Singapore Trade Agreement May Include Strict Rule Of Origin For Textiles

By James A. Morrissey, Washington CorrespondentU.S. government trade officials are supporting a
“yarn forward” rule of origin in a proposed U.S.-Singapore Free Trade agreement, a move that
pleases U.S. textile manufacturers but gives importers and overseas exporters heartburn. The rule
of origin would be similar to that of the North American Free Trade Agreement (NAFTA), which
requires products benefiting from the free trade pact to be made with yarn and fabric in the
participating nations. It is designed to help the U.S. textile industry and guard against
transshipments of apparel where the yarn or fabric may be made in another country. The U.S.
Association of Importers of Textiles and Apparel has told the U.S. Trade representative that a
NAFTA-like rule of origin for Singapore would be “inappropriate” and said, instead, a “substantial
transformation standard” with a 35-percent value-added requirement would make more sense. The
Singapore Free Trade Agreement is particularly significant, since the U.S. Trade Representative has
announced plans to expand it to include Indonesia.