Garment exports to US may lose out to Africa

Bangladesh could lose its competitiveness to African countries for export of garments to the United States in the face of discriminatory tariff benefits.

garment exports to us from african countries

With a zero duty benefit under the Act Growth and Opportunity in Africa (AGOA), export of clothing products originating in different African countries has been on the rise in the United States.

Clothing exports to the United States from nine advanced African countries increased by 9.66 percent year on year to $ 926.8 million in 2013, according to data from the US Department of Commerce.

Bangladesh exports garments worth just over $ 5 billion per year in the United States, the largest export destination for the country, paying 15.61 percent duty.

Bangladesh Garment exporters paid $ 828 million to US Customs rights last year and $ 3.41 billion over the past five years, according to the Ministry of Commerce of Bangladesh.

However, apparel exports to the United States from Bangladesh fell 1.12 percent to $ 2.18 billion in the first five months of 2014 with the same period a year ago, according to the US Department Trade.

“Obviously, the number of competitors will increase if African nations are developing in exports to the US,” said Abdus Salam Murshedy, former president of the Bangladesh Garment Manufacturers and Exporters.

“We will lose our competitive edge in a discriminatory service structure and a higher cost of production in the domestic market,” said Murshedy. “African countries have the advantage of cotton, Bangladesh did not.”

Large companies such as VF Corp and PVH Corp eyeing the massive continent of Africa as a future production site of clothes that can be exported to the United States duty-free and quota.

“Africa is prime and ready to go,” said Bill McRaith, head of the supply chain for PVH Corp, formerly known as Phillips-Van Heusen, whose labels include Tommy Hilfiger and Calvin Klein, according to a report by Apparel Magazine.

The company takes a commitment of 20 years for the African region with an eye on vertical operations and socially responsible factories.

McRaith, who worked in the clothing supply for decades, spoke at a panel organized by the United States Association of fashion industry (USFIA) on August 17 at the Magic Show in Las Vegas. The topic was “the future: from the western hemisphere in Africa: pros and cons”.

One of the reasons why Africa is becoming popular is the AGOA which gives duty-free and quota-free status to apparel made in more than 45 countries in sub-Saharan Africa.

PVH is already producing garments in Lesotho and Kenya, but eyeing a vertical model in which the company would use the African cotton for fabric, then cut and sew clothing.

“You hear people say,” Where is the next China Africa seems to be the following solution for the United States? “Said the executive PVH, according to the magazine report.

“The beauty of Africa is low cost,” McRaith said.

In Ethiopia, minimum wages can be as low as $ 23 a month, he said. A living wage for garment workers hovering around $ 100 a month in a country where H & M, Primark and Tesco have been producing clothes, McRaith added.

Moreover, landlocked Ethiopia becomes a preferred sourcing location because its energy is supplied by geothermal and hydroelectric sources that make its electricity prices one-fifth of those in China.

McRaith visited the continent since 1982 and believes that trade preferences for Africa will boost production in the region for low cost clothing that should not be delivered quickly. He calls this alternative “low and slow”, based on the South-East Asian model.

Julie Hughes, President USFIA, stressed that even if China is becoming more expensive, it still provided 41 percent of all clothing imported into the United States, 35 percent of textiles, 18 per cent of son and 67 percent of made-ups, which include sheets, towels, bed covers, aprons and other items related to the dwelling.

But the clothing companies are looking for other places supply that prices and wages are rising in China, the magazine report.

A distinctive advantage in the trade preference of Africa is that the fabric can come from any country, including places such as China and South Korea, for the manufacture of clothes and still receive the free status rights.

This gives an advantage to Africa from major apparel producing countries such as China and Vietnam, whose clothes are subject to the rates, the report said the magazine.

Refayet Ullah Mirdha

Source by:  the daily star

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