Chinese, Asean suppliers could face fresh challenges under United States-Mexico-Canada Agreement
New deal includes tougher rules on the sourcing of cars and garments
Asian manufacturers could find it harder to sell their products in American markets under a new deal signed by the United States, Mexico and Canada, and could risk long-term isolation in key industries, analysts say.
“In the long term, as long as the supply chains are shifting towards North America, it will be harder for countries elsewhere to break into the North American market,” said Henry Gao, a professor of trade policy at Singapore Management University.
Under the United States-Mexico-Canada Agreement (USMCA) tighter country of origin rules and labour standards for the car and garment manufacturing industries mean production of those products could shift back to North America, which would be a blow to Asian producers.
The deal, announced on Monday, includes tougher rules stipulating that raw materials used in garment manufacturing, such as sewing thread, must be sourced from suppliers in one of the three signatory countries.
“[The rules] are likely to limit the ability of Vietnamese companies to fill demand for inputs in the textiles sector,” said Maxfield Brown, head Dezan Shira’s Business Intelligence Unit for the Association of Southeast Asian Nations.
Vietnam exported about US$60 million worth of sewing thread, pocketing fabric, narrow elastic bands and coated fabric to the three nations last year, according to figures from Dezan Shira.