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Real Time US Debt Clock - https://commodity.com/data/usa/debt-clock/ Chapter 10: The Americas and the Caribbean Basin https://1728581.mediaspace.kaltura.com/media/ATT1300+ch+10/1_jg2yiiii Introduction -

North, Central, and South America span the globe vertically, from north to south The technology for spinning and weaving machines developed in Europe migrated to the early colonies through industrial espionage The influences of European, Asian, and African cultures are reflected in different sectors throughout the Americas and in the textiles and apparel found here

Political and Economic Overview -

The terms, America, and, the Americas, as used in this text, refer to the combination of North (Canada and the US), Middle (Mexico, Central America, and the West Indies), and South America Western Hemisphere = North America, Central America, West Indies, and South America In textile and apparel literature, Central America and the West Indies are commonly referred to as the Caribbean Basin countries

Efforts to Unify the Americas -

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Pan-American Union (1910) purpose of closer relations: o Economic o Cultural o Political 40 years later, the ninth Pan-American Conference created the Organization of American States (OAS)

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The Pan-American Union held the First Summit of the Americas in 1994 o Established political, economic, and social development goals to defend democracy, protect human rights, strengthen security against terrorism, and combat illegal drugs o Formed by the FTAA o The OAS was in charge of enforcing these rules A Free Trade Area of the Americas (FTAA) o 34 countries involved o Goal: industrial development through reduction of trade barriers o North Americans see FTAA as an extension of NAFTA, and South Americans see FTAA as an extension of Mercosur (Southern South American Common Market) – is a free trade within in a common external tariff for Brazil, Argentina, Paraguay and Uruguay

Economic and Industrial Standing of Selected American Countries -

Canada has largest geographic size; the US has the largest population Only the US and Canada are considered developed countries; most countries in region are considered developing countries Most of the Central American countries could be defined as newly developing Most of the South American countries are in the “developing” category

Which countries out of this slide would have the most apparel production and the lowest cost labor? -

Newly developed countries would have the most apparel production Developing is in the transition stage Developed countries import the most and the least developed have the least apparel production activity o So, Central America would have the most apparel production and the lowest cost labor

Trends in Textile and Apparel Trade in the Americas -

Dominance of the US, Canada, and Mexico in the textile and apparel trade in the Americas Many US apparel brands sold around the world; however, few garments actually produced in US The force of China is likely to have decreased Caribbean Basin apparel exports since 2008 Import and export charts in the book to compare the Americas

The United States has the highest labor cost at $17.41 and Peru has the lowest labor cost at $2.02 -

Peru has made a niche market of fine alpaca sweaters and fabrics that appeal to the US consumers

The United States – we are still in a huge trade deficit and you can tell by looking at apparel and textiles sector

Role of North American (NAFTA) Countries in Textiles and Apparel -

The North American Free Trade Agreement (NAFTA) went into effect in 1994 o US, Canada, Mexico By 2002, the US was the largest trading partner of Canada and Mexico and the largest foreign investor in both countries The effect of NAFTA on the industrial well-being of the participating countries has been controversial o Since the demise of the global quota system, competition from China and other nations such as Vietnam and Bangladesh has become too great and Mexico has suffered significant setbacks in the overall trade numbers of textiles and apparel o The US has also seen a great deficit, that is why Trump has terminated NAFTA; now it is in talks because he is rethinking his decision o There is a list of rules established by NAFTA on page 309

The US -

Market-oriented economy; private individuals and business firms make most decisions Long-term problems include: o Rapidly rising medical costs o Pension costs of the aging population  Includes retirement plans such as 401K or IRA o Sizable trade and budget deficits o Stagnation of income for middle and lower-income groups

Domestic Production of Textiles and Apparel -

Between 1980 and 2002, the apparel workforce was cut 56.6 percent – this is the result of global sourcing; however, cotton industry still thrives US textile mills have spun almost five million bales on average for each of the years 2006 to 2008 (“National Cotton Council of America,” 2009) US is the third largest cotton producer in the world, China is the first and India is the second

