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  • Writer's pictureDavid Connolly

A new US bill incentivises circular fashion in a bid to compete

A new US bill is tackling circularity on a federal level in a bid to revive America’s local textile industry and help it to better compete with that of China.

Introduced by US senators Bill Cassidy (Louisiana) and Michael Bennet (Colorado), the Americas Trade and Investment Act (otherwise known as the Americas Act) is a bipartisan bill that includes over $14 billion in incentives for circularity across apparel, footwear, accessories and home linens.

If enacted, the Americas Act would support domestic circular businesses and textile manufacturing, incentivise reshoring and nearshoring manufacturing from China to the US; put in place measures aimed at reducing exposure to forced labour in Xinjiang (through a US customs and border protection special enforcement unit to stop imports from the region); and close the “de minimis” loophole (which eliminates duties on shipments under $800 and some say has been abused by foreign competitors).

The bill, which is a major piece of legislation covering issues beyond textiles such as the expansion of US free trade, will be referred to the Senate Finance Committee following its public announcement today, though it’s a long process for the Americas Act to be passed and become law. Public perception will be a big part of how it plays out.

“With the bold textile reuse and recycling incentive provisions in the Americas Act, organisations in our industry will be able to reinvest in jobs in the US and compete globally, while incubating innovation and R&D (research and development) and fostering an environment to cultivate private capital,” says Rachel Kibbe, CEO of Circular Services Group and American Circular Textile Group, which has been working with senators Cassidy and Bennet on the bill. “Essentially we have the opportunity for the US to reposition itself as a global leader through localised circular textile manufacturing.”

The bill could play a big role in developing America’s manufacturing capabilities, which lag far behind China’s. The two largest global economies have been in a trade war since 2018, with the US enforcing tariffs on goods imported from China and increasing export controls.

Circularity is positioned within the Americas Act as a potential differentiator between US and Chinese manufacturing. The bill says Eastern manufacturing has “paved the way for unprecedented natural resource exploitation, escalated emissions, forced labour, and wasteful overproduction practices which resulted in surges of high-volume, low-value used textiles sent to vulnerable communities worldwide”.

What it doesn’t directly address is that US companies are often at fault for this exploitation, as they push suppliers to lower their prices in order to increase their own profits.

The idea is to offer an alternative for US companies to manufacture locally so there’s no excuse to continue seeking labour in countries with looser labour regulations, says Kibbe. “Right now, [US companies] can say they don’t have great alternatives and it’s true in the Western Hemisphere, so we want to provide that option to manufacture closer to home,” she says.

Success will also rely on US consumers changing their habits, voting with their dollar rather than continuing to support brands that exploit workers in the supply chain. “Real impact requires consumers and popular culture to lead a massive rallying cry, making overconsumption out of style and shifting focus to spending on fewer, sustainable items the norm,” says Kibbe.

The bill will deliver 15 per cent net income tax exclusion for circular businesses (including resale, repair, rental, fibre recycling, sorting and reuse); $10 billion in preferential loans and $3 billion in grants for textile reuse and recycling, manufacturing support programmes and components, and machinery to aid with product transportation and processing; $1 billion in innovation program research and development related to textile use and recycling; and $100 million for a public education program.

The focus on recycling comes at a pivotal time. Textile-to-textile recycling company Renewcell filed for bankruptcy last week, highlighting the difficulties faced by startups that are trying to change an industry while still operating within it. Experts say the question is not why Renewcell filed for bankruptcy, but rather why the industry let it happen.

With this in mind, building better infrastructure and access to low cost capital for circular textile businesses is a priority, says Kibbe. “Early adoption is very challenging. There are failures at the beginning and that is an inevitable part of the process. But there are missing links to create efficiencies in the circular supply chain that can bring costs down. By providing capital with low or no time horizon on returns, like [lower] interest on loans and grants, we can support cost effective circular textile systems. We’re justifying what we’re asking for [by proposing the Americas Act], because these are things that would help level the playing field for businesses in our industry.”

Original article: here

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