Fashion Intel & Analysis
As we feared, before heading off to the G-7, President Trump has just announced via Twitter that he will escalate the trade war with China. The September 1st tariffs on apparel, home textiles, footwear and other consumer products on List A of Tranche 4 will now be assessed at 15% instead of 10%. And the many consumer products on Tranche 3 will see the duty increase to 30% on October 1st (as well as all products on Tranche 1 and Tranche 2). USFIA will join with other industry groups to push back on these increases, and we will be asking for a delay in the imposition of any additional tariffs on fashion products. We will send additional updates when we have more information.
As you have seen reported this morning, the Chinese government announced today that they will respond to the U.S. Tranche 4 tariffs by increasing their own tariffs on $75 billion of U.S. exports to China. So far we have not seen the details of this announcement. We have, however, started to hear rumors expressing concern that the Trump Administration will respond by increasing the 10% tariffs on List A of Tranche 4. While of course there may be a tweet that responds to the action by China, USFIA can say that, at this time, there is no planned Administration response. Peter Navarro, director of the Office of Trade and Manufacturing Policy in the White House, said the Chinese action was "well anticipated." Stay tuned for additional information as it is available.
The Citizen Power Initiative for China held a press conference today in D.C. to release a new report, “Cotton: The Fabric Full of Lies.” The report focuses on forced prison labor in Xinjiang, China in the cotton, textile, and apparel sector.
The report says that Xinjiang province accounts for 84 percent of China’s cotton output and is a primary supplier and exporter of cotton/textile/ apparel products. The report explores China’s long-standing policy to use prison inmates as forced labor and finds Xinjiang has the largest number of prisons and labor camps in China, totaling 85 prisons with an estimate of 500,000 to 800,000 inmates.
According to the findings, prison inmates in Xinjiang are routinely used to reclaim land for cotton fields and participate in other parts of the cotton value chain, up to and including work in garment factories. The report outlines the Chinese government’s strategy to maintain political stability in Xinjiang by expanding Xinjiang’s cotton/textile/apparel industry. Part of the strategy involves the detention of large number of Uyghurs to “re-education camps” to produce manufactured goods.
During 2018, 2,200 new cotton/textile/apparel companies were found to participate in the forced labor programs, according to the study. The press conference named Lihua Cotton Company, Huafu Fashion, and Lutai Textiles as suppliers that rely on forced labor.
Based on the report, the Citizen Power Initiatives for China and the Uyghur Human Rights Projects call on the Chinese government to change their unfair practices, and plan to ask the Trump Administration to use their authority to ban imports from Xinjiang that use forced labor. The full report is scheduled to be released by the end of the month and USFIA will share that information when it is available.
The U.S. Customs and Border Protection Office of Trade has released new data on the number of IPR seizures in fiscal year 2018. The Intellectual Property Rights Fiscal Year 2018 Seizure Statistics show that the number of IPR seizures in FY 2018 decreased by 333 seizures to 33,810 (from 34,143 in FY 2017). However, the total estimated manufacturer’s suggested retail price (MSRP) of the seized goods, had they been genuine, increased to nearly $1.4 billion (from $1.2 billion in FY 2017).
The table below shows the industries most impacted by the counterfeits – not surprisingly apparel/accessories are at the top of the list, with footwear close behind.
The report also finds that e-Commerce sales have resulted in a significant increase in the shipment of small packages to the U.S. market. In FY 2018 there were 161 million express shipments, and 475 million packages shipped through international mail. Over 90% of all intellectual property seizures were products shipped as e-commerce – with a majority falling under the de minimis threshold of $800.
Steve Francis, Director of the National Intellectual Property Rights Coordination Center, is calling on the private sector to join the organization’s network of 25 domestic and international partner agencies as part of a campaign designed to heighten public awareness about the dangers of counterfeit goods.