US importers and retailers of textile and apparel are now
focused on the shift in market dynamics post-2004. Speculation is
mounting as it looks ever more likely that quotas will end for WTO
Members of the United States Association of Importers of
Textiles and Apparel (USA-ITA) recognize the tremendous commercial
potential that an end to quotas will bring. However, they also
harbour deep concerns about the uncertainties surrounding the
changes that will come into place on 1 January 2005. Looking at the
likely market outcome of quotas elimination from the point of view
of US importers, there are still many unanswered questions for the
industry, making planning for the new status quo difficult.
Given that textiles remain highly political in the US, the 2004
presidential election adds to the uncertainty. There is little
question that presidential hopefuls will make promises to the
domestic textile industry, promises that will come due in 2005.
Key questions amongst USA-ITA members concern:
China textiles safeguard
China was successful in its quest to join the phase-out of
quotas on the same schedule as other WTO members. However, the
country has had to pay for this by agreeing to the possibility of
new quotas on integrated products until the end of 2008.
This does not necessarily mean that all Chinese textile and
apparel products will be subject to quotas until that date - such
decisions will be made on a case-by-case basis. But, depending upon
how the United States implements the new safeguard of further
quotas, the most import-sensitive products may be the most
To date, the US domestic industry has targeted five 'integrated'
products - manmade-fibre luggage, brassieres, gloves, dressing
gowns and knit fabric - for safeguard actions.
How those products are handled this year may provide some
insights for the future and give an indication as to whether other
countries will be effectively protected as a result.
USA-ITA members are slightly less worried about a flood of
antidumping and anti-subsidy measures, and suspect that fewer
unfair trading allegations will be levelled against apparel than
against yarns, fabrics and made-up articles, such as bed linens and
towels. With few apparel makers left in the US, there appears to be
less risk of such cases being brought.
In addition antidumping (AD) and countervailing duty measures
(CVD) cases are expensive to litigate, with petitioners possibly
incurring legal fees well in excess of US$ 500,000 to go through
the extensive investigations involved. However, were AD or CVD
petitions to be filed, it is likely that multiple countries would
be named each time to prevent buyers from readily moving to another
As important and as high as they are in this sector, tariffs are
only one factor among many in the sourcing decision-making process,
so the existence of preferential trade arrangements alone does not
mean US buyers are drawn to suppliers in those countries. So long
as the United States persists in writing rules that limit the
competitiveness of participants in the free trade arrangements,
their role in sourcing decisions may be limited.
Obviously, producers from countries in the Western hemisphere
have an inherent advantage in the US market by virtue of their
location and ability to offer quick inventory replenishment.
Western hemisphere producers are an important source for 'basics'
as opposed to fashion goods, and are therefore key to quick
inventory replenishment strategies. However, the future
attractiveness of these countries as supposed preferential
suppliers varies in great part according to the commercial
viability and manageability of the origin rules and compliance
responsibilities - and risks - that apply to them. While USA-ITA
members will press for changes, non-preference suppliers may, in
the meantime, remain more attractive.
From 2005, the largest American importers and retailers will
consolidate their production in fewer countries. None, however,
will risk putting too much business in too few countries. It is the
smallest importers who may find themselves in the most difficult
position, compelled to focus on suppliers offering the lowest
prices despite higher risks.
Traditional factors influencing American sourcing decisions will
remain constant, such as costs, logistics, plant efficiency,
infrastructure (including close proximity between fabric and
apparel production), supply chain management, social and government
stability, human rights, reliability and relationships. The winners
will be those manufacturers who can demonstrate their strength in
the traditional factors and also prove that they are prepared to
deal with the new issues that emerge, with the agility to make
Brenda A. Jacobs (email@example.com) is
Washington Trade Counsel to US Association of Importers of Textiles