the NIC still foresees "several hundred million people...entering the middle class," he said.

Moreover, Mr. Kojm suggested that this rising middle class will have little tolerance of authoritarian regimes.

"Governance will be increasingly difficult in countries with rising incomes," he said, noting that "middle-class people have middle-class values and aspirations" for greater individual empowerment.  Access to social media and other technological tools, that have not previously been available, will help the growing middle class achieve its goals, which could include the overthrow of repressive governments, such as what the world is witnessing in Syria today.

The NIC chief  also said that education levels will continue to rise, and graduation rates for women are poised to exceed that of men, based on the current trend.

Meantime, there are clear challenges to progress by the world’s poor.  Mr. Kojm pointed to food demand, which he said will rise by 50 percent during the next 18 years. Although global population is forecast to grow by just 17 percent, from 7.1billion to 8.3 billion, middle-class people want middle-class diets, which are heavy in meat, requiring more water and grain to produce, he said.

Consequently, "nearly 50 percent of humanity will live in water-stressed regions by 2030," said Mr. Kojm.  However, new technological developments could help close the gap between food and water shortages. 

The NIC head said the rural-to-urban migration will continue, with 60 percent of the world’s populace living in cities by 2030, against 50 percent currently.

The National Intelligence Council reports to the Director of National Intelligence and provides the President and senior policymakers with analyses of foreign policy issues that have been reviewed and coordinated throughout the Intelligence Community.

More details in the NIC report entitled “Global Trends 2030: Alternative Worlds” can be found here.

Questions:  If the global middle class can double over the next 18 years, how can the worldwide cotton industry best prepare for an almost guaranteed increase in demand for the natural fiber?

Which areas of the world are best suited to benefit from the clothing demand created by a rising middle class populace?

The 13th and latest round of negotiations between the nine countries forming the Trans Pacific Partnership (TPP) concluded earlier this month in San Diego, California.  The following is taken from a statement issued by the US Trade Representative’s office with the conclusion of the round.

The United States and its eight TPP partners made important progress toward conclusion of the more than 20 chapters under negotiation between the United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. The TPP Agreement is an important trade initiative by the Obama Administration, which is aimed at: 

•  supporting jobs for American workers by boosting US exports to the rapidly  developing Asia-Pacific region, 
•  promoting manufacturing, innovation, and entrepreneurship, and 
•  settling on an agreement that safeguards worker rights and the environment.

This week’s talks made further substantial progress across the chapters, reflecting significant preparatory work done by each of the TPP countries since the previous negotiating round in Dallas in May. Negotiating groups made particularly significant progress in a number of chapters, including customs, cross-border services, telecommunications, government procurement, competition policy, and cooperation and capacity building. In addition, the negotiating groups moved their work ahead substantially on other issues, including rules of origin, investment, financial services, temporary entry, and other issues. 

The nine countries also continued intensive discussions on the ambitious tariff packages they are seeking to conclude that will provide access to each other’s industrial goods, agriculture, and textiles markets. They also advanced their discussions of how to promote regional supply chains to further augment the benefits of the agreement. 

Meantime, congressional Democrats and organized labor have criticized the talks, claiming a lack of transparency.  

However in the USTR’s statement, Ms. Barbara Weisel, chief U.S. negotiator, said the US government recognizes the importance of obtaining as broad a range of input from the public as possible throughout the TPP negotiations. This negotiating round featured numerous opportunities for nearly 300 people who had registered to meet with US and other TPP negotiators. 

On the first day of the negotiating round, a Direct Stakeholder Engagement Forum was held, which enabled representatives of industry, non-governmental organizations, academia, and the general public to meet directly with negotiators to discuss specific TPP issues. 

The chief negotiators from all nine TPP countries subsequently held a briefing with stakeholders, and Ms. Weisel also participated in a roundtable discussion hosted at the University of California, San Diego. Moreover, there were additional meetings between negotiators and interested parties throughout the negotiating round.

During this round, US Trade Representative also notified Congress of its intent to enter into TPP negotiations with Mexico and Canada on July 9 and 10, respectively. This notification triggers a 90-day period during which the Obama Administration will consult with Congress on objectives related to these new entrants to the TPP negotiations. Mexico and Canada will join the TPP negotiations once current TPP members successfully conclude their domestic procedures.