New York -

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New York’s Garment District: garmentdistrictnyc.com/ o Includes fabric shops, cafes, wholesalers, rooftop lounges, accessories, sample sales, patternmakers o Trying to vamp it up to stay alive In January 2010, Mayor Bloomberg announced initiative to ensure fashion industry continues to be centered in NY (Feitelberg &Moin, 2010) o NY is the major fashion marketing center, but the district’s manufacturing faces extinction

California Apparel Centers -

Many manufacturers also abandoning the SF area Opportunity to develop a niche market of designer venues, such as begood clothing in SF (offers organic cotton clothing, membership only but the clothes are as cheap as $15) Levi Strauss and Co. and Guess still have headquarters here but source production offshore Since the mid-1980s, LA County has become the largest apparel production center in the US o Major designer jeans, F21, American Apparel, and Guess started in LA LA Fashion District: http://fashiondistrict.org/ o Retail shopping, fabric, etc. Major center for immigration, especially from Asia, Central America, and Mexico; ready supply of expertise and low-cost labor

US Retailing -

The closings of major brick and mortar stores: Macy’s, Guess, American Apparel, Bebe, BCBG Increased Internet shopping: Revolve, Lulus Walmart is still doing well (374.5mil in sales, 3x larger than any other retailer in the world)

Canada -

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Canada has moved from a largely rural economy into a largely industrial and urban one Canada has established free trade agreements with Chile, Costa Rica, Israel, and Peru, with other agreements under discussion Canada is very similar to the United States’ market-oriented economic system, patterns of production, and living standards Canada Requirements: o All labeling and marking in both English and French o Imported products must have COO (country of origin) labels A key strength of the Canadian economy is a substantial trade surplus, something the US does not have One of Canada’s internal political issues continues to be the relationship with the province of Quebec, with its French-speaking residents and unique culture

Textiles and Apparel in Canada -

Three very active trade associations:

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o The Canadian Textiles Institute o The Canadian Apparel Federation o The Retail Council of Canada The apparel industry has been highly fragmented; Quebec accounted for 61.3 percent of Canada’s apparel production Majority of apparel exports from Canada are destined for the US (90%)

Retailing in Canada -

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Massive retail consolidation over the past two decades, leading to fewer, larger retailers Larger retailers are exerting tremendous price and performance pressures on traditionally smaller apparel companies o So by producing offshore, big box is making their prices less for consumers therefore the smaller companies have to follow that trend and compete but sometimes they cannot compete because they still cannot match their prices and big box retailers are asking for chargebacks which means return inventory that wasn’t sold and they get their money back from suppliers so smaller retailers are going out of business The population and 60 percent of retail sales are concentrated in Ontario and Quebec Department store Hudson’s Bay Company has been a part of Canadian history for three centuries Other well-known countries in Canada include Club Monaco and Lululemon

Mexico -

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Mixture of modern and outmoded industry and agriculture, with a growing private sector NAFTA’s benefits across the country were unequal o The most developed and competitive sectors which are the north and central regions benefitted from NAFTA o The less developed areas in the south did not o Also, large firms benefitted but medium and small size firms did not Free trade created demand for a more skilled Mexican workforce but underinvestment in education has created a roadblock Institutional failures in improving accountability, regulatory effectiveness, and control of corruption (the drug issue – major issue – in 2007, Mexico was the largest foreign supplier of marijuana) have moderated the gains provided by NAFTA (NAFTA, 2003) o Safety in Mexico has tarnished greatly (issue for international business)– need armored cars and bodyguards for business trips

Textiles and Apparel in Mexico -

Mexico’s share of the US market grew dramatically after NAFTA In 2003, China began to dominate production and Mexico has lost market share ever since Today, Mexico supplies only 4.5 percent of US textile and apparel imports, but Mexican textile and apparel exporters are now almost entirely dependent on US retail market demand o US build more factories in Mexico – goal was to reduce their supply chain time (30 weeks) to 20 weeks by building closer factories and wanted to compete with China

