Sourcing Journal published several articles about the 2021 Virtual Apparel Importers Trade & Transportation Conference. They covered EAC Highsmith’s remarks in CBP’s Highsmith: ‘Together We Can Put an End to Modern Day Slavery, 2021 Conference Silver Sponsor Cotton Incorporated’s session in Have Sky-High Raw Materials Prices Peaked?, and the Supply Chain Roundtable in Port of Long Beach Exec Calls for National Freight Strategic Policy.

CBP’s Highsmith: ‘Together We Can Put an End to Modern Day Slavery’

Fashion is top of mind for the nation’s customs watchdog. 

Textiles and apparel “continue to be a priority trade issue for the agency,” AnnMarie Highsmith, executive assistant commissioner for the Office of Trade at U.S. Customs and Border Protection (CBP), said in a keynote addresses at the U.S. Fashion Industry Association (USFIA) and American Import Shippers Association Trade & Transportation Conference this week.

In fiscal year 2021, textile imports totaled more than $128.7 billion, which represents a 4 percent increase from the fiscal year 2020 value of $124 billion. Textiles accounted for approximately 15 percent or $13 billion of the $85.5 billion in duties that CBP collected and all of fiscal year 2021, Highsmith said.

The article goes on to discuss David Spooner's comments on China: 

USFIA Washington counsel David Spooner noted that the recently passed China legislation in the Senate contained an amendment that would require USTR to consider China Section 301 tariff exclusion requests. These would be valid for 18 months and would require USTR to dispose of the requests “not later than 90 days before the duty is due to be paid.”

“The amendment is not perfect,” Spooner said. “It would permit USTR to refrain from product exclusions if it declares that exclusions would undermine U.S. leverage in trade negotiations and establishes vague criteria for evaluation.”

Highsmith said some of the primary tools CBP relies on to facilitate trade in apparel and textiles are free trade agreements and preference programs.

The most utilized preference programs for textiles and apparel are the U.S.-Mexico-Canada agreement and the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA), which account for 31.8 percent and 31.5 percent of preference program utilization, respectively.

One of those programs is the African Growth and Opportunity Act (AGOA), from which President Biden has said he will eliminate Guinea and Mail for “unconstitutional change in governments,” and Ethiopia, for “gross violations of internationally recognized human rights being perpetrated by the government…and other parties amid the widening conflict in northern Ethiopia.”

Spooner said he didn’t see a way for that to be avoided, particularly in the case of Ethiopia, once seen as apparel production up-and-comer, given continued military and civil action and unrest.

Asked if he thought Nicaragua’s recent highly criticized election would put the country in jeopardy of losing DR-CAFTA trade status, Spooner said he wasn’t aware of a mechanism in the FTA for that to happen and would more likely result in sanctions.

The article closes with Highsmith's comments on forced labor and the shipping crisis:

“We are committed to improving our ability to peer deep into supply chains and we’ll continue to partner with the industry,” Highsmith said. “We will continue to meet with vendors to explore tracing technology to enhance transparency and streamline the force labor enforcement. We do look forward to working together with USFIA members to eliminate force labor. Together we can put an end to modern day slavery.”

“CBP is working with port facilities to expedite cargo clearance, examine high risk cargo as expeditiously as possible and to facilitate the movement of cargo as rapidly as possible,” Highsmith said. “Our industry partners have demonstrated extraordinary creativity and are the best in the business at overcoming challenges. but we welcome your input on how to address this temporary supply chain. Anything that you think that we can be doing or doing better doing differently, any changes, big or small. that may add up to an impact in this area, please let us know.”

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Have Sky-High Raw Materials Prices Peaked?

The unusual business patterns resulting from the global pandemic have twisted the supply and demand cycle for raw materials and their prices in new directions.

For example, Mark Messura, senior vice president of global supply chain marketing for Cotton Incorporated, told the U.S. Fashion Industry Association and American Import Shippers Association Trade & Transportation Conference this week that cotton prices continue to rise despite data indicating ample reserves in global stocks.

Cotton Inc. noted that “open interest has been migrating out of the December contract ahead of its expiration and into the March contract,” which has been trading a little lower than December, with the latest values near $1.14 per pound. The A Index average of global cotton prices increased to $1.25 per pound from $1.20 in the last month.

Current USDA estimates put world stocks at 86.9 million bales and world-less-China stocks at 50.5 million bales. In terms of stocks-to-use, the global ratio is 70 percent and the figure for the world-less-China is 53.4 percent. Cotton Inc. said this contrasts sharply with the supply situation 10 years ago during the 2010-11 price spike, when global stocks were only 49.3 million bales and world-less-China stocks totaled 38.7 million. Stocks-to-use ratios in 2010-11 were 42.7 percent for the world and 45.2 percent for the world-less-China.

“Our inventory and use levels aren’t really supporting the idea of prices at these at these current levels,” Messura said. “So, fundamentally we’re in a period where something else is going on, whether that’s investors or speculators coming in the market, or just maybe a little bit of overheating in prices. Fundamentally, there’s not a strong case to say that that world supply demand fundamentals really support this this current level of price trades.”

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Port of Long Beach Exec Calls for National Freight Strategic Policy

In a keynote speech at the U.S. Fashion Industry Association and American Import Shippers Association Trade & Transportation Conference this week, Dr. Noel Hacegaba, deputy executive director and chief operating officer at the Port of Long Beach, seemed to channel the Beatles’ lyrics “a little better all the time, it can’t get no worse” when detailing the port’s congestion situation.

“I think all of us would agree that in normal times the supply chain is invisible,” Hacegaba said. “But the pandemic-induced disruption and backlogs that it has triggered across the global supply chain has made the supply chain very visible, some would say too visible.”

Hacegaba said the connection between the supply chain, the economy and consumers has never been clearer or more understood, and “all eyes are on the ports and in our case the ports of Southern California, where approximately 40 percent of the nation’s cargo enters.”

“So, there’s a lot riding on help with the backlog and getting the supply chain back in motion again,” he said. “With the engagement of the administration [and] the cooperation of all segments of the supply chain, I believe we have a once in a lifetime opportunity to reimagine and reinvent the supply chain and not let this crisis go to waste but use it as an opportunity to transform our aging transportation freight network and make it more resilient.”

Hacegaba noted this week’s passage of the infrastructure bill and said the port is encouraged by the prospects of it, specifically the $17 billion allocated for ports.

“But infrastructure investments are just one way to solve our supply chain challenges,” he said. “We also need policy. We are long overdue to have a national freight policy, a strategic plan…If we’re serious about competing with other nations, we need a holistic, comprehensive and innovative trade policy. In my view, this is the only way we’ll be able to fully maximize historic infrastructure investments.’

In addition, Hacegaba said the country and industry also need to reimagine the supply chain. “We have the tools and technology and even the talent, and with all eyes on the supply chain, I’d like to think we have the will, as well,” said. “It’s the only way we’re going to be able to clear the backlog and demonstrate to the world that we’re ready for more growth.”

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