The 14th Round of TPP negotiations will be in Leesburg, Virginia on September 6-15. 

The validity of warnings regarding China’s stumbling economy by economists and other market analysts bears merit in light of recent comments by the country’s premier.  

Mr. Wen Jiabao has toured several provinces this month encouraging workers, researchers and industrial leaders to be more innovative in their research and development of new techologies, as a means to reverse a falling economic growth rate, thus improving the country’s social and economic infrastructure.

Reports from China’s Xinhua News Agency suggests Premier Wen has taken a lead role in exhorting the nation to perservere through the difficult times, calling for “greater efforts to strengthen the vitality and dynamism of economic growth,” according to Xinhua.

Mr. Wen acknowledged that the economy is progressing at a slower, though more stable pace, but insisted the growth rate “is still within the government target range set early this year, and stabilization policies are working." 

Beijing has lowered its target for gross domestic product (GDP) growth this year to 7.5 percent, compared with 9.2 percent in 2011, because of ongoing economic difficulties in the United States and an expanding debt crisis in the Euro Zone countries.

Hampered by poor external demand and government efforts to reign in a previously runaway property sector, GDP growth slowed to a three-year low of 7.6 percent in the second quarter.  

China has imposed a strict ban on real estate speculation in order to hold prices at affordable levels.  Residential construction, however, has slowed sharply and there are varying reports of how low real estate prices have fallen across the country.  

The Central Bank has cut regulated bank lending and deposit rates twice since last month, and a small rise in activity has been witnessed.  Meantime, a number of China’s largest cities are reported to have loosened the prohibition on real estate speculation, which has drawn the attention of the central government and brought warnings of punishment, if the national policy is not reinstated.

The premier also addressed tax reform during his series of meetings.  He said the central government will continue to introduce “proactive fiscal policies” centered on structural tax reductions to lighten the burden on small and micro-sized firms.  Structural obstacles between supply credit and demand also will receive attention.

In meetings with 30 corporate officials and industry association chiefs, Mr. Wen again emphisized the need for increased innovation, in the face of falling foreign demand for traditional Chinese export products, coupled with increasing production costs.

However, when a textile manufacturing chief executive from Jiangsu Province offered the idea of tax relief to make prices more competitive to counter the drop in demand, the premier appeared to offer only soft support, saying the government will pursue aggressive fiscal policies to support companies, but structural tax reductions should be aimed at boosting innovation.

Data for the first four months of 2012 show a sharp drop in Chinese exports of textiles and apparel, according to the China National Textile and Apparel Council.  

Valued at US$71 billion, January-April exports were only 1.07 percent greater than at the same time a year earlier, and there is a growing fear that manufacturers are losing market share abroad.  Textiles shipments were only 0.15 percent higher at US$30.73 billion than at the same time in 2011, while apparel exports were placed at US$40.27 billion, which reflected a rise of 1.77 percent.

Questions:  If China has indeed lost export market share for its textile and apparel products, have other countries have stepped in to fill the gap, or is this more a reflection of current worldwide economic malaise? 

What are the implications of a Chinese economic recession?

As a follow-on to the December 2011 announcement from the US Trade Representative’s Office that the West African Cotton Improvement Program (WACIP) would be funded for an additional four years, the National Cotton Council of America (NCC) last week hosted a meeting of US cotton industry officials and government officials from Chad, Benin and Burkina Faso.

The Council described the Washington DC meeting with West and Central African countries as an effort to build a foundation for better communication and establish the necessary groundwork for cooperation on issues of mutual interest.

NCC Chairman Chuck Coley mentioned recent changes in US farm law and asked the delegation to focus on areas of common interest, instead of a cotton policy that many in Africa believe puts the continent’s farmers at a disadvantage.

"I think we agree that promoting the increased consumption of cotton by the world's consumers is our top priority," said Mr. Coley. He said that US cotton farmers have contributed substantial financial support to promotion programs designed "to ensure that cotton is competitive in all end use markets and is the first choice of consumers." 

He noted cotton’s research and promotion program, which has been supported by US cotton producers with a per bale assessment since 1960.  Moreover, producer check-off dollars have been used to conduct highly successful generic cotton promotion programs throughout the world, he said.

