In this issue:
Annual Conference Wrap-Up
On Tuesday, November 16, 2010, more than 300 people came out for the 22nd Annual Textile & Apparel Importer Trade & Transportation Conference held at Bidgewaters South Street Seaport in New York. Hosted by AISA and USA-ITA, this annual event was full of riveting information from many different perspectives within the apparel importing and transportation community. Opening the day were keynote presentations from both perspectives, and it was closed by Customs and Border Protection's Janet Labuda's final presentation before her retirement. Below is a brief recap of the event. If you were there, thank you for attending! If not, we look forward to having you join us next year! Conference presentations are posted on our website, along with a slideshow of photos from the event.
Janet Fox, Senior Vice President and Director of Sourcing, JC Penney & USA-ITA Chairman
During her Chairman's Address, Ms. Fox expressed her growing concerns over raw material prices, rising labor costs in China, the pending China currency legislation, and the turmoil in Pakistan. She contrasted those concerns with those of the previous year, which revolved around freight rates and recession woes. Looking ahead, Ms. Fox said she was excited about the new Congress, and about the potential movement next year on pending trade legislation. She reaffirmed USA-ITA's commitment to work closely with the Obama Administration and with Congress to ensure the passage of FTAs.
Ron Widdows, Group President and CEO, NOL Group
Like Ms. Fox, Mr. Widdows focused on some of the changes from 2009 into 2010, including a faster-than-expected recovery for shippers, and capacity issues that led to serious problems between shippers and carriers. While most of those have been resolved, Mr. Widdows was very clear that the proposed Shipping Act of 2010 is not the answer. Instead, he advocated for taking another look at current antitrust laws and having open discussions with all parties at the table. Mr. Widdows also argued against protectionism, making the point that the country will need to increase imports in order to increase exports. He also pegged China, with increased attention to improving infrastructure, as the dominant force in global sourcing for the foreseeable future.
Peter McGrath, Executive Vice President, Product Development and Sourcing, JCPenney
Speaking on what would become a common theme throughout the conference, Mr. McGrath discussed the steep rise in cotton prices globally over the past few months, and the uncertainty that has created in the global sourcing market. He proclaimed that it would usher in the end of cheap apparel, and would lead to growth in private brands as more retailers look to cut costs in other areas. Mr. McGrath also challenged the Obama Administration, Congress and USA-ITA to fight against high textile and apparel tariffs on basic items, which unfairly target the poor.
Frank Capo, VP Customer Service & Sales, Total Terminals International
John Atkins, Chief Operating Officer, Global Terminals
Mr. Capo discussed a number of issues involving Port on the West coast of the U.S., including the increase in volume this year, individual terminal initiatives, and issues with chassis. For the last, he mentioned that it is expensive for carriers to maintain their own, and may cease doing so in the future. Mr. Capo also touched on the current political hot topic of the LA Clean Trucks Program, which he said was a thinly-disguised measure to bring teamsters into the ports.
Mr. Atkins gave the conference attendees his perspective on the status of the terminals and ports on the East coast. With poor infrastructure and a need for deeper ports and higher clearance above water, some ports like the Port Authority of New York & New Jersey are taking steps such as dredging all terminals and considering bridge replacement. Clean Port initiatives that are sweeping the West coast are also being discussed in the East, though without the employee mandate that has led to opposition in LA.
Brian Pomper, Partner, Akin Gump Strauss Hauer & Feld LLP
David Spooner, Of Counsel, Squire Sanders & Dempsey
The Meaning of the Midterm Elections
With the midterm elections just passed and the lame duck sessions ongoing in Congress, Mr. Spooner and Mr. Pomper brought some insight from Washington for conference attendees. In Mr. Spooner's opinion, the changeover in the House to Republican leadership could mean an easier time with the trade agenda, which did not move at all this year and even experienced set-backs in the form of protectionist legislation. Mr. Pomper was not as positive on that point, mentioning that many of the Democrats who lost their seats were pro-trade, and that the incoming Tea Party representatives may not be as pro-trade as their Republican colleagues. Both agreed that, despite the changes, it would continue to be a difficult political climate for Free Trade Agreements in 2011.
Dr. Lee B. Kindberg, Director Environment, Maersk Line
Mark Messura, Sr. VP Global Supply Chain Marketing, Cotton Incorporated
Cotton and Sustainability Panel
In her presentation, Dr. Kindberg defined sustainability as dealing with the environment and with corporate social responsibility. While these are currently buzz words, the legal and social climate changes constantly, leaving companies with a high degree of uncertainty. She highlighted the best ways to determine your own company's supply chain carbon footprint through mode of transportation, distance traveled by each mode, and available routing. Dr. Kindberg highlighted Wal-Mart as an example who publishes their sustainability goals and data online, and encouraged other companies to provide concrete data on their own efforts to customers. In addition to transportation, Dr. Kindberg encouraged companies to look at the entire supply chain – from the factories to the retail outlets.
Mr. Messura brought a data-filled presentation highlighting the market volatility of cotton. He said that in the past year or so, cotton prices rose rapidly due to lower production, higher demand, Indian export restrictions, and poor logistics in China. He predicted that they would remain high for at least another two years, but once past that point the global supply was uncertain. One result of the global downturn in supply has been that U.S. cotton is currently 80 percent sold, which is five times higher than this time last year.
