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U.S. TradeU.S. TradeOpportunities Opportunities
& & ChallengesChallenges
November 16, 2011November 16, 2011
WHAT DO U.S. BRANDS AND WHAT DO U.S. BRANDS AND RETAILERS WANT? RETAILERS WANT?
Sourcing decisions based on:Sourcing decisions based on:•Quantity•Value•Predictability
A storyboard…A storyboard…
Where are the vendors?
Design
Vendor
Partnerships
Global
Sourcing
Merchandisin
gRegulatory Coherence for Labeling & Testing
Logistics Customs
Enforcement
Manufacturing
Global Retail
Global Value Chain Global Value Chain StoryboardStoryboard
Design starts with three elements:
1. Vision2. Concept3. Quality
Design
Design
Vendor
Partnership
sWhile 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.
Global
Sourcing
Global sourcing criteria include:•Value•On-time delivery •Minimums•Fabric and trim options
A liberal, simple, A liberal, simple, streamlined rule of streamlined rule of
origin.origin.
TPP needs…
We look at opportunities including:•Free Trade Agreements•Preference programs
From a U.S. perspective, companies need a value proposition.
Where are
the
vendors?
To sell the product, companies need…
•Line opening•Sales market•Execute the purchase order
Merchandisi
ng
Manufacturin
g
Regulator
y
CoherenceCompanies with a global value chain have a number of regulatory requirements
Labeling
Requirement
s
Companies with a global value chain have a number of labeling requirements
Testing
Requirement
s
Companies with a global value chain have a number of testing requirements:
•AZO Dye Compounds•Cadmium•Drawstrings•Flammability•Lead•Phthalates
Harmonized rules & Harmonized rules & regulations, regulations,
especially product especially product safety & labeling.safety & labeling.
TPP needs…
Logistic
sLogistics are a critical element of the global value chain.•Companies move the product throughout the TPP countries and around the globe•Warehousing and distribution
Customs
Enforceme
nt
It’s not that simple to enter a country:•Post-entry verification and enforcement•Various procedures, including customs procedures, throughout the supply chain
Harmonized and streamlined procedures
throughout the supply chain.
TPP needs…
Global
Retail
• E-Commerce• Corporate-structured
ownership• Global tax structure• Strong IPR protections
Where are the vendors?
Design
Vendor
Partnerships
Global
Sourcing
Merchandisin
gRegulatory Coherence for Labeling & Testing
Logistics Customs
Enforcement
Manufacturing
Global Retail
Global Value Chain Global Value Chain StoryboardStoryboard
What Makes Western Hemisphere What Makes Western Hemisphere Sourcing Successful?Sourcing Successful?
• Proximity to the U.S. Helps Meet the Demand for Speed-to-Market and Quick Response to New Trends
• Permanent Benefits Support Competitive Price Advantage
Rank Country Market Share Growth Duty-Free1 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 -
Top Apparel Top Apparel SuppliersSuppliers
YE August 2011YE August 2011
Rank Country Market Share Growth Duty-Free12 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 -
Top Apparel Top Apparel SuppliersSuppliers
YE August 2011YE August 2011
Total Apparel Total Apparel Preference TradePreference Trade
0
500
1,000
1,500
2,000
2,500
3,000
Mill
ion
$
COSTA RICA EL SALVADOR GUATEMALA HONDURAS NICARAGUA DOMINICAN REP.
U.S. Apparel Imports from U.S. Apparel Imports from CAFTACAFTA
U.S.-Central America FTAU.S.-Central America FTATrade 2005 Trade Today
Costa Rica: $167.6 million $167.1 million
Textiles: $5.2 million $5.2 million
Apparel: $162.4 million
$163.8 million
Dominican Republic: $658.6 million $658.6 million
Textiles: $10.5 million $10.5 million
Apparel: $648.1 million
$648.1 million
El Salvador: $2,811.1 million
$1,811.1 million
Textiles: $43.8 million $43.8 million
Apparel: $1,767.3 million $1,767.3 million
Guatemala: $1,301.4 million
$1,301.4 million
Textiles: $9.2 million $9.2 million
Apparel: $1,292.2 million $1,292.2 million
Honduras: $2,647.0 million $2,647.0million
Textiles: $9.1 million $9.1 million
Apparel: $2,637.9 million $2,637.9 million
Nicaragua: $1,243.5 million $1,243.6 million
Textiles: $0.8 million $0.8 million
Apparel: $1,242.7 million $1,242.7 million
CAFTACAFTA
• U.S. apparel imports from Honduras peaked in 2004 and 2007
• U.S. apparel imports from El Salvador peaked in 2002 with a secondary peak in 2009
• U.S. apparel imports from Guatemala peaked in 2003
• U.S. apparel imports from the Dominican Republic peaked in 1999
• U.S. apparel imports from Nicaragua are at an all time high in 2011, previously, imports peaked in 2006, and 2009
• U.S. apparel imports from Costa Rica peaked in 1996
CAFTA Qualifying74.53%
Non-CAFTA Qualifying
12.94%
Short Supply3.66%
Costa Rica TPLs0.01%
MFN0.57%
Nicaragua TPLs6.18%
Cumulation1.79%
Reduced Duty0.00%
DR 2-for-10.32%
8070.00%
CAFTACAFTADuty-Free Treatment of U.S. Apparel ImportsDuty-Free Treatment of U.S. Apparel Imports
Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, NicaraguaCosta Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua Year Ending August 2011Year Ending August 2011
87% of CAFTA 87% of CAFTA Countries’ Countries’ Apparel (by Apparel (by ValueValue) is ) is Duty-FreeDuty-Free
• Total Trade:
3,254.5 million SME; $7,829.4 million
CAFTA-Qualifying 84.85% by Quantity; 81.68% by Value
• Apparel
3,143.8 million SME; $7,750.7 million
CAFTA-Qualifying 85.44% by Quantity; 81.70% by Value
CAFTA TradeCAFTA TradeCosta Rica,Costa Rica, Dominican Republic, El Salvador, Dominican Republic, El Salvador,
Guatemala, Honduras, NicaraguaGuatemala, Honduras, Nicaragua
CAFTA: El Salvador CAFTA: El Salvador Top Textile and Apparel Exports to U.S. Top Textile and Apparel Exports to U.S.
