Forotex 2011 Camtex Julia Hughes

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Forotex 2011 Camtex Julia Hughes

  1. 1. U.S. Trade Opportunities & Challenges November 16, 2011
  2. 2. WHAT DO U.S. BRANDS AND RETAILERS WANT?
  3. 3. <ul><li>Sourcing decisions based on: </li></ul><ul><li>Quantity </li></ul><ul><li>Value </li></ul><ul><li>Predictability </li></ul>
  4. 4. A storyboard…
  5. 5. Global Value Chain Storyboard Where are the vendors? Design Vendor Partnerships Global Sourcing Merchandising Regulatory Coherence for Labeling & Testing Logistics Customs Enforcement Manufacturing Global Retail
  6. 6. <ul><li>Design starts with three elements: </li></ul><ul><ul><li>Vision </li></ul></ul><ul><ul><li>Concept </li></ul></ul><ul><ul><li>Quality </li></ul></ul>Design
  7. 7. Design While designers bring the inspiration, each vendor and factory must be pre-approved and meet detailed criteria before production starts. Compliance is the price of entry. Vendor Partnerships
  8. 8. <ul><li>Global sourcing criteria include: </li></ul><ul><li>Value </li></ul><ul><li>On-time delivery </li></ul><ul><li>Minimums </li></ul><ul><li>Fabric and trim options </li></ul>Global Sourcing
  9. 9. A liberal, simple, streamlined rule of origin. TPP needs…
  10. 10. <ul><li>We look at opportunities including: </li></ul><ul><li>Free Trade Agreements </li></ul><ul><li>Preference programs </li></ul><ul><li>From a U.S. perspective, companies need a value proposition. </li></ul>Where are the vendors?
  11. 11. <ul><li>To sell the product, companies need… </li></ul><ul><li>Line opening </li></ul><ul><li>Sales market </li></ul><ul><li>Execute the purchase order </li></ul>Merchandising
  12. 12. Manufacturing
  13. 13. Companies with a global value chain have a number of regulatory requirements Regulatory Coherence
  14. 14. Companies with a global value chain have a number of labeling requirements Labeling Requirements
  15. 15. <ul><li>Companies with a global value chain have a number of testing requirements: </li></ul><ul><li>AZO Dye Compounds </li></ul><ul><li>Cadmium </li></ul><ul><li>Drawstrings </li></ul><ul><li>Flammability </li></ul><ul><li>Lead </li></ul><ul><li>Phthalates </li></ul>Testing Requirements
  16. 16. Harmonized rules & regulations, especially product safety & labeling. TPP needs…
  17. 17. <ul><li>Logistics are a critical element of the global value chain. </li></ul><ul><li>Companies move the product throughout the TPP countries and around the globe </li></ul><ul><li>Warehousing and distribution </li></ul>Logistics
  18. 18. <ul><li>It’s not that simple to enter a country: </li></ul><ul><li>Post-entry verification and enforcement </li></ul><ul><li>Various procedures, including customs procedures, throughout the supply chain </li></ul>Customs Enforcement
  19. 19. Harmonized and streamlined procedures throughout the supply chain. TPP needs…
  20. 20. <ul><li>E-Commerce </li></ul><ul><li>Corporate-structured ownership </li></ul><ul><li>Global tax structure </li></ul><ul><li>Strong IPR protections </li></ul>Global Retail
  21. 21. Global Value Chain Storyboard Where are the vendors? Design Vendor Partnerships Global Sourcing Merchandising Regulatory Coherence for Labeling & Testing Logistics Customs Enforcement Manufacturing Global Retail
  22. 22. What Makes Western Hemisphere Sourcing Successful? <ul><li>Proximity to the U.S. Helps Meet the Demand for Speed-to-Market and Quick Response to New Trends </li></ul><ul><li>Permanent Benefits Support Competitive Price Advantage </li></ul>
  23. 23. Rank Country Market Share Growth Duty-Free Top Apparel Suppliers YE August 2011 1 China 40.79 2.74 - 2 Vietnam 8.20 14.41 - 3 Bangladesh 6.76 13.19 - 4 Indonesia 5.40 12.79 - 5 Honduras 5.07 7.21 94.90 6 Cambodia 4.14 19.53 - 7 Mexico 3.86 2.73 86.19 8 India 3.85 2.03 - 9 El Salvador 3.32 9.68 92.83 10 Pakistan 2.72 0.59 - 11 Thailand 1.66 -4.60 -
