Bruce S.Berton has been regularly motivating the industry through his column in Apparel Online with interesting stories and ground realities.In this issue he takes a closer look at the changing political scenario in the US and its probable impact on trade, particularly in the context of global compliance.The following article was written in the end of 2003 when many Americans considered quota phase out as a potential threat to the economy.Now that the US has a Democratic Party majority in Congress, there will be significant efforts to bring all imports into compliance in line with the agenda drawn out that year…
There is no magic weapon in this war, but I would like to tell you about what is in place and what is being done to allow our economy to benefit by globalisation.
China’s entry into the World Trade Organization (WTO) came with safeguards that are yet to be tested. WTO members are guaranteed reciprocal access to each other’s markets, but with restraints. To simplify:
- Retention of ‘non-market economy’ methodology in calculating normal value antidumping investigations, which enables specific US industries to continue to obtain high tariffs on imported Chinese products sold at ‘less than fair value;’
- A special ‘safeguard’ mechanism enabling the US to erect tariffs and quotas to address ‘market disruption’ from surges in Chinese imports;
- A textile safeguard to protect the politically connected American textile manufacturers from an expected flood of Chinese clothing and textiles once the major quotas are lifted.
These antidumping investigations and higher tariffs and quotas will eventually be applied, but will you be around when these actions are taken? This is what I mean when I say it is possible to lose the battle, but win the war.
Staying the course and planning ahead will make you a survivor.
The US Department of Trade is working tirelessly on behalf of all industries, and especially the textile and apparel industries, to initiate and complete Free Trade Agreements (FTA), which are outside of the WTO jurisdiction.
We have NAFTA, CBTPA, CAFTA, AGOA, ANTPA, and Chile/Singapore TPA in place to allow no duty and no quota free trade, PROVIDING YOU FOLLOW THE RULES.
More Free Trade Agreements are in the works, and it would behoove you to understand their advantages and how they work.
The fiasco taking place with the WTO is just an example of the problems that are yet to unfold, as the globalisation of product and trade moves in this 21st century. Sourcing is becoming more selective today, because of the requirements of the retailers and their policies.
The playing field is not level and most likely will never be, mainly due to transshipping, smuggling, fraudulent documentation, and other methods I do not wish to mention.
It is up to you. If you desire to put your head on your pillow and sleep, knowing you have played by the rules, then take steps that should not allow your so-called competition to cheat and steal from you and your firm.
NAFTA is working proof of the success of a Free Trade Agreement. If you wish to compare NAFTA with the EU, from 1994 to 2000, the rounded figures are as follows:
- NAFTA experienced an increase of almost 42% from 1994-2000 with the US at 43.4%, Canada with 28.3%, and Mexico at a 34.5%.
- The EU grew less than 3% from 1994-2000.
- While Ireland and the UK grew significantly during this time, France, Germany and Italy actually declined. These countries are three of the four largest economies in the EU and are well over half of the total GDP.
You can stick you head in the sand, you can say none of this directly affects your business, or you can open your mind and investigate all the opportunities that help you remain competitive.
I am equally involved in assisting our clients in both the import and the export of their products, in the textile and apparel industry, as well as other sectors. As they say, ‘There is no free lunch’, and it is much safer to see the risks on the road ahead, than have an accident from which you may not recover.
The war of trade competition is continually changing, and even the battlegrounds vary as to the strategy required to defend or take a position. It is up to all of us, working together, to keep this industry moving forward.