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Even with the goal, it was more efficient and cheaper to work with China than with Mexico – even just as fast sometimes In China, they have cities just for manufacturing with all the necessary factories

Retailing in Mexico -

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Developed in two distinct parts: o A growing, modern retail sector with specific target markets, operational efficiencies, and advanced technology o The traditional retail sector with open markets in which prices are bartered, and taxes not paid – mom and pop stores, convenience stores, local grocery stores – owned by families  To hold on, they have to learn how to compete – in US, we have mom and pop smaller stores right alongside Walmart that are still in business Walmart is now Mexico’s largest retailer and is Mexico’s largest private sector employer o Has put many small family owned businesses out of business Sam’s Club is also very successful in Mexico

Caribbean Basin (CBERA) Countries -

Includes Central America and the West Indies o Most people in this region speak French, English, and Spanish West Indies consists of the Bahamas, the Greater Antilles, and the Lesser Antilles Barbados, Cuba, Haiti, the Dominican Republic, and Jamaica are independent island nations; others are territorial possessions of US or European countries Growth of the textile apparel industry is largely the result of US economic development legislation and trade preference programs The group of nations has suffered the most from the end of the quota system o This helped out China the most – allowed China to export as much as they wanted

The yarn-forward rule of most US trade agreements requires use of US yarns and fabrics to qualify for tariff breaks. HTSUS - Allowed cut garments in the US, then export to Caribbean Basin to be assembled, and then imported back to the US after its assembled with tariff only on the value added – it helped the

Caribbean Basin countries because the US needed a lot of sewing services (so CB opened up more sewing services and tariff was only on value added) CBERA or CBI - Expanded the use of 807 by eliminating the quota restraints CBTPA – if you use the yarn in garments in the US, the finished apparel will be US quota free (programs that help the CB countries because of the yarn-forward rule) CAFTA-DR – there are 7 signatories (the US, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua) The greatest challenge when sourcing from this area is to decide which trade preference program is most appropriate. Central American Countries -

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Costa Rica has expanded its relatively stable economy to include strong technology and tourism industries o Costa Rica is an economic success story; its level of living measured by GDP per capita is the highest in this sector o Foreign investors are attracted to this country for its political stability and high education levels o Tourism brings in foreign exchange El Salvador, Guatemala, Honduras, and Nicaragua are relatively unstable politically and economically o El Salvador adopted the U.S. dollar as its currency  Caused problems because the other CA countries devalue their currency against our dollar o Guatemala is the largest and most populous country  Denimatrix – focus on high fashion jeans o Honduras is one of the poorest countries in the Americas but the leading apparel producer in Central America by sales o Nicaragua, the poorest Central American country, continues to be dependent on international aid and debt relief with a textile and apparel sector that consists mostly of assembly operations in government-sponsored free trade zones

The West Indies -

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Dominican Republic o One of fastest economic growth rates in Western Hemisphere, although political problems have persisted o The service sector, including tourism and free trade zones, has taken over as largest employer  14th largest exporter to the US Haiti o Poorest country in the Western Hemisphere o Has small but vital apparel industry

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Following devastating earthquake in January 2010, the U.S. encouraged firms to select this nation for CMT activities

South America -

South America has huge deposits of natural resources, including minerals and petroleum that are not fully commercialized These natural resources, and agriculture, are responsible for the majority of GDP For most countries, privatization of utilities, banking, and trade is still in progress Two trade groups: Andean countries (stems from Andes mountains and includes Bolivia, Columbia, Ecuador, and Peru), in the north, and Mercosur (trade name for southern cone common market which includes Argentina, Brazil, Uruguay and Paraguay – account for 70% of south America’s total economy) countries, in the south