David Kim, President, GG International
Sahid Nazir, CEO, Masood Textiles Mills Ltd
Dr. Alaa Arafa, Chairman, Ready Made Garment Export Council
Sourcing Around the Globe
This panel brought together three international manufacturing representatives who shared perspectives from different countries on manufacturing and sourcing from within their country. Mr. Kim spoke about his company, GG International, which operates in Indonesia. Indonesia is the third largest apparel supplier to the U.S. by value, but suffers from challenges including power shortages, insufficient infrastructure, lack of raw materials, and low R&D. The country's positive assets include a young and skilled workforce, improved government investment, and a growing and stable economy.
Mr. Nazir talked about the devastation that remains in Pakistan the floods earlier this year, which did affect the country's domestic manufacturing and cotton crop. He touched on the ROZ zones, which, while not entirely in the war zones, are also far from the cotton growing areas. Pakistan is the world's fourth-largest cotton producer and the largest cotton yarn spinner, and textile and apparel represent 62 percent of Pakistani exports. Mr. Nazir encouraged companies to consider Pakistan as China grows more expensive, and added that jobs in Pakistan will promote regional security.
Dr. Alaa compared Egypt with many other sourcing options, making the case for why companies should consider relocated their sourcing away from places like China, India, Bangladesh, Indonesia, Pakstan, Vietnam and Cambodia. Among the benefits he mentioned were good growth, decent purchasing power, and a young and growing labor force. While textile and apparel only make up seven percent of Egypt's non-oil exports, programs like the QIZs could help increase sourcing in Egypt.
Gail Strickler, Assistant USTR for Textiles & Apparel, Office of the U.S. Trade Representative
Janet Heinzen, Acting Chairman, Committee for the Implementation of Textile Agreements, U.S. Department of Commerce
Textile Trade Policy in 2011
Ms. Strickler gave attendees an update on recent fixes to CAFTA, which has been growing over the past 10 months, and also gave an update on the progress in Haiti, where new factories are slated to open in the future. She highlighted and provided updates for a list of top issues including India Cotton; ROZs; Doha Round; Korea FTA; Colombia and Panama FTAs; and TPP negotiations. When asked about USTR's opposition to textiles provisions in the next Miscellaneous Tariff Bill (MTB), Ms. Strickler said that in the context of current TPP talks, it is best for the U.S. to have as much leverage as possible. The duty suspensions in the MTB would diminish the U.S.' ability to get textile concessions. She also said that she would prefer to save duty-free access to the U.S. market for countries that also provide duty-free access for U.S. goods.
Ms. Heinzen gave conference attendees some background on what the Commerce Department Office of Textiles and Apparel (OTEXA) and the Committee for the Implementation of Textile Agreements (CITA) are and what they do. Despite many changes in the past decade with sourcing patterns, major U.S. suppliers in 2000 and 2009 were the same. For 2011, Ms. Heinzen highlighted the MTB; the National Export Initiative (NEI); current practices with FTAs; Preference programs; and the Doha Round as issues that the Commerce Department would be focusing on.
George Goldman, Vice President and Managing Director, Hong Kong/South China, APL, Ltd.
Jon Fee, Partner, Alston + Bird LLP
Interesting Times: What's Next for China
Mr. Goldman provided insight on the changes happening and slated to come within China, where wages are going up and the labor force is shrinking. The government is investing heavily in infrastructure to move industry inland, but Mr. Goldman believes that this shift will not happen soon. Despite all of this, he disagreed with other speakers' assessments that China is getting too expensive, which would cause companies to leave the country. He predicted that China will remain at the forefront for sourcing operations in the foreseeable future.
Mr. Fee spoke about the U.S. social and regulatory concerns with China. While the domestic textile industry has vilified the country, he does not believe that the currency legislation – which passed the House – would advance in the Senate in either the lame duck session or in 2011. Mr. Fee said that with other regulatory tools, such as safeguards or AD/CVD cases, neither had been used for apparel and he did not see any likelihood in that happening down the road. Mr. Fee did express concern over the LDP import system, however.
Leigh Schmid, Outgoing Chairman, COAC
Janet Labuda, Director of Textile Enforcement, U.S. Customs and Border Protection
Customs Issues in 2011
Mr. Schmid spoke about Customs recent initiatives--including Management by Account and ACE--that would be moving forward in 2011. In response to criticism that COAC has been ineffective recently, he pointed out that the past four years had seen a high turnover in Customs Commissioners, which made COAC's job much more difficult. Ms. Labuda, in her final appearance at the Annual Conference prior to her retirement, shared the positive news that U.S. importers continued to increase despite the recent drop in U.S. imports. While textiles and apparel make up just 6 percent of U.S. imports, they provide 47 percent of Customs duties. Ms. Labuda reported that during Customs visits to 11 countries and 235 factories, non-compliance rates were 25 percent, down substantially from 45 percent in 2009. She also reported that Customs has rolled out major training efforts in CAFTA, Morocco, Egypt, and the U. S.