The latest monthly round-up of updates to key free trade agreements and trade preference programmes involving the United States and European Union covers developments in February 2020.
UNITED STATES
US-Kenya Free Trade Agreement
On 6 February 2020, President Trump announced US plans for a free trade agreement with Kenya, aiming to both deepen the economic ties between the two countries and complement Africa’s regional economic integration efforts. The Office of the US Trade Representative (USTR) will follow the 2015 Trade Promotion Authority Act (TPA) and notify Congress of its intention to negotiate. USTR will also publish objectives for the negotiations at least 30 days before talks begin.
In 2019, the US imported US$453m worth of apparel from Kenya (0.5% of total US apparel imports). While being a relatively minor clothing supplier to the US, Kenya accounts for about one-third of total US apparel imports from sub-Saharan Africa.
US-China Section 301 tariff action update
On 14 February 2020, the 15% punitive Section 301 tariffs on Tranche 4A products were reduced from 15% to 7.5%. The tariffs were imposed on 1 September 2019, and cover most US apparel imports from China.
On 5 February and 20 February 2020, the Office of US Trade Representative (USTR) said additional Tranche 3 products would be excluded from US Section 301 actions against China. The exclusion will be effective from 24 September 2018 to 7 August 2020 and cover several textile products (HS Chapters 50-63):
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By GlobalDataUS punitive tariffs on imports from the EU
On 14 February 2020, the Office of the US Trade Representative (USTR) formally announced the imposition of punitive tariffs on certain imports from the European Union (EU) starting from 18 March 2020. The tariffs are retaliatory measures against the EU’s Airbus subsidies, which were found to be inconsistent with World Trade Organization rules. Several apparel products produced by the United States will be subject to a 25% additional tariff, including:
Meanwhile, USTR said it remained open to reaching a negotiated settlement with the EU on the issue.
EUROPEAN UNION
Cambodia eligibility for EU Everything But Arms’ programme
On 12 February 2020, the European Commission announced the withdrawal of some of the tariff preferences granted to Cambodia under the European Union’s Everything But Arms’ (EBA) trade scheme due to the serious and systematic violations of the human rights principles enshrined in the International Covenant on Civil and Political Rights.
The withdrawal of tariff preferences will affect all travel goods, sugar and some garments and footwear, which will be subject to the EU’s most favoured nation tariff starting from 12 August 2020. However, the EU Commission says it will continue to engage with the Cambodian authorities and closely monitor the human rights and labour rights situation in the country. f Cambodia shows significant progress, notably on civil and political rights, the Commission may review its decision and reinstate tariff preferences under the EBA arrangement.
Apparel items (HS chapters 61 and 62) affected by EU’s decision:
EU-Vietnam Free Trade Agreement
On 12 February 2020, the European Parliament approved the EU-Vietnam Free Trade Agreement (EVFTA). After further approval by the EU Council, the agreement is due to enter into force in 2020. It will eventually eliminate nearly all tariffs on goods traded between the two sides, including textiles and apparel, through a staged schedule. Vietnam is a major apparel supplier to the EU. In 2018, EU members (including the UK) imported US$3.9bn worth of apparel from Vietnam, accounting for around 4% of EU’s total apparel imports that year.