The NCC chairman said the industry is proud of the outreach program initiated by the US industry that served as the predecessor and basis for the West African Cotton Improvement Program.  After initially funding the program at $27 million for seven years that ended in April 2012, the US Trade Representative's Office has added another $16 million to take the program into 2016.

"Now we want to work with you and your farmers to identify ways to improve the program to ensure it yields the maximum possible benefits for your farmers and industries,” said Mr. Coley. “We need feedback to know which activities have generated the best results and what programs should be initiated in the future."

Coley said the NCC supports the extension of duty-free, quota-free access to US markets for raw upland cotton produced in the countries designated as least developed by the United Nations.

"We support the commitment made by US officials last year at the WTO ministerial," he said.  

Coley told the group that the NCC has conveyed its support for prompt enactment of legislation to extend the eligibility of products containing third-party fabrics before it expires later this year, recognizing its importance to employment in Africa. He also said the NCC shares concerns that extending duty-free, quota-free access to textile products from Vietnam and Bangladesh could seriously erode the benefits of African Growth and Opportunity Act (AGOA) for the African countries.

The National Cotton Council is addressing three core issues -- market access, export subsidies and domestic support – about which the West Africans are concerned, Mr. Coley told the delegation.

"We eliminated an export subsidy and our export credit programs are being substantially modified," he noted. "We have supported enhanced market access by supporting duty-free, quota-free access for your fiber and by the extension of the important textile market access provisions in AGOA. We also have addressed your concern about our domestic supports by proposing significant reforms to the US cotton program for inclusion in the new farm law."

In closing, Mr. Coley stressed the issues that US and West African growers have in common.

"We look forward to engaging in a dialogue with your industry representatives and we will look forward to your responses about how WACIP can be improved," he said. "Your producers will benefit when yields are enhanced, when they receive a larger share of the world price and when there is true competition for their business. We believe enhanced communications, as well as programs like WACIP and others, can advance those objectives."

Questions:  Which issues (US and African) are most critical and should be addressed most immediately?

Are most recent changes in US cotton policy pertaining to producer supports, export subsidies and credit programs enough to allay the concerns of African growers?

What sort of investment (time, money, education, etc) should be expected from African countries participating in the West African Cotton Improvement Program to ensure its success?

The IntercontinentalExchange (ICE) has announced its intention to stop issuing its weekly report of the speculative and hedge positions of traders in the No. 2 cotton futures contract and for fresh concentrated orange juice after July 2.

Originated by the New York Cotton Exchange (NYCE), ICE carried on with the report for cotton and orange juice futures when it purchased the Board of Trade of New York, a successor to the NYCE.  No other commodity exchanges make a weekly spec/hedge report.

An exchange official reports that there are two reasons for the discontinuation:

• The data in the report is similar to the Commodity Futures Trading Commission's (CFTC) weekly Commitment of Traders reports, which are published in three different formats on a weekly basis, and which contain additional information beyond what's in the spec/hedge report.
• The amount of work required by each clearing member firm to make timely and accurate reports to the ICE each week solely for the rather limited information provided for only two futures contracts.

The sense on the part of the exchange was that the value added by the spec/hedge report, considering the CFTC already publishes the Commitments of Traders report,  was outweighed by the costs to the clearing members in time and effort, the ICE official explained.

According to the CFTC, the Commitments of Traders report provides a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions equal to or above the minimum reporting levels established by the CFTC.

Reports are available in both a short and long format. The short report shows open interest separately by reportable and non-reportable (small speculative) positions. For reportable positions, additional data is provided for commercial and non-commercial (speculative) holdings, spreading, changes from the previous report, percents of open interest by category, and numbers of traders.

The long report, in addition to the information in the short report, groups the data by crop year, where appropriate, and shows the concentration of positions held by the largest four and eight traders.

Questions:  Is the ICE decision justified?

What reason or reasons can be given to continue the spec/hedge report?

A slowing general economy, coupled with downturns in manufacturing and retail sales, has prompted China’s central government to lower interest rates and introduce a somewhat greater degree of flexibility for the nation’s bankers.

