Will 'Buy American' policy impact Sri Lankan garment exports?

29 Apr '09

2 min read

The 'Buy American' clause proposed by President Obama, urging the purchase of locally produced products is stirring up a controversy. This indicates the protectionist thinking that is slithering into the US administration.

The stimulus package also mentions that uniforms for a particular government department can be purchased only if they are 100% US made.

This has raised an alarm in the minds of worldwide economic analysts, as this policy has the potential of taking an ugly turn and may be even for the worse and could even more impact global economies.

Earlier the same protectionist strategy practiced during the 1930's had caused a major downturn in worldwide economies and resulted in a breakdown of foreign trade as other countries tried to retaliate with their own protectionist policies.

Sri Lanka is one of the most significant and dynamic country in the global apparel market. Garment industry in Sri Lanka retains a dominant position and contributes nearly 40% to its industrial production.

With the advent of the economic crisis in US, the heat is being felt by the garment companies in Sri Lanka, which led to a 5.5 percent decline in exports during 2008. The slump is continuing currently.

To ride the tide, many existing Sri Lankan companies had to go for a cut in their prices so as to remain competitive.

Obama's reign may be a turning point in the U.S. trade policy, making the industry critics to contemplate and debate about the impact of the billions of dollars worth of global apparel and textile trade.

While the rest of the world looks at US for an economic turnaround, Sri Lankan apparel industry faces the key challenge of losing its competitive edge in the apparel exports due to the policies of the US Government.

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Fibre2fashion News Desk - India