MarketMarketYear Ending August 2011Year Ending August 2011
Rank Among All U.S. Suppliers Market Share
Total Trade: 12th 1.58 %
Apparel Only: 9th 3.32 %
Category/Description % of Textile Exports
• Category 352 Cotton Underwear 27.89%
• Category 332 Cotton Hosiery 13.71%
• Category 338 Cotton Knit Shirts (M&B) 12.76%
• Category 638 MMF Knit Shirts (M&B) 11.62%
El SalvadorEl SalvadorDuty-Free Treatment of U.S. Apparel ImportsDuty-Free Treatment of U.S. Apparel Imports
Year Ending August 2011Year Ending August 2011
CAFTA-Qualifying89.74%
Short Supply4.43%
Non-CAFTA-Qualifying5.70%
Cumulation0.03%
•Yarn-Forward Apparel or Fabric-Forward Wool Apparel
•Single Transformation Garments
93% of
El Salvador’s Apparel
(by Value) is
Duty-Free
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Mill
ion
$
CANADA MEXICO
U.S. Apparel Imports from U.S. Apparel Imports from NAFTANAFTA
NAFTANAFTATrade 1993 Trade Today
Canada: $1,019.9 million
$1,303.2 million
Textiles: $566.1 million $1,248.6 millionApparel: $453.8 million $54.7 million
Mexico: $1,371.9 million
$ 2,636.2 million
Textiles: $244.9 million $1,673.5 millionApparel: $1,127.0 million $962.8 million
•U.S. apparel imports from Mexico peaked in May 2001 at $8,574.3 million
•U.S. apparel imports from Canada peaked in October 2000 at $1,774.9 million
Non-NAFTA Qualifying
7%
NAFTA Qualifying69.48%
807A2.43%
80713.21%
Canada TPLs5%
Mexico TPLs3%
NAFTANAFTADuty-Free Treatment of U.S. Apparel ImportsDuty-Free Treatment of U.S. Apparel Imports
Canada and MexicoCanada and Mexico Year Ending August 2011Year Ending August 2011
91% of NAFTA 91% of NAFTA Countries’ Countries’ Apparel (by Apparel (by ValueValue) is ) is Duty-FreeDuty-Free
Haiti Hemispheric Opportunity Haiti Hemispheric Opportunity Through Partnership Through Partnership
Encouragement Act (HOPE)Encouragement Act (HOPE)
• Effective Date: December 20, 2006 (Expanded CBTPA Benefits)
• Product Coverage: Apparel and Luggage
• Duty Rates: Duty-free
• Tariff Preference Levels (TPLs): Value Added, Woven Apparel, and Knit Apparel
• Other Benefits: Single Transformation, Earned Import Allowance (3-for-1 Program)
• Short Supply: All yarns and fabrics designated as Short Supply for ANY current or future FTA
HaitiHaitiTop Textile and Apparel Exports to U.S. Top Textile and Apparel Exports to U.S.
MarketMarketYear Ending August 2011Year Ending August 2011
Category/Description % of Textile Exports
• Category 338 Cotton Knit Shirts (M&B) 42.70%
• Category 352 Cotton Underwear 26.29%
• Category 638 MMF Knit Shirts (M&B) 9.44%
Rank Among All U.S. Suppliers Market Share
Total Trade: 23th 0.52 %
Apparel Only: 16th 1.14%
HaitiHaitiDuty-Free Treatment of U.S. Apparel ImportsDuty-Free Treatment of U.S. Apparel Imports
Haiti HOPE and CBTPAHaiti HOPE and CBTPA Year Ending August 2011Year Ending August 2011
CBTPA Knit TPL53.70%
CBTPA T-Shirt TPL19.94%
Non-Preference2.02%
HOPE Value Added TPL6.61%
HOPE Woven TPL8.25%
HOPE Knit TPL8.72%
Mixed Cutting0.26%
8090.50%
99% of 99% of Apparel from Apparel from HaitiHaiti
(by (by ValueValue) is ) is Duty-FreeDuty-Free
So…So…
What about What about price?price?
