International Affiliates News
International Affiliates News
International Affiliates Newsletter for January 29, 2016
IN THIS ISSUE:
- TPP UPDATE: SIGNING NEXT WEEK, BUT THE WORK IS JUST BEGINNING!
- EUROMONITOR INTERNATIONAL 2016 APPAREL & FOOTWEAR DATA EXPLORES GROWTH OF FAST FASHION, SPORTSWEAR, OMNICHANNEL
- WRAP UPDATES 12 PRINCIPLES
- USFIA CALENDAR OF EVENTS
As you know, the 12 Trans-Pacific Partnership (TPP) ministers will meet in Auckland, New Zealand, on February 4, 2016, to sign the text. In advance of this ceremony, the New Zealand government published the final, official, English-language version of the legal text and annexes, available at http://www.tpp.mfat.govt.nz/text. However, the work is just beginning. After the 12 countries sign the agreement, the hard work begins because each country will need to ratify the agreement according to their own parliamentary procedures. In the United States, the Obama Administration and Congress will work together to prepare the implementing legislation. Based on the fact that the TPP text itself anticipates that it could be as long as two years from the date of signing before the agreement goes into effect, we are realistically estimating that the agreement by be in effect in 2018. And just this week, the Peterson Institute for International Economics released a report, The Economic Effects of the Trans-Pacific Partnership: New Estimates. They found that the United States will be the largest beneficiary of the TPP, with an increase in annual real incomes by $131 billion, or .5 percent of GDP, and an increase in annual exports by $357 billion, or 9.1 percent of exports, by 2030. These gains can be thought of as the equivalent of $1.45 trillion in investment, and delaying the launch of TPP by even one year would represent a $77 billion permanent loss to the U.S. economy.
In the meantime, organizations including the United States Fashion Industry Association (USFIA) have continued to speak out on the agreement. From January 13 to 15th, the U.S. International Trade Commission (ITC) held three days of hearings on the “Trans-Pacific Partnership Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors.” On the last day of hearings, representatives from major U.S. fashion, footwear, retail, and cosmetics associations testified about the impact of the TPP on the industries. All of the organizations expressed support for TPP, but many also noted the missed opportunities, especially for textiles and apparel. In her testimony, USFIA President Julia K. Hughes expressed the association’s support for “better market access, not just to boost U.S. exports or U.S. imports, but to facilitate global trade.” However,
USFIA continues to believe that the United States should change its negotiating stance to recognize the global value chain and the jobs created by American brands, retailers, and importers. Unfortunately, the TPP falls short. There are certainly benefits in the agreement for USFIA member companies, but the agreement maintains the basic restrictive provisions that have existed since the negotiation of NAFTA in the early 1990s, and which ignore the international scope of the fashion industry…
From this perspective, USFIA and our members applaud the conclusion of the TPP agreement. Nevertheless, we remain disappointed that the negotiators missed the opportunity to craft an agreement that recognizes the way that fashion brands and retailers do business. The lengthy duty phase-outs for many key products, and the reliance on a yarn-forward rule of origin, limit opportunities for our members to reach new consumers in the TPP countries and limit our opportunities to create jobs in the United States.
Hughes expanded on the benefits and opportunities in the agreement in her testimony, which is available for download here.
Of particular note, the National Council of Textile Organizations (NCTO) voted to formally support the TPP, saying that their principal objectives were met as part of the finalized terms of the agreement. These objectives include:
- A strong yarn forward rule of origin for the vast majority of textile and apparel products.
- Reasonable, multi-year tariff phase-outs for sensitive textile and apparel products.
- Terms that provided for the stability of the Western Hemisphere textile and apparel production chain.
The full statement is available on the NCTO website.
EUROMONITOR INTERNATIONAL 2016 APPAREL & FOOTWEAR DATA EXPLORES GROWTH OF FAST FASHION, SPORTSWEAR, OMNICHANNEL
Euromonitor International is pleased to announce that the 2016 Apparel and Footwear edition is now live and available to access on Passport. The updated research provides latest insights on how the apparel and footwear industry performed during 2015 and identifies key prospects through to 2020.
KEY RESEARCH HIGHLIGHTS
- Fashion driven markets go “fast-fashion”
- US$ dollar strengthening erodes margins
- Uneven growth within developing markets
- Omni-channel becomes the norm
- Sportswear keeps outgrowing the overall category
To read this article, visit our website.