  24. 24. Rank Country Market Share Growth Duty-Free Top Apparel Suppliers YE August 2011 12 Nicaragua 1.65 22.94 56.32 13 Philippines 1.54 10.99 - 14 Guatemala 1.34 6.62 60.95 15 Sri Lanka 1.32 4.84 - 16 Haiti 1.14 18.28 74.33 17 Egypt 0.96 6.22 98.38 18 Dom. Rep. 0.93 2.88 90.43 19 Jordan 0.74 -1.09 99.69 20 Taiwan 0.63 -5.32 - 21 Malaysia 0.51 1.88 - 22 Korea 0.33 -10.66 -
  25. 25. Total Apparel Preference Trade
  26. 26. U.S. Apparel Imports from CAFTA
  27. 27. U.S.-Central America FTA Trade 2005 Trade Today Costa Rica: $167.6 million $167.1 million <ul><ul><li>Textiles: $5.2 million </li></ul></ul>$5.2 million <ul><ul><li>Apparel: $162.4 million </li></ul></ul>$163.8 million Dominican Republic: $658.6 million $658.6 million <ul><ul><li>Textiles: $10.5 million </li></ul></ul>$10.5 million <ul><ul><li>Apparel: $648.1 million </li></ul></ul>$648.1 million El Salvador: $2,811.1 million $1,811.1 million <ul><ul><li>Textiles: $43.8 million </li></ul></ul>$43.8 million <ul><ul><li>Apparel: $1,767.3 million </li></ul></ul>$1,767.3 million Guatemala: $1,301.4 million $1,301.4 million <ul><ul><li>Textiles: $9.2 million </li></ul></ul>$9.2 million <ul><ul><li>Apparel: $1,292.2 million </li></ul></ul>$1,292.2 million Honduras: $2,647.0 million $2,647.0million <ul><ul><li>Textiles: $9.1 million </li></ul></ul>$9.1 million <ul><ul><li>Apparel: $2,637.9 million </li></ul></ul>$2,637.9 million Nicaragua: $1,243.5 million $1,243.6 million <ul><ul><li>Textiles: $0.8 million </li></ul></ul>$0.8 million <ul><ul><li>Apparel: $1,242.7 million </li></ul></ul>$1,242.7 million
  28. 28. CAFTA <ul><li>U.S. apparel imports from Honduras peaked in 2004 and 2007 </li></ul><ul><li>U.S. apparel imports from El Salvador peaked in 2002 with a secondary peak in 2009 </li></ul><ul><li>U.S. apparel imports from Guatemala peaked in 2003 </li></ul><ul><li>U.S. apparel imports from the Dominican Republic peaked in 1999 </li></ul><ul><li>U.S. apparel imports from Nicaragua are at an all time high in 2011, previously, imports peaked in 2006, and 2009 </li></ul><ul><li>U.S. apparel imports from Costa Rica peaked in 1996 </li></ul>
  29. 29. CAFTA Duty-Free Treatment of U.S. Apparel Imports Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua Year Ending August 2011 87% of CAFTA Countries’ Apparel (by Value ) is Duty-Free
  30. 30. <ul><li>Total Trade: </li></ul><ul><li>3,254.5 million SME; $7,829.4 million </li></ul><ul><li>CAFTA-Qualifying 84.85% by Quantity; 81.68% by Value </li></ul><ul><li>Apparel </li></ul><ul><li>3,143.8 million SME; $7,750.7 million </li></ul><ul><li>CAFTA-Qualifying 85.44% by Quantity; 81.70% by Value </li></ul>CAFTA Trade Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua
  31. 31. CAFTA: El Salvador Top Textile and Apparel Exports to U.S. Market Year Ending August 2011 Rank Among All U.S. Suppliers Market Share Total Trade: 12 th 1.58 % Apparel Only: 9 th 3.32 % <ul><li>Category/Description % of Textile Exports </li></ul><ul><li>Category 352 Cotton Underwear 27.89% </li></ul><ul><li>Category 332 Cotton Hosiery 13.71% </li></ul><ul><li>Category 338 Cotton Knit Shirts (M&B) 12.76% </li></ul><ul><li>Category 638 MMF Knit Shirts (M&B) 11.62% </li></ul>
  32. 32. El Salvador Duty-Free Treatment of U.S. Apparel Imports Year Ending August 2011 <ul><li>Yarn-Forward Apparel or Fabric-Forward Wool Apparel </li></ul><ul><li>Single Transformation Garments </li></ul>93% of El Salvador’s Apparel (by Value ) is Duty-Free
  33. 33. U.S. Apparel Imports from NAFTA
