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Opportunities for Military Textiles in the U.S. Australia Free Trade Agreement

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    1. Opportunities for Military Textiles in the U.S. Australia Free Trade Agreement Presentation by Caroyl Miller Deputy Textile Negotiator Office of the U.S. Trade Representative Washington, D.C. October 21, 2008

    2. U.S. Exports of Textile Mill Products to Australia

    3. Australias Imports of Textile Mill Products, 2007 (Million US$)

    4. U.S. Exports to and Imports From Australia of Textile Mill Products

    5. U.S. Australia Free Trade Agreement (USAFTA) President notified Congress of his intent to negotiate, November 2002 Negotiations concluded, February 2004 Implementing legislation passed by House and Senate, July 2004 Agreement implemented, January 1, 2005.

    6. Textile Provisions USAFTA Duties on qualifying textile and apparel products will be fully eliminated by January 1, 2015 on a reciprocal basis. Qualifying textile products: those that meet the rules of origin for preferential tariff treatment (originating goods). General rule: yarn-forward manufacturing in either U.S. or Australia. Short supply exceptions. Customs cooperation, verification procedures. Textile safeguard.

    7. Preferential Tariff Treatment All originating goods receive a tariff preference from day one. MM fiber and yarn tariffs, 2008, generally 3 percent and duty free on 1/1/2010. Fabric tariffs, 2008, generally 8 percent, reduced to 3 percent on 1/1/2010 and duty free on 1/1/2015. Tariffs on made up articles, 2008, are generally either 5.5 percent, 8 percent or 15.5 percent, reduced again on 1/1/2010 and duty free on 1/1/2015. Tariffs not on a linear elimination schedule, but a step down schedule. Rates reduced to x percent, and stay at x percent for a specified period, then reduced again to y percent and stay at y percent until final elimination. *Tariff Concession

    8. Rules of Origin Goods containing U.S. and/or Australian content are originiating goods. Also, if goods meet the Agreements tariff shift rule, they are originating. Tariff shift requirements are modeled on the yarn forward standard, but exceptions apply. Consultation process to address changes in availability of inputs. De minimis threshold of 7 percent by weight.

    9. Customs Cooperation Textile-specific provisions Cooperation in the implementation of FTA benefits as well as more generally to enforce laws of either Party pertaining to textiles and apparel. Included are rights to exchange information and documents, conduct verifications, including through visits by Customs authorities, and rights to deny entry or to deny preferences, as the case may be, if origin cannot be established.

    10. Textile Safeguard Safeguard mechanism allows duties to be re-instated if imports from the other Party are causing or threatening serious damage to domestic production. Duties can be re-instated for a period of two years, with a possible extension for an additional two years. Relief is available for ten years after tariffs have been eliminated. Provisional relief: in critical circumstances, a Party may apply safeguard measures prior to the completion of an investigation for up to 200 days. If the investigation later results in a finding that serious damage does not exist, the increased duties will be refunded. Requirement for compensation (as do similar mechanisms in all our other FTAs).

    11. Government Procurement U.S. suppliers have rights to bid on contracts to supply Australian government at the national and sub-central level. Requires the use of tendering procedures that will ensure that procurements are conducted in a transparent, predictable and fair manner. Australian central government eliminates its industry development programs, under which suppliers had to provide various types of offsets, e.g., local content or local manufacturing requirements, as a condition of their contracts. Restricts Australias use of selective tendering to ensure that U.S. suppliers have a fair opportunity to compete for government contracts.

    12. Annex 15 A, USAFTA Listing of agencies, ministries and departments and other entities that are subject to the Government Procurement Chapter. Procurements over a certain threshold (A$87,000 in 2008 for goods for central government; A$679,000 for goods for regional government procurements)

    13. Covered Agencies Central Government: Department of Defence (with exceptions) Defence Materiel Organisation Regional Governments: Eg, Police and fire services

    14. Government Procurement Chapter Australias regular rules of origin (i.e., non-preferential) Australias regular MFN tariffs

    17. Resources U.S. Government: Australian Government: Australian Industry:

    18. Going Forward Recommentation 11: Australian Government procurement policy should encompass capability building for Australian TCF firms and organisations so that they are in a better position to tender successfully for contracts both individually and in broader networks. In addition, consideration of value for money in tendering should take account of labour and environmental standards, as evidenced by the Australian Ethical Quality Mark. The Review notes and supports concern expressed about the US Berry Amendment, which excludes Australian TCF firms from the US defence apparel procurement market. Building Innovative Capability: Review of the Australian Textile, Clothing and Footwear Industries, August 2008.