Interview with Julia Hughes

2012 has been a tough year. Due to economic uncertainty, U.S. consumers have been cautious about their purchases. During the first five months of 2012—the most recent data on U.S. imports—the quantity of total U.S. apparel imports fell by four percent. Many countries lost even more market share than four percent. Among the top 10 suppliers are: only top-ranked is China, second-ranked Vietnam, and sixth-ranked Cambodia, shipped more apparel than one year ago. We are cautiously optimistic, however, that this trend will turn around in time for the holiday selling season.

While the volume of U.S. apparel imports has been falling in 2012, cost continues to increase. Prices are higher for apparel even though U.S. consumers may not be ready to accept that. Absolutely, we see rising costs around the world. Labor costs will continue to increase, too. In addition, the industry is still paying for last year’s skyrocketing prices for cotton.

In order for the TPP agreement to be beneficial for our industry, it must recognize the importance of the entire supply chain in sourcing decisions. When choosing sourcing partners, U.S. brands look at a variety of components, including design availability, fabric and trim availability, vendor compliance, and speed-to-market, not to mention overall value for price paid. As such, TPP should include, first and foremost, a liberal, simple, streamlined rule of origin for textiles and apparel, based on change in tariff heading (CTH) and/or the regional value content (RVC) requirement. In addition, TPP should be a 21st-century agreement, harmonized with existing Free Trade Agreements (FTAs) and other preference programs and recognize the global regulations with which companies must comply, in order to truly work with the global value chain.

China remains the major sourcing destination for both United States and European Union. China supplies more apparel–and many types of products – for U.S. apparel brands and retailers, than any other country. So, in that sense, no country competes with China in terms of the sheer volume of sourcing opportunities. However, looking at the rest of the world, there are many other sourcing opportunities available today. Apparel suppliers based in Asia— meaning Southeast Asia, South Asia, and Asia—ship 76 percent of U.S. imports. The most competitive producers remain Vietnam; Bangladesh, and Indonesia—moreover, U.S. imports from these countries combined with U.S. imports from China represent almost 2/3 of all U.S. apparel imports. In addition to these volume suppliers, there are very interesting sourcing opportunities closer to home. For U.S. companies, this means Western Hemisphere production that is usually duty-free under NAFTA or CAFTA-DR. Apparently, duty-free production offers substantial savings since the U.S. duties on apparel can run as high as 32 percent.

In U.S. politics, we are seeing a debate over protectionism vs. opening markets. However, we are hopeful that the argument for opening markets will win, especially as the Trans-Pacific Partnership (TPP) negotiations continue. The TPP is a bold initiative for a regional free trade area that by opening markets will create new jobs for the United States as well as for all the TPP trading partners. If we are going to open overseas markets to U.S. goods and services, then we also need to provide more opportunities for our trading partners to sell consumer goods to the U.S. This is our message in the TPP negotiations. Trying to force a yarn-forward Rule of Origin in the TPP only means that the agreement will not achieve the goal of opening markets among all nine (and soon to be 11) TPP countries. The argument for opening markets is also clear when you look at the African Growth & Opportunity Act (AGOA), a trade preference program that provides duty-free access to the United States for African manufacturers. AGOA contains a provision that allows manufacturers in Africa to use fabric from non-African countries and still receive the duty benefits; this provision accounts for 95 percent of apparel imports under AGOA and is responsible for 150,000 jobs in Africa, not to mention countless jobs in sourcing, design, marketing, and retail in the United States. Yet, Congress nearly let this provision expire, much to the dismay of both U.S. brands and African manufacturers. After uproar by some of the United States’ leading apparel brands, as well as the leadership of the AGOA-eligible countries, Congress realized their mistake. This is just another example of the fact that people are realizing the importance of global value chains and opening markets. By opening markets, we only help U.S. companies; we have to open our market to other goods in order to have new markets for U.S.-made goods, too.

USA-ITA membership is accessible to education and information. Our signature event is the Textile & Apparel Importer Trade & Transportation Conference, which we host every November in New York City with the American Import Shippers Association (AISA). (This year, the 24th annual conference will take place on November 14 at Bridgewaters South Street Seaport, and will feature speakers from U.S. Customs & Border Protection and the Consumer Product Safety Commission, among others to be confirmed.) Participating in our events is not only to learn critical information, but also have the opportunity to engage in candid discussion with policymakers and other experts, and we have seen positive changes for our industry result from these discussions. This year, we have ramped up our webinars and invited members and other experts to present on specialized topics, such as sourcing and compliance in Bangladesh. In addition to our live events, we send frequent communications to our members with news alerts and expert analysis.

USA-ITA helps our members to stay ahead of the issues, connect with the industry, and compete in the global market. As noted, we offer exclusive publications for our brand, retailer, importer, and service provider members, including regular textile development memos featuring news and analysis, and monthly customs overviews. Our international affiliate subscription program allows international manufacturers, suppliers, service providers, and other organizations to understand how U.S. government policies and private sector actions affect their businesses and customers. Besides, we offer possibility for our members to network with industry leaders and promote their own businesses. Our members can host webinars or write articles for our publications, sponsor our annual conference, and participate in trade shows and other events around the world through our extensive network. As well as our members actively take advantage of opportunities to meet with U.S. government officials, join coalitions, and participate in the policy making process.