Worldwide Responsible Accredited Production (WRAP), an Associate Member of USFIA, has revised its 12 Principles with a new approach to the issue of working hours. The WRAP Principles are based on generally accepted international workplace standards, local laws and workplace regulations, and include the spirit or language of relevant conventions of the International Labor Organization (ILO). The Principles encompass human resources management, health and safety, environmental practices, and legal compliance including import/export and customs compliance and security standards. Avedis Seferian, President & CEO of WRAP, writes:
The WRAP Board had the topic of working hours on the agenda for all of our meetings in 2015, looking for a more refined approach to the issue, one focused on transparency and driving actual improvement. After a lot of consideration, they have recently approved a revised version of our 12 Principles…The main revision is a new approach to working hours, where we are changing our certification criteria to allow factories that meet certain conditions to qualify for a standard, 1-year (Gold) certification, even if they are not yet in full compliance with limits on working hours set in local laws…
The conditions are:
- Being fully transparent about their working hours;
- Ensuring those hours are all being worked voluntarily, in conditions that protect worker safety and health;
- Compensating all employees fully in accordance with WRAP’s Principle on Compensation and Benefits; and
- Showing progress, from one audit to the next, toward meeting the working hours’ requirements in local law.
More information is available on the WRAP website.
USFIA International Affiliates are invited to join us for the following events—and as always, you’re eligible to take advantage of USFIA member discounts!
February 4 (Online): USFIA and the Better Cotton Initiative (BCI) will host a free webinar on Levi’s sustainable denim project.
February 11 (San Francisco, CA): USFIA will host Fashion Forward, a full-day trade and customs seminar at Levi Strauss & Co. We invite you to join us to meet many companies based on the West Coast and hear about TPP, supply chain security, and more!
February 15-18 (Las Vegas, NV): USFIA will participate in SOURCING at MAGIC, the largest textile and apparel trade show in the United States. Drop by our booth in the Sourcing Hall, and make plans to attend our seminars on TPP and sourcing!
March 1 (Hong Kong): USFIA and Innovation Partner Amber Road will host SourceTrends2016: Getting Ready for Growth and Expansion into New Regions, a full-day seminar at the Intercontinental Hong Kong.
March 14-15 (Shanghai): USFIA President Julia K. Hughes will speak about TPP at the China & Asia Textile Forum. Contact us for a form to receive a significant discount on your registration.
International Affiliates Newsletter for January 15, 2016
International Affiliates Newsletter for November 13, 2015
IN THIS ISSUE:
- APPAREL IMPORTERS CONFERENCE FOCUSES ON TPP, INNOVATION, & COLLABORATION
- USFIA ELECTS NEW OFFICERS, BOARD MEMBERS
- USFIA CALENDAR OF EVENTS
On November 4, 2015, attendees at the 27th Annual Apparel Importers Trade & Transportation Conference in New York heard from a wide variety of government, legal, and industry speakers on current issues facing the industry. Hosted jointly by the U.S. Fashion Industry Association (USFIA) and the American Import Shippers Association (AISA), the one-day event highlighted lingering questions about the Trans-Pacific Partnership (TPP) as well as progress and growth through innovation and collaboration both in the supply chain around the globe and here in the United States.
The two keynote speakers discussed domestic issues with global implications from the perspective of transportation.
Ron Widdows, Principal for Widdows & Associations in Singapore and Former Group CEO of NOL/APL, spoke about the Changing Landscape of Container Shipping: Implications for the Shipper Community [DOWNLOAD PRESENTATION]. Widdows began by posing this question to shippers, carriers, and logistics agencies: “How do we do what we need to do without damaging our customers?” He continued, “Many of the steps that the carriers have taken in the chase to reduce cost have had a negative impact on service levels and consequently a direct impact on their customer’s supply chains.” Other factors, such as a capacity oversupply that is expected to continue for years, and a potential consolidation of “national carriers” in various countries will change the face of the industry. Implications for shippers include continued access to low rates due to competition with no end in sight, and carrier behavior that continues to focus on reducing costs to counter revenue and profitability.
Widdows challenged the audience to work together to resolve the overall complexity of transportation, particularly on the U.S. West Coast. Resolutions can happen, he said, through intermodal cooperation by bringing the railroads together with the ports. Widdows acknowledged that working together doesn’t always function in practice as it should. “There’s a visibility of information required” to work together that most of the participants don’t want to share, said Widdows, referring to “commercially sensitive” information. Added to potential pitfalls are the ongoing labor issues at the ports, and 11 carriers are still undergoing labor negotiations. Widdows advised brands, retailers and importers to “get engaged” in talking to ports and raising awareness of the situation with the government. “Reward those carriers who move in a helpful direction,” said Widdows, “and if you can’t get their attention, go do business with the next carrier.”
