TPP Could Mean Good Things for Nonwovens
Earlier this year, negotiations between the U.S. and 11 countries, many located in the Pacific Rim, led to the creation of a free trade agreement between these countries. According to many economists, the Trans-Pacfiic Partnership (TPP)—which still needs to be ratified by participating countries— is a win for the U.S. economy with some estimating that it could significantly increase U.S. exports to these countries—which include Vietnam, Japan, Malaysia and Singapore— by more than 9%. The lessening of trade duties amongst these countries would also decrease the Pacific Rim region’s dependence on China and bring these nations closer to the U.S.
Also benefitting from the agreement would be the global economy as a whole as it would promote higher labor standards and quadruple the number of people outside of the U.S. covered by labor provisions, thus limiting practices like child labor and other types of forced work.
As economists continue to weigh the pros and cons of the TPP on the U.S. and global economy, Nonwovens Industry’s own government affairs guru Peter Mayberry has offered his opinion in this month’s Capitol Comments column (see page 24). Mayberry seems optimistic that the agreement would bode well for nonwovens as it would reduce trade tariffs on nonwoven fabrics to many countries where the U.S. already ships a significant amount of nonwoven fabrics like Japan and Vietnam.
The expansion of nonwovens usage in Southeast Asia has been well reported in the pages of this magazine. With growth rates near 10%, a skilled workforce and increasing disposable incomes, many countries in this region are being viewed as the next great frontier for nonwovens growth and already several U.S.-based hygiene companies have established operations in the region.
This interest, of course, has been met with investment by many nonwovens companies as well. The latest of these was announced just last week when Toray Industries revealed it would continue its Asian investment spree with a new 18,000-ton spunbond polypropylene line in Korea. While Korea is not affected by the TPP, Toray has been bullish about growth throughout Asia for several years and currently has operations in China and Indonesia. The seven or so hygiene-focused lines the Korean company has added over the course of the past decade are all designed to do the same thing—chase growth in the China and throughout Asia.
Of course, Toray has not been alone in its investment strategy. In fact, nonwovens manufacturers from around the globe have been adding to their output in this region as more disposable diaper and other hygiene-centric companies have invested in the region. From Japanese powerhouses like Unicharm, Kao and Pigeon to Western-based multinational companies like Kimberly-Clark, Procter & Gamble and SCA, it seems like everyone is betting on growth in these regions.
As more spunbond and spunmelt capacity comes onstream in North America—new investments have been announced by Avgol, Berry Plastics and Fitesa in recent months—producers will be looking for new customers to support growth, and the TPP could provide the U.S. nonwovens industry with a better path to finding these customers in these emerging markets.
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