In it’s latest edition of Cotton Outlook, Liverpool-based Cotlook, Ltd. reports the benchmark, one-year lending rate has been reduced to 6.31 percent from 6.56 percent, and the one-year deposit rate from 3.5 to 3.25 percent. In addition, banks have been given the freedom to set the rates they pay on deposits and charge for loans.

Latest reports indicate economic growth (measured by Gross Domestic Product) in the January-March period fell to 8.1 percent and had declined further to 7.7 percent by the end of the first five months.  Some private financial estimates place 2012 GDP growth in a range of 7.7 percent to 7.9 percent, compared with 9.2 percent last year.

In the cotton sector, Cotlook paints a discouraging picture, in which spinners are unable to replace their raw cotton needs at manageable prices, and the government has been forced to import significantly more cotton than desired yet still support producers at the farm level.  China’s imports this season have already reached almost to 4.5 million tons, suggesting the season’s total may reach 5.2 million (more than twice normal), given the size of the outstanding commitment from the United States, together with that from Australia, said Cotlook.

Weak prices during the past month for raw materials (domestic and imported cotton, polyester and viscose staple fibers) have been accompanied by falling prices for yarn and fabric, which has contributed to a pessimistic view of the market outlook by most spinners, according to a report from Beijing Cotton Outlook, an eight-year-old joint venture between Cotlook, Ltd., the China National Cotton Exchange and the China Cotton Association.

In its report, Cotlook said “that since early June, cotton yarn prices have been on a downward trend in Henan, Shandong and Zhejiang; a number of small cotton spinning, weaving and garment factories have advanced their summer vacations, and small to medium-sized textile enterprises have recorded a substantial decline in the amount of cotton consumed, and some 60 percent of that used is said to have been imported. Other references have been directed toward a decline in the quality of output. Enterprises are struggling to maintain meagre profit levels.”

Meantime, Cotlook reported that Madame Zhu Beina, president of the China Cotton Textile Association, said at a May cotton trade summit in Chengdu that yarn output in 2011 was well below official figures, at around 20,500,000 tons, and noted that the association’s data showed a three percent decline in output during the first four months of 2012. Moreover, without a strong recovery during the final six months, this year’s annual total likely will fall to less than 20 million tons.

Other factors contributing to the industry’s pessimism include:

• A significant decline in the competitiveness of Chinese-spun lower count yarns,
• A below-normal fabric trade prompting some companies to reduce capacity on fear of further losses, and
• Orders at dyeing factories placed at no more than a couple of weeks out.

 Questions:  What signs suggest that China’s economic downturn may be nearing a bottom?

Since China no longer appears to be immune to the cyclical nature of global economic health, are there implications for the country’s intermediate and long term prospects for cotton and textiles along the supply chain?

In an effort to provide traders with the most comprehensive tools available in futures and over-the-counter markets, the IntercontinentalExchange (ICE) recently released an improved trading platform to enhance trading flexibility and confidence in the execution of orders.

Among the improvements incorporated into the newest platform, Mr. Benjamin Jackson, ICE Futures U.S., Inc. President and Chief Operating Officer, briefly explained the Interim Price Limits (IPL) regime to those attending the annual meeting of the American Cotton Shippers Association last week in Denver, Colorado.

He described how IPL uses customizable parameters to create a temporary circuit breaker in ICE’s electronic trading platforms, in order to diminish the likelihood and extent of short-term price spikes in either direction.  The regime was first applied to ICE financial contracts when the new platform was rolled out in March, and agricultural products, including cotton, were added on April 2.

Exchange officials have drawn specific attention to the fact that for those products that have a daily trading limit, like cotton, the IPL system operates within that limit.  It does not affect the daily limit or allow the market to trade outside of the daily limit range. 

The IPL is designed to prevent large price moves within a given period of time, protecting the market from price spikes caused not only by cascading stops but also by multiple limit or market orders moving the market in one direction. It will prevent bids higher than the upper IPL and offers below the lower IPL. 

When IPL limits are hit, the market will go into a hold. The IPL hold will allow the market to continue to function and trade while preventing further price movements beyond the IPL bands for a set period of time, called Recalculation Time.

Therefore the values that can be configured for IPL are the Amount, Recalculation time and Hold Duration. 

The ICE has published an IPL ‘White Paper’, which provides a more detailed explanation, as well as examples of trading when the IPL has been triggered.