Gene Seroka, Executive Director of the Port of Los Angeles, Silver Sponsor, followed Widdows with the port’s perspective. His presentation, Driving Our Ports Toward Greater Efficiency [DOWNLOAD PRESENTATION], focused on the impact that the Port of Los Angeles has on global trade: 1 in 11 people in Los Angeles have a job related to the port, and more than $500 billion worth of goods moved through the ports of Los Angeles and Long Beach last year. Productivity at the port hit a low late last year, rebounding throughout the second and third quarters of 2015 to reach previous levels last month. “There is still more work to do,” acknowledged Seroka, adding, “the voice that needs to be heard is yours. If the industry does not step forward with solutions, legislation will happen.” Seroka also highlighted how some companies are beginning to bring new technology and innovation to help cargo move more swiftly and efficiently.
From Sourcing to Tax, Collaboration Works
Gary Barraco, Director of Global Product Marketing for Amber Road, Platinum Sponsor and USFIA Innovation Partner, moderated A Conversation on Ethical Sourcing. The panel featured Mara Burr, Senior Vice President at Albright Stonebridge Group and Former Deputy Assistant U.S. Trade Representative for South & Central Asian Affairs; Edward Hertzman, Founder of Hertzman Media & The Sourcing Journal; and Avedis Seferian, President & CEO of Worldwide Responsible Accredited Production (WRAP). The panelists tackled some difficult questions that have arisen in the wake of the Rana Plaza and Tazreen tragedies in Bangladesh. They came to a consensus on several points, including:
- The ideal would be a single global industry standard for factory compliance, particularly as new countries become feasible options through FTAs, but such a standard will probably never happen due to the competitive nature of sourcing. Seferian said, “While responsibility is shared, liability isn’t.”
- Consumers as a whole are more concerned with cost than ethics when it comes to clothing. While there are groups that make a lot of noise, aided by the media, it’s not enough to turn the tide towards completely ethical sourcing. Hertzman commented, “I don’t know if we’re incentivized enough to make the changes that need to happen.”
- Sourcing decisions should consider the full capability of each country, including infrastructure, government stability, and regulations. After tragedies such as those in Bangladesh, the lens of the media focuses almost entirely on the retailers and brands, while letting the responsible governments off lightly. Seferian said it is important to make sure that “the right responsibilities fall on the right shoulders. This is difficult because some of the shoulders don’t have the capacity to bear the burden.”
The theme of collaboration continued during USFIA Premier Partner PwC’s panel discussion, Impress the C-Suite: Save Money When Trade & Tax Work Together [DOWNLOAD PRESENTATION]. Moderator Anthony Tennariello, Partner at PWC’s Customs & International Trade Practice, led Maytee Pereira, Director in PwC’s Customs & International Trade Practice, and Paige Hill, Principal in PwC’s Tax Practice, through a series of questions that highlighted how clients have increased efficiency and saved money through collaboration. Companies that have separate departments dealing with taxes and customs must come together from the beginning of the process, rather than waiting until taxes have classified a product in one way that potentially raises its customs duties. “You need to be able to bridge the gap of understanding,” said Tennariello.
During lunch, attendees had the opportunity to hear from Dr. Noel Hacegaba, Managing Director of Commercial Operations & Chief Commercial Officer of the Port of Long Beach, the conference’s Lunch Sponsor & Gift Bag Sponsor, who shared his unique vision for the future of U.S. ports. The Port of Long Beach has benefitted from double-digit rebounds this year. Apparel is one of the top 10 commodities coming through the port, with 46 percent of all apparel imports coming into the U.S. through the ports of Los Angeles and Long Beach. Collectively, the two ports are investing $6 billion in infrastructure improvements, while at the same time working together towards improving efficiency. For the first time in history, they’ve brought all concerned parties to the table to discuss the future of the ports, including labor, the carriers, and the terminals. Hacegaba shared the ambitious vision of becoming the first zero-emissions port, along with becoming fully electric and off-the-grid. Thinking big will allow the ports to support continued growth in trade.
Update on Customs Issues
After lunch, conference attendees welcomed Eric Batt, the new Director of the U.S. Customs and Border Protection (CBP) Center of Excellence & Expertise (CEE) for Apparel, Footwear & Textiles [DOWNLOAD PRESENTATION]. Joined by John Pellegrini, USFIA’s Customs Counsel from McGuireWoods LLP [DOWNLOAD PRESENTATION], Batt spoke in length about the CEEs and the plans for the coming months. Currently, three centers are undergoing operation updates, with 10 nationwide that serve different industries. He announced that the AFT CEE would be the next to go 100 percent operational, scheduled for completion in early 2016. There are currently 33 participating accounts at the AFT CEE, with 15 waiting for approval. Batt outlined the benefits of AFT partnership, including outreach, helping onboard innovative new products, and helping with Cargo Hold Resolutions.