  34. 34. NAFTA <ul><li>U.S. apparel imports from Mexico peaked in May 2001 at $8,574.3 million </li></ul><ul><li>U.S. apparel imports from Canada peaked in October 2000 at $1,774.9 million </li></ul>Trade 1993 Trade Today Canada: $1,019.9 million $1,303.2 million <ul><ul><li>Textiles: $566.1 million </li></ul></ul>$1,248.6 million <ul><ul><li>Apparel: $453.8 million </li></ul></ul>$54.7 million Mexico: $1,371.9 million $ 2,636.2 million <ul><ul><li>Textiles: $244.9 million </li></ul></ul>$1,673.5 million <ul><ul><li>Apparel: $1,127.0 million </li></ul></ul>$962.8 million
  35. 35. NAFTA Duty-Free Treatment of U.S. Apparel Imports Canada and Mexico Year Ending August 2011 91% of NAFTA Countries’ Apparel (by Value ) is Duty-Free
  36. 36. Haiti Hemispheric Opportunity Through Partnership Encouragement Act (HOPE) <ul><li>Effective Date: December 20, 2006 (Expanded CBTPA Benefits) </li></ul><ul><li>Product Coverage : Apparel and Luggage </li></ul><ul><li>Duty Rates: Duty-free </li></ul><ul><li>Tariff Preference Levels (TPLs): Value Added, Woven Apparel, and Knit Apparel </li></ul><ul><li>Other Benefits: Single Transformation, Earned Import Allowance (3-for-1 Program) </li></ul><ul><li>Short Supply: All yarns and fabrics designated as Short Supply for ANY current or future FTA </li></ul>
  37. 37. Haiti Top Textile and Apparel Exports to U.S. Market Year Ending August 2011 <ul><li>Category/Description % of Textile Exports </li></ul><ul><li>Category 338 Cotton Knit Shirts (M&B) 42.70% </li></ul><ul><li>Category 352 Cotton Underwear 26.29% </li></ul><ul><li>Category 638 MMF Knit Shirts (M&B) 9.44% </li></ul> Rank Among All U.S. Suppliers Market Share Total Trade: 23 th 0.52 % Apparel Only: 16 th 1.14%
  38. 38. Haiti Duty-Free Treatment of U.S. Apparel Imports Haiti HOPE and CBTPA Year Ending August 2011 99% of Apparel from Haiti (by Value ) is Duty-Free
  39. 39. So… What about price?
  40. 40. Category 338 Year Ending August 2011 197,141,312 Dozen $6,586.5 Million Men’s and Boys’ Cotton Knit Shirts
  41. 41. Men’s and Boys’ Cotton Knit Shirts Rank Country Dozen Unit Value Share 1 Honduras 32,207,132 20.99 16.34 2 Haiti 20,232,162 17.41 10.26 3 China 19,047,498 58.57 9.66 4 El Salvador 18,556,270 22.07 9.41 5 Pakistan 14,864,973 37.07 7.54 6 India 12,887,872 40.81 6.54 7 Nicaragua 10,700,107 21.17 5.43 8 Indonesia 9,788,143 42.07 4.97 9 Mexico 9,760,004 25.78 4.95 10 Bangladesh 9,670,378 27.98 4.91 11 Vietnam 8,933,141 46.60 4.53 12 Guatemala 6,107,983 33.84 3.10 13 Dominican Republic 5,945,375 20.31 3.02 14 Cambodia 3,738,510 43.35 1.90 15 Peru 3,274,971 95.41 1.66
  42. 42. U.S. Imports in Category 338 Men’s Knit Cotton Shirts Year Ending August 2011
  43. 43. Category 638 Year Ending August 2011 53,043,855 Dozen $2,146.2 Million Men’s and Boys’ MMF Knit Shirts
  44. 44. Men’s and Boys’ MMF Knit Shirts Rank Country Dozen Unit Value Share 1 Honduras 10,357,650 34.05 19.53 2 El Salvador 6,761,118 24.34 12.75 3 Nicaragua 6,563,180 16.81 12.37 4 China 5,384,658 51.68 10.15 5 Mexico 4,696,789 41.53 8.85 6 Vietnam 3,336,192 61.16 6.29 7 Indonesia 2,192,987 56.20 4.13 8 Haiti 1,789,902 18.72 3.37 9 Jordan 1,689,897 65.92 3.19 10 Egypt 1,361,709 36.91 2.57 11 Thailand 1,026,763 74.58 1.94 12 Guatemala 926,482 56.86 1.75 13 Bangladesh 893,821 34.81 1.69 14 Cambodia 786,374 58.00 1.48 15 Philippines 687,470 44.12 1.30
  45. 45. U.S. Imports in Category 638 Men’s/Boys’ MMF Knit Shirts Year Ending August 2011
  46. 46. Recommendations to Reach Buyers <ul><li>The Right Product at the Right Price </li></ul><ul><li>Promote CAFTA </li></ul><ul><ul><li>Database </li></ul></ul><ul><ul><li>Tradeshows </li></ul></ul><ul><ul><li>Direct Outreach to the Brands </li></ul></ul><ul><li>Can We Improve CAFTA? </li></ul>
  47. 47. Julia K. Hughes President, USA-ITA +1 202 419 0465 [email_address] Thank You!

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