Andean Countries -

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Became eligible for duty-free treatment by the U.S. via the Andean Trade Promotion and Drug Eradication Act (ATPDEA) Relatively small source of U.S. imports of textiles and apparel Colombia has been negotiating with the U.S. for a free trade agreement o Columbia is one of the more successful apparel producers in South America o Their key products include knits, denim, and t-shirts Peru, despite internal problems, has developed a vertically integrated textile and apparel sector from production of raw material through apparel manufacturing o Peru produces high quality products, including combed cotton and knit tops

Southern South American and Mercosur Countries Chile -

Signed free trade agreement with U. S. in 2003 Chile is considered the most stable economy in Latin America o Retailers include Walmart, Topshop, and Zara

Argentina -

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Member of Mercosur, which supports duty-free trade among members Fashion-conscious nation that is magnet for international retailers o Zara, Nike, YSL, Lacoste, Harrods, Calvin Klein o Leading retailer is France’s Carrefore/Promodes Their textile and apparel companies are located mainly in Buenos Aires Argentina’s apparel industry is fragmented more than 65% is run by small families, employing on average 50 people

Brazil -

Largest country in region, with largest population Leading economic power

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The major strength of its textile market has been cotton, but there has been expansion into production of polyester. o Unifi (produce polyester and nylon), santana textiles that has launched ecofriendly stretch denim with elastane

Chapter 11: Asia and Oceania https://1728581.mediaspace.kaltura.com/media/ATT1300+ch+11/1_43i88u9k Introduction -

Asia is the largest continent; countries range from fully developed to least developed Contains the world’s two most populous nations – China and India o Contains largest trading nation – China – with US at #2 and Japan at #3 Half of the Asian continent’s countries have populations smaller than NYC Oceania consists primarily of two developed island countries, Australia and New Zealand

Asian Regional Collaboration -

The Asia-Pacific Economic Cooperation (APEC) – established in 1989 as a form for facilitating economic growth, operation, trade, and investment in the Asia Pacific Region

First efforts – increase trade by reducing trade barriers including tariffs in countries located on the Pacific Rim Across-the-border connectivity in the form of regional and bilateral trade agreements is already in place, with many more on the horizon o In 2009, 166 trade agreements with more than 60 others in various stages of negotiation o

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Economic and Industrial Standing of Countries in Regions of Asia and Oceania -

China has the largest population, India is second East Asia and Oceania have longer life expectancies and higher literacy rates than do SE Asia and South Asia Based on GDP, China has the second largest economy in the world, followed by Japan, Germany, and UK o The US is #1

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Japan, Australia, and New Zealand rank among the most fully developed nations in the world Overall, Oceania is rich; East Asia is relatively rich, except for China; SE Asia is relatively poor, except for Singapore; and South Asia is poor

Overview of Asian Textile and Apparel Trade -

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Migration of textile and apparel production to Asia began over 60 years ago o Started in Japan (first Asian country to produce low cost products including textiles and apparel) At peak in the early 1980s, Hong Kong, Taiwan, and South Korea (the “big three”) supplied almost 30 percent of world exports of apparel and textile – however, when China gained membership to the WTO in 2001, that nation became the dominant apparel supplier in the world, when the… o Big four -> big one More quotas were imposed, which created opportunities for emerging suppliers, including Bangladesh, Macau, and Sri Lanka 2008 – China exports tripled to nearly $120 billion, overtaking the EU with “only” $112 billion Developed countries Australia and New Zealand both have increasing textile and apparel imports – primarily in wool

Participation of Asian Countries in Textiles and Apparel -

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WTO’s elimination of quotas fostered changes in the patterns of production, trade, and consumption of textile and apparel products for Asian nations o The changes here were positive changes that allowed Asian countries to produce and export as much as they could handle, which ultimately made China the richest in the world In 2010, sustainability of supply chains was most frequently mentioned priority Total labor costs per hour in Asia range from $30.81 in Japan to $0.31 in Bangladesh Social costs range from 67 percent in Japan to 11 percent in Thailand and Bangladesh East Asia is kn...