A Yarn-Forward Rule of Origin:
o The U.S.-Morocco Free Trade Agreement (FTA) returns to the industry-supported "yarn forward" in a Middle Eastern trade agreement. The free trade agreements (FTAs) with Israel and Jordan allow for the use of unlimited third-country yarn and fabric in apparel eligible for duty-free treatment.
o As with other FTAs (including NAFTA, Singapore, and Chile), the agreement contains limited allowances for the use of yarn and fabric from a non-party under a Tariff Preference Level (TPL). But unlike NAFTA, the TPL in the Morocco FTA is temporary. It is set at an initial level of 30,000,000 square meters equivalent (sme) for the first four years of the FTA and is reduced over the next six years and eliminated entirely after ten years.
o The TPL is equal to less than 1% (0.08%) of total U.S. imports. After the TPL expires, all trade under the Morocco FTA must adhere to the yarn-forward rule of origin. U.S. exporters also have the same TPL access to Morocco’s market, allowing U.S. fabric and apparel exporters some flexibility in their inputs.
o The agreement also contains a special allowance for the U.S. and Moroccan industry to use cotton fibers from least-developed sub-Saharan African countries, where those fibers are normally required to originate in a Party. This provision is supported by the domestic cotton industry.
Reciprocal Market Access:
o The FTA provides fully reciprocal market access for U.S. producers. On a product-by-product basis, the U.S. and Morocco will adhere to the same schedule for tariff elimination. If a U.S. tariff on any given product is eliminated immediately, Morocco’s tariff on that same product is also eliminated immediately.
o For the majority of textile products, tariffs will be eliminated over six years. In addition, for selected items, the U.S. and Morocco will provide duty free treatment to designated quantities of products, an innovation that enabled the United States to obtain reciprocal access to Morocco’s market.
A Special Textile Safeguard:
o Allows either party to re-impose MFN tariffs if imports from the other party damage domestic production. This safeguard allows longer periods of relief than the textile safeguards of any other U.S. FTA.
Special Enforcement Provisions:
o The agreement also contains special, state-of-the art customs enforcement and cooperation provisions for textiles, allowing the customs authorities of the parties to verify production in the event of a question, and ultimately to deny entry or deny duty preferences if production cannot be authenticated.
"…The increase in total U.S. textile and apparel imports from the world is likely to be very small [under this FTA] and the impact on U.S. production and employment in the textile and apparel sector is likely to be negligible. Any increase in shipments from Morocco as a result of the FTA is likely to displace imports from other high-cost exporting countries…"
-U.S. International Trade Commission