Category 338
Year Ending August 2011197,141,312 Dozen
$6,586.5 Million
Men’s and Boys’ Cotton Men’s and Boys’ Cotton Knit ShirtsKnit Shirts
Men’s and Boys’ Cotton Knit ShirtsMen’s and Boys’ Cotton Knit Shirts
RankRank CountryCountry DozenDozen Unit ValueUnit Value ShareShare11 HondurasHonduras 32,207,13232,207,132 20.9920.99 16.3416.34
22 HaitiHaiti 20,232,16220,232,162 17.4117.41 10.2610.26
33 ChinaChina 19,047,49819,047,498 58.5758.57 9.669.66
44 El SalvadorEl Salvador 18,556,27018,556,270 22.0722.07 9.419.41
55 PakistanPakistan 14,864,97314,864,973 37.0737.07 7.547.54
66 IndiaIndia 12,887,87212,887,872 40.8140.81 6.546.54
77 NicaraguaNicaragua 10,700,10710,700,107 21.1721.17 5.435.43
88 IndonesiaIndonesia 9,788,1439,788,143 42.0742.07 4.974.97
99 MexicoMexico 9,760,0049,760,004 25.7825.78 4.954.95
1010 BangladeshBangladesh 9,670,3789,670,378 27.9827.98 4.914.91
1111 VietnamVietnam 8,933,1418,933,141 46.6046.60 4.534.53
1212 GuatemalaGuatemala 6,107,9836,107,983 33.8433.84 3.103.10
1313Dominican Dominican RepublicRepublic 5,945,3755,945,375 20.3120.31 3.023.02
1414 CambodiaCambodia 3,738,5103,738,510 43.3543.35 1.901.90
1515 PeruPeru 3,274,9713,274,971 95.4195.41 1.661.66
U.S. Imports in Category 338 Men’s Knit Cotton U.S. Imports in Category 338 Men’s Knit Cotton Shirts Shirts
Year Ending August 2011Year Ending August 2011
China, $58.57
Vietnam, $46.60
Indonesia, $42.07
Cambodia, $43.35
Guatemala, $33.84
Bangladesh, $27.98
Mexico, $25.78
El Salvador, $22.07
Nicaragua, $21.17
Honduras, $20.99
Dominican Rep., $20.31
World, $33.41
Category 638
Year Ending August 201153,043,855 Dozen$2,146.2 Million
Men’s and Boys’ MMF Knit Men’s and Boys’ MMF Knit ShirtsShirts
Men’s and Boys’ MMF Knit ShirtsMen’s and Boys’ MMF Knit ShirtsRankRank CountryCountry DozenDozen Unit ValueUnit Value ShareShare
11 HondurasHonduras 10,357,65010,357,650 34.0534.05 19.5319.53
22 El SalvadorEl Salvador 6,761,1186,761,118 24.3424.34 12.7512.75
33 NicaraguaNicaragua 6,563,1806,563,180 16.8116.81 12.3712.37
44 ChinaChina 5,384,6585,384,658 51.6851.68 10.1510.15
55 MexicoMexico 4,696,7894,696,789 41.5341.53 8.858.85
66 VietnamVietnam 3,336,1923,336,192 61.1661.16 6.296.29
77 IndonesiaIndonesia 2,192,9872,192,987 56.2056.20 4.134.13
88 HaitiHaiti 1,789,9021,789,902 18.7218.72 3.373.37
99 JordanJordan 1,689,8971,689,897 65.9265.92 3.193.19
1010 EgyptEgypt 1,361,7091,361,709 36.9136.91 2.572.57
1111 ThailandThailand 1,026,7631,026,763 74.5874.58 1.941.94
1212 GuatemalaGuatemala 926,482926,482 56.8656.86 1.751.75
1313 BangladeshBangladesh 893,821893,821 34.8134.81 1.691.69
1414 CambodiaCambodia 786,374786,374 58.0058.00 1.481.48
1515 Philippines Philippines 687,470687,470 44.1244.12 1.301.30
U.S. Imports in Category 638 Men’s/Boys’ MMF Knit U.S. Imports in Category 638 Men’s/Boys’ MMF Knit ShirtsShirts
Year Ending August 2011Year Ending August 2011
El Salvador, $24.34
Haiti, $18.72
Nicragua, $16.81
Thailand, $74.58
Jordan, $65.92
Vietnam, $61.16
Cambodia, $58.00
Guatemala, $56.86
Indonesia, $56.20
China, $51.68
Philippines, $44.12
Mexico, $41.53
World, $40.46
Egypt, $36.91
Bangladesh, $34.81
Honduras, $34.05
Recommendations to Reach Recommendations to Reach BuyersBuyers
• The Right Product at the Right Price
• Promote CAFTA– Database– Tradeshows– Direct Outreach to the Brands
• Can We Improve CAFTA?