Referring to the CBP’s enforcement actions, Batt said, “While our mission is to facilitate trade, we still have to catch the bad guys.” The main areas of focus include:
- Intellectual Property Rights (IPR): In 2014, 38 percent of all IPR seizures were AFT-related. In the past year, the AFT CEE has seized over 1750 shipments totaling nearly $20 million in value. Batt stressed the importance of filing with CBP for the highest level of IPR protection. Product manuals with recorded trademarks can be submitted for inclusion in CBP’s Internal Product ID Guide, which stays within CBP.
- Free Trade Agreements (FTAs): Particularly, CBP looked into false claims related to FTAs for duty evasion.
- Revenue Evasion: Batt acknowledged that the high duties – averaging 16 percent - on textiles and apparel are an incentive to avoid paying them. Forty-five percent of all duties collected are on textiles and apparel. CBP uses Textile Production Verification Teams (TPVTs) to conduct on-site verifications of foreign textile and wearing apparel manufacturers.
Penny Ricas, Vice President of Global Account Management for OHL, USFIA’s Customs Broker Partner, took conference attendees Inside the Broker’s Inbox: ACE, FTZs, and More [DOWNLOAD PRESENTATION]. “ACE will fundamentally change the way in which the industry and the government conduct business” said Ricas. She provided information on upcoming ACE deadlines, including theFebruary 28, 2016, deadline for implementation. Ricas also spoke about the benefits available through Foreign Trade Zones (FTZs), such as faster supply chains, lower import processing costs, and enhanced security. On average, importers are able to reduce costs from $300,000 to $1 million through duty deferral, duty elimination, and duty reduction.
Of particular interest to many in attendance was Ricas’ description of the Broken Known Importer Program (BKIP), which allows a customs broker to certify that an importer is a known entity to them. This allows the broker to flag ACE entries for those particular clients, which CBP uses as part of their risk calculations. It should, said Ricas, lessen the chances of an examination or a hold at the point of entry. Finally, she spoke about President Obama’s renewal of the Generalized System of Preferences (GSP) over the summer, which allowed importers to seek refunds for duties paid on GSP-eligible goods retroactively from the time of its expiration. According to Ricas, CBP did not actually process all refunds, so the only option open is to file a formal protest.
Update on TPP & Other Trade Policy Issues
One week after being named Acting AUSTR for Textiles & Apparel, Bill Jackson spoke to attendees in length about the TPP, offering some general details from the chapter on textiles and apparel, which he helped negotiate. Joshua Teitelbaum, Deputy Assistant Secretary for Textiles, Consumer Goods, & Materials at the U.S. Department of Commerce, also spoke about TPP, noting potential savings on textile and apparel imports from Malaysia and Vietnam at $1.78 billion. He listed a number of apparel items that would go completely duty-free on day one of TPP implementation, including dresses, skirts, travel goods and bags, and anoraks. Those products currently have high import duties, said Teitelbaum, so the potential for cost-savings is great. [DOWNLOAD PRESENTATION]
Jackson also spoke about the petitions asking for Generalized System of Preferences (GSP) benefits for travel goods, which are currently being reviewed by USTR. The next step will be to ask the U.S. International Trade Commission for a report on the potential effects, followed by an opportunity for public hearings and public comments. The process will conclude in the spring with a presidential proclamation in June, when the final determination will be announced. An audience member from the Ministry of Education in Bangladesh asked whether the United States would reinstate GSP benefits for Bangladesh. Jackson, who served as Deputy Assistant U.S. Trade Representative for GSP, said the United States would review Bangladesh’s eligibility in the appropriate channels.
After getting the regulators’ perspective, conference attendees heard What’s Happening in Washington from the experts with an “inside the Beltway” perspective. David Spooner, Partner & USFIA Washington Counsel with Barnes & Thornburg LLP[DOWNLOAD PRESENTATION], was joined by Jon Fee, Partner at Alston & Bird LLP [DOWNLOAD PRESENTATION], to shine some light on current legislation and the changes in Congress. Fee explained the Trade Facilitation & Trade Enforcement Act of 2015, which authorizes CBP and will create a “robust” importer of record program. The legislation will also allow for an easier return of goods exported from the U.S. for repair. Fee believed this legislation could pass Congress by the end of the year. Fee also spoke at length about the TPP, highlighting the current negative rhetoric from presidential candidates on both sides of the political spectrum. While much can change in a year, Fee said there was some potential for a late-2016 lame duck vote on TPP—but a good possibility the TPP vote would be pushed back into 2017.