Questions:  Does this ICE effort to guarantee some stability to the market instill trading confidence?

Are there other features that could be incorporated into the electronic trading platform to ensure the safety of trades?

The United States and eight other Pacific Rim members of the Trans-Pacific Partnership (TPP) concluded a 12th round of trade negotiations in Dallas, Texas, last week.  Progress was made on a number of fronts, according to the US Trade Representative’s office, but few details have been made available.

A news release from Washington reported that discussions on a US proposal regarding State-owned enterprises (SOEs), and how to ensure that they compete fairly with private companies, was among the focus areas.  Negotiating teams also discussed new issues related to trade and the environment, the digital economy, and the development of supply chains in the region, as well as tariff packages that would provide access to member’s industrial goods, agricultural, and textiles markets.

Meantime, the Textile and Apparel Alliance for TPP (TAAT), a global coalition of US textile and apparel trading partners from Africa, North, Central and South America, as well as US congressional allies, are pressing the US Trade Representative to ensure that the textile and apparel section of the final pact provides a “positive environment for job creation among TPP members” and prevent non-members, namely China, from reaping a business windfall without being obligated to abide by the rules of the trade agreement.

In a statement issued earlier this month, the TAAT commended 76 members of Congress who have formally written to urge the US Trade Representative to see that textile rules in the TPP agreement support US jobs, develop new export markets, increase opportunities for private investment and entrepreneurship, and reinforce strong trade ties with existing Free Trade Agreement (FTA) partners.

Background information in the statement explained that “the TAAT coalition was formed in February after Vietnam, a TPP participant, proposed country-of-origin rules for textiles and apparel that are far weaker than those in current US free trade agreements (FTAs) and preference programs.” 

TAAT contends that if adopted, the weaker rules would allow Vietnam's state-owned enterprises to export textiles and apparel made from subsidized inputs produced by China's “massive” textile SOEs duty free to other TPP countries. The competitive advantage gained by Vietnam's SOEs would therefore shift business to them at the expense of privately-owned and financed textile and apparel producers in the United States and elsewhere in the African and North and Central American trade blocs, “thereby harming potential for new textile and apparel export markets for US producers and those of FTA partners.” 

Vietnam, a non-market economy, exported US$7.2 billion in textiles and apparel to the United States in 2011, making it the second largest supplier of those products behind China, the TAAT noted. The Vietnamese government both owns and subsidizes textile and apparel production. Vinatex, Vietnam's state-owned textile and apparel conglomerate, is one of the largest garment producers in the world. In addition, Vietnam depends on China for much of its yarns and fabrics, importing US$4.4 billion of textile components from that country in 2010.

Therefore China, “the largest textile and apparel exporter in the world and a country not participating in the TPP, would gain substantial new access to the US market without having to make trade concessions in return,” said the statement.

Consequently, the TAAT coalition said it is supporting rules proposed by the US government which build on the free trade agreements that have been negotiated over the past 25 years. 

These include the "yarn forward" rule of origin, responsible market access provisions, and strong customs rules and enforcement. A yarn-forward rule of origin means that all yarn, fabric, and assembly production stages must be done in a TPP country for a textile or apparel product to be eligible for duty-free treatment, unless an exception applies. 

TAAP said Washington has also insisted that the TPP agreement ensure "that state-owned enterprises compete fairly with private companies and do not distort competition in ways that put US companies and workers at a disadvantage."

The TAAT coalition includes textile and apparel associations from the United States and more than two dozen other free trade and trade preference countries. Coalition members represent nearly two million workers in the textile, apparel, and fiber production sectors, thousands of privately owned factories, and nearly US$25 billion in two-way textile and apparel trade.

The six-year-old Trans-Pacific Partnership, which has evolved from an original membership of Brunei, Chili, New Zealand and Singapore, now includes New Zealand, Peru, Singapore, the United States, and Vietnam.  The next round of negotiations will be in San Diego, California, from July 2-10. 

Questions:  Considering complaints that TPP talks have been less than transparent to the public, what reasons can be given to open the deliberations or keep them private?

The Dallas round featured the opportunity for those who will be affected by the final agreement to be on the sidelines and meet with chief negotiators.  Does this provide a satisfactory means for stakeholders in the talks to ensure their positions on specific issues are put forward?