Textiles and Apparel: Assessment of the Competitiveness of Certain Foreign Suppliers to the U.S. ...

583 Pages·2004·5.37 MB·English

U.S. International Trade Commission
COMMISSIONERS
Deanna Tanner Okun, Chairman
JenniferA. Hillman, Vice Chairman
Marcia E. Miller
Stephen Koplan
Charlotte R. Lane
Daniel R. Pearson
RobertA.Rogowsky
DirectorofOperations
VernSimpson
DirectorofIndustries
Thisreportwaspreparedbythe
OfficeofIndustriesandtheOfficeofEconomics
Address all communications to
Secretary to the Commission
United States InternationalTrade Commission
Washington, DC 20436
U.S. International Trade Commission
Washington,DC20436
www.usitc.gov
Textiles and Apparel: Assessment of the
Competitiveness of Certain Foreign
Suppliers to the U.S. Market
Volume I
Investigation No. 332--448
CLASSIFIED BY: United States Trade Representative, Letter Dated March 3, 1998
DECLASSIFIED BY: Robert B. Zoellick, United States Trade Representative,
Letter Dated January 26, 2004
Publication 3671 January 2004
Project Leaders
Kimberlie Freund and Robert W. Wallace
Office of Industries
Brian R. Allen, Gail Burns, John T. Cutchin, Roger Corey, Vincent DeSapio, Cynthia Foreso, John Fry,
William L. Green, Robert Hughes, Jackie W. Jones, Selamawit Legesse, Ruben Mata, Douglas Newman,
Robert L. Randall, Laura Rodriguez, Josephine Spalding-Masgarha, Heather Sykes, Karl S. Tsuji,
Norman Van Toai, Ralph J. Watkins, and Judith-Anne Webster
Office of Economics
Soamiely Andriamananjara, Michael Barry, Nannette Christ, Joanne E. Guth, Thomas E. Jennings,
Diane Manifold, Walker A. Pollard, James Stamps, and Edward C. Wilson
Office of General Counsel
William W. Gearhart
Primary Reviewers
Janis Summers and Cathy Jabara
Administrative Support
Phyllis Boone, Judith Bryant, Brenda Carroll, Louise Gillen, Sharon Greenfield, Monica Reed,
Wanda Tolson, Zema Tucker, and Sharon Williams
Under the direction of
John J. Gersic, Chief
Energy, Chemicals, and Textiles Division
NOTICE
THIS REPORT IS A PUBLIC VERSION OF THE REPORT SUBMITTED TO THE
UNITED STATES TRADE REPRESENTATIVE ON JUNE 30, 2003. ALL
CONFIDENTIAL BUSINESS INFORMATION HAS BEEN REMOVED AND
REPLACED WITH ASTERISKS (***).

Abbreviated Table of Contents
Page
Volume I
Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
List of selected acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Chapter 1: Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-1
Chapter 2: Review of the literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
Chapter 3: Comparative assessment of the competitiveness of the textile and
apparel sector in selected countries . . . . . . . . . . . . . . . . . . . . . . . . 3-1
Chapter 4: Position of interested parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1
Appendixes
A. Request letter from the United States Trade Representative. . . . . . . . . . . . . . . A-1
B. Federal Register notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
C. Calendar of public hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
D. Interviews by Commission staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
Volume II is available only on CD-ROM.
Volume II (Appendixes E - L): Profiles of Textile and Apparel
Industries in Selected Countries
E. East Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
F. South Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
G. ASEAN countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1
H. Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1
I. Caribbean Basin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
J. Andean Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . J-1
K. Sub-Saharan Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . K-1
L. Egypt, Israel, Jordan, and Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . L-1

ABSTRACT
Following receipt of a request from the United States Trade Representative (USTR) on
September 16, 2002, the U.S. International Trade Commission instituted investigation No.
332-448, Textiles and Apparel: Assessment of the Competitiveness of Certain Foreign
Suppliers to the U.S. Market, under section 332(g) of the Tariff Act of 1930 (19 U.S.C.
1332(g)). As requested by the USTR, the report assesses the textile and apparel industries
of certain foreign suppliers to the U.S. market with respect to their competitiveness and other
factors pertinent to their adjustment to the final completion of the phaseout of quotas on
January 1, 2005, as required by the Uruguay Round Agreement on Textiles and Clothing
(ATC). The foreign suppliers are (1) significant ATC suppliers to the U.S. market, (2)
Mexico, and (3) other supplying countries with preferential market access.
China is expected to become the “supplier of choice” for most U.S. importers (the large
apparel companies and retailers) because of its ability to make almost any type of textile and
apparel product at any quality level at a competitive price. However, the extent to which
China continues to expand its shipments following quota elimination in 2005 will be
tempered by the uncertainty over the use by the United States of the textile-specific
safeguard provision contained in China’s WTO protocol of accession. To reduce the risk of
sourcing from only one country, U.S. importers also plan to expand trade relationships with
other low-cost countries as alternatives to China, particularly with India, which also has a
very large manufacturing base for textiles and apparel and a large supply of relatively low-
cost skilled labor. One or two other low-cost exporting countries in South Asia--Bangladesh
or Pakistan--are expected to emerge as major suppliers for a narrower but still significant
range of goods. Some U.S. importers indicated they would also consider CBERA countries,
particularly those located in Central America, as a major source of supply if a Central
American or hemispheric free-trade agreement is negotiated that allows the use of third-
country fabrics. In the ASEAN region, the only countries considered competitive as major
alternate suppliers to China or India are Vietnam and, to a lesser extent, Indonesia. However,
although both countries have an abundant supply of low-cost labor, Vietnam will not be
eligible for quota elimination until it becomes a WTO member, while Indonesia is
considered somewhat risky because of its political and social unrest.
Although many countries may see their share of the U.S. market decline, a large number of
countries likely will become second-tier suppliers to U.S. apparel companies and retailers
in niche goods and services. As U.S. firms strive to balance cost, flexibility, speed, and risk
in their sourcing strategies, they will look to the second-tier suppliers to meet those needs
not met by the first-tier suppliers. Regardless of the outcome of any regional free-trade
agreements, the production of certain goods likely will remain in Mexico and the CBERA
region to service U.S. buyers’ quick turnaround or mid-season orders requirements. Turkey
and Colombia also are considered capable suppliers for quick turnaround business.
The information and analysis in this report are for the purpose of this report only. Nothing
in this report should be construed to indicate how the Commission would find in an
investigation conducted under other statutory authority.