Spooner also echoed Fee’s concerns over the prevailing negative attitudes towards TPP, this time highlighting opposition from several powerful industries, and a lukewarm reception from TPA’s biggest promoter, Senator Orrin Hatch (R-UT), who was upset over the U.S. giving some ground on protections for biologics. Spooner spoke about changes with the House, including Paul Ryan’s (R-WI) ascension to Speaker of the House and the leadership change in the Ways & Means Committee. Pro-trade leadership could make a difference there, said Spooner.
The last two sessions of the day were both panel discussions led by Gary Barraco, returning to his job as moderator. The first panel, Discussions on Textiles & Innovation, highlighted how retailers can collaborate with fiber producers to produce results for both parties. J. Berrye Worsham, President & CEO of Cotton Incorporated [DOWNLOAD PRESENTATION], and Sarah Herring, Director of Revenue, Partnerships, & Brand Development for Rue La La [DOWNLOAD PRESENTATION], shared their success story on the marketing campaign “Cotton, it’s your favorite for a reason,” that launched in May and continues through the end of November. This unique partnership brought together Cotton Incorporated’s innovation strategy with Rue La La’s multimedia approach to commerce. Worsham also spoke about the Cotton Leads program, which is committed to responsibly-produced cotton. In another unique partnership, Cotton Inc. is joining with Australia to sponsor a global lifecycle inventory and assessment for cotton. Worsham reported that there are currently over 340 Cotton Leads partners, compared to just two partners in 2013.
The final panel, with Anthony Hardenburgh, Vice President of Global Trade Content for Amber Road and Maristella Iacobello, Vice President of Customs Compliance & Government Relations for PVH Corp, asked the question – Free trade: Now What or So What? With over 500 trade agreements on the books around the world, Barraco asked if these agreements truly make a difference in how companies conduct business. “We can’t just chase FTAs and preference programs,” said Iacobello, though she added that the 10-year renewal of the African Growth & Opportunity Act (AGOA) makes the continent a more attractive prospect than previously. In particular, with countries such as Kenya and Ethopia, she said, the goal is to go vertical. Hardenburgh recommended that companies make sure their trade and compliance staff have an adequate understanding of classification and rules of origin. “Automation has come a long way in the last ten to fifteen years,” he said. Iacobello agreed, adding that “partnerships are key,” particularly when it comes to taking advantage of FTAs and preference programs. She cautioned that future problems can be averted by “getting in the face” of your supply chain from the very beginning.
On November 5th, the United States Fashion Industry Association (USFIA) Board of Directors met in New York City for the final meeting of the year. Following the first USTR/Commerce briefing to industry about the TPP, the Board elected the 2016 officers and new Board members.
The 2016 officers are:
- Chair: Maureen Gray, Vice President of International Trade at Ralph Lauren Corporation
- Vice Chair: John Clark, Vice President of Michar LLC
- Treasurer: Michael Singer, Vice President of Customs & Social Compliance at Macy’s Merchandising Group
- Secretary: Sonja Chapman, Director of International Traffic & Customs Compliance at Golden Touch Imports
Thanks to the officers for their service to our association!
In addition, the Board elected two new members: Anne McGrath, Director of Compliance & Vendor Operations for The Kasper Group, and Laura Noonen, Director of Trade Compliance & Imports for Ascena Global Sourcing. We look forward to a great year ahead!
International Affiliates are invited to join us at the USFIA member rate for the below events. If you or any of your colleagues will be attending SOURCING at MAGIC, let us know so we can include your booth and activities in our promotions to brands and retailers!
November 17 (Online): USFIA will host a free, members-only webinar, TPP: It’s Just the Beginning!
December 10 (Online): USFIA and Squire Patton Boggs will host a webinar, Slavery & Human Trafficking: How the Newest Supply Chain Risk Impacts the Fashion Industry.
December 15 (Online): USFIA and Amber Road, USFIA’s Innovation Partner, will host a free webinar, Dialing into the Supplier Network.
February 12 (San Francisco, CA): SAVE THE DATE! USFIA will return to Levi Strauss & Co. for a full-day event.
February 15-18 (Las Vegas, NV): SAVE THE DATE! USFIA will participate in SOURCING at MAGIC.
March 24 (Columbus, OH): SAVE THE DATE! USFIA will return to L Brands for a full-day event.
April 8 (Washington, D.C.): The USFIA Board of Directors will meet.