Sherbrooke, August 28th, 2017 - At the dawn of the first exchanges between the Canadian, American, and Mexican governments regarding the North American Free Trade Agreement (NAFTA), FilSpec would like to make known its concerns relative to the changes that might negatively impact the Canadian textile industry.
A prospeous business for the region
FilSpec is a manufacturing company operating in Sherbrooke since 2004. More specifically, FilSpec designs and produces technical textile threads that serve as the base for high performance fabrics and knitwear. Despite the problems that have affected the textile sector over the past decades, FilSpec has managed to reinvent itself and is now sailing on an even keel due to the expertise it developed in innovative, “intelligent” textiles. The company exports over 85% of its production, 82% of which goes to the U.S. The Sherbrooke FilSpec plant, which houses the head office and most of its manufacturing activities, employs 165 people who receive competitive salaries in a unionized environment.
Possible elimination of the NPTs:
important consequences for the textile industry
The National Council of Textile Organizations (NCTO) is a very influential American lobby. It represents American textile manufacturers of threads, fabrics, and clothing, and supports the major producers of synthetic and natural fibres. The NTCO represents the American textile industry at the NAFTA negotiations and its position on the matter is quite clear: it hopes to maintain the NAFTA accord and eliminate tariff preference levels (TPLs). The TPLs were negotiated at the time to minimize the negative impact of NAFTA on certain Canadian industrial sectors. It must be understood that the TPLs allow industry players to use inputs from sources outside of NAFTA. These inputs allow for the more competitive manufacture or transformation of products. This in turn allows for the export of said products to other NAFTA members at a preferential custom rate.
TPLs favour Canada and Mexico, but especially Canada because, contrary to the U.S., we have very few manufacturers of synthetic fibres or producers of natural fibres like cotton, which are the basic element for the manufacture of yarns or fabrics. TPLs permit FilSpec to import fibres from various countries and to manufacture yarns in Canada and export them to NAFTA partners.
In Canada, the equivalent of the NCTO is the Canadian Textile Industry Association (CTIA), which, on a more modest scale, represents the Canadian textile industry. Because Canada produces little to no synthetic or natural fibres, it is impossible for the CTIA to attract the same level of financial resources as the NCTO. In theory, the Canadian government should have received from the CTIA the position of the industry regarding the NAFTA negotiations.
Considering the power of the American textile industry in comparison to our own, we worry that the NAFTA negotiation process will negatively affect our sector or simply forget to protect it, as has sadly been the case in the past. FilSpec therefore decided to share its concerns with regional, provincial, and federal elected officials to ensure the interests of the Canadian textile industry are well represented at these negotiations.
Without the TPLs, FilSpec would find itself in an altogether different situation. For FilSpec alone, eliminating the TPLs would represent $1,500,000 additional custom tariffs the company would have to pay. It is practically impossible to offset that amount with a price increase of our products, as our American competitors can count on economies of scale on which we cannot rely. Our clients would then surely find themselves American suppliers. The elimination of the TPLs would impact at various levels hundreds of Canadian textile businesses and put an industry in peril that has already been severely tested these last few decades.
Therefore, FilSpec decided to do everything in its power to make known the negative consequences the elimination of the TPLs would have not only on its activities but on the industry as a whole. We hope to take part in discussions so that we may make our point clear and gain the support of elected officials to ensure our sector is well represented at the NAFTA negotiation table.
Over 650 Canadian businesses affected
In Canada, 650 businesses operate in the textile sector. According to the latest figures from Statistics Canada, these businesses exported $1.1 billion dollars in 2016, of which $952.6 million went to the United States, the world’s biggest export market for textiles. Textile businesses also paid out $333.2 million in salaries in 2014. With an average hourly wage of $19.54, the Canadian textile industry offers good paying jobs to thousands of Canadian.
Eric Perlinger, President