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In retaliation against the digital services taxes adopted by the UK, Italy and Spain, the US had decided to impose 25 per cent tariffs on the import of British fashion and luxury goods. However, it soon suspended these tariffs for six months owing to upcoming G20 meetings and the G7 summit.
Making multinationals pay for digital services in the country
As per Women’s Wear Daily, UK will host the 47th G7 summit in Cornwall, England, from June 11 to 13. The primary agenda of this summit would be to resolve the online tech tax challenge. On its part, the British government remains committed to scrapping the new digital tax in support of tech giants such as Amazon. It introduced a new 2 per cent tax on revenues generated by UK-focused search engines, social media services and online marketplaces in April this year.
Most of these search engines and marketplaces are operated by US-based companies including Amazon, Facebook and Apple. By rectifying this misalignment, the British government aims to ensure that multinationals operating digital services in the country contribute to the nation’s development.
Tariff suspension to boost business of British SMEs
However, the US retaliated against this stance with new tariffs worth nearly $325 million. As per reports, the new tariffs cover men’s and women’s outerwear, women’s and girls’ dresses, men’s shirts and ties, beauty products, leather shoes, gold necklaces and jewelry made from base metal. Katherine Tai, Representative, USTR says, the US aims to first reach a consensus on its decision in the upcoming OECD and G20 meetings, and has therefore, suspended these tariffs for the time being.
The suspension of decision has been welcomed by most brands and industry organizations. Emmanuel Saujet, Co-Founder, International Cosmetics and Perfumes said, the suspension would boost the luxury fragrance business in North America. Millie Kendall, CEO, British Beauty Council, expressed her delight saying, the tariffs would have devastated many British SMEs considered significant trade partners by the US.
Protecting industry jobs
Adam Mansell, CEO, UK Fashion and Textile Association urged the British government to ensure tax-related disputes are included as a part of the wider negotiations with the US trade authorities. Helen Brocklebank, CEO, Walpole, noted the British luxury sector has a decades-long relationship with the US and creates around 160,000 sustainable and highly skilled jobs in both countries. Hence, trade representatives need to ensure that they do not endanger these jobs in either of these countries. Steve Lamar, President and CEO, American Apparel & Footwear Association (AAFA) is also opposed to using tariffs as negotiating tools and urged the government to remove them completely.
Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) said the budget for fiscal year 2021-22 has failed to meet their demands for reducing corporate tax and source tax and providing cash incentive.
Abdul Kader Khan, President, says, though the export-import policy mentioned about providing equal facilities to both direct and deemed exporters, the sector never gets the equal facilities," he noted.
The budget has proposed reducing corporate tax to 30 per cent from existing 32.50 per cent, despite their demands of 10-12 per cent like other export-oriented sectors, he said.
Khan urged the government to consider 10 and 15 per cent corporate tax, respectively, for green and other factories to help overcome the financial crisis in the current situation.
The BGAPMEA president also demanded 0.25 per cent source tax, which is 0.50 per cent at present.
Some 1,800 small and medium accessories and packaging makers are meeting the requirements for 30 to 35 types of such items needed for the RMG exporters, while contributing to help save a huge amount of foreign currency, he explained. The government has been providing cash incentives to some 35 products for many years to increase exports, he said. But the accessories and packaging sector is yet to receive such support in spite of being the export-oriented and SME industry. He demanded 1.0 per cent cash incentive for the sector to help survive the 1,800 factories. The trade body also demanded that the government provide equal budgetary facilities to the accessories and packaging makers as given to the direct exporters, taking the sub-sector's contribution to the export trade and economy. The BGAPMEA, however, hailed the overall budget.
Garment and furniture exporters in Philippines have urged the government to address the deteriorating shipping and logistics situation in the country.
Robert Young, Trustee, Philippine Exporters Confederation, Inc. (Philexport) and President, Foreign Buyers Association of the Philippines (FOBAP), said the garment industry is incurring millions of dollars in losses due to the supply chain squeeze.
Exporters are facing transport issues, including vessel capacity constraints and surging freight prices, which are leading to cargo delays and revenue setbacks.
This situation is creating production space issues which are creating a domino effect, such as] continuing delays in our shipment. Even if vendors finish production of their orders, if they are not able to move the goods, they don’t get paid, creating a cash flow issue, he added quoting two exporters.
This, along with other issues such as the slow release of permits and import license, rising cost of natural materials, and shortage of raw materials, adds to manufacturing costs and leads to continuing loss of business in favor of Vietnam and Indonesia.
Meanwhile, furniture exporters have asked the Chamber of Furniture Industries of the Philippines to help them find slots on vessels and address soaring freight rates.
Sergio Orti-Luis, President, Philexport, urged the government and the private sector to work closely together to effectively address the logistics constraints.
Faruque Hassan, President, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has urged the government to review some of its new budget proposals, including a 10 per cent cash incentive for non-cotton based garment exports.
Hassan said, Bangladesh has a huge opportunity in grabbing the global market for non-cotton based readymade garment (RMG) exports as the demands have been increasing over the years.
He said the world consumption of non-cotton based textile items is 75 per cent and the demand is increasing 3.0-4.0 per cent annually. As per Financial Express, Bangladesh has installed the required machinery for manufacturing non-cotton RMG items while the fabric is also available. The country now needs to be competitive in this segment, Hassan said.
He added that the government’s support to incentivize manmade textile manufacturing and exporting will help increase the industry's competitiveness, which will also help raise the global market share.
He also urged the government to withdraw the 10 per cent tax on cash incentive, increase existing incentive to 5.0 per cent from the existing 4.0 per cent for exports to non-traditional markets and continuation of 0.50 per cent source tax for the next five years.
As per a new book published by Maxine Bedat, around 2.3 million pairs of jeans are sold every year. As per a Planetscope data, this is equal to selling 73 pairs of jeans sold per second, says Bedat in her book titled Unraveled — The Life and Death of a Garment. US leads in the sale of denim jeans with around 450 million pairs sold each year. From the sourcing of raw material to customers’ closets, these jeans travel around 65,000 km and pass through various manufacturing stages across the world. They require around 3,781 liters of water for a single piece equaling to 33.4 kg of carbon emissions, estimates United Nations Environment Program (UNEP). Other sources say that up to 10,000 liters of water are used to make a pair of jeans.
According to Ademe, the average lifespan of a pair of jeans is four years, which she says isn’t very much considering the garment’s impact on the planet.
Alex Lamb, Director, Kilgour advises Savile Row tailors to focus on customization and offering efficient services to customers. In a Drapers Online report, Lamb says, though the diaries of these tailors are filling up, they face a tough road ahead. These tailors have maintained existing customer base with the help of technology, and have even managed to win new customers though Zoom and Face Time consultations.
However, they are unable to conduct business with international clients due to lockdowns. Lamb informs, roughly 30 per cent of his brand’s business comes from overseas clients though its primary base is still domestic. He therefore urges the government to lift restrictions on the sector.
The pandemic has accelerated demand for easier-to-care-for clothing and smart, technical products that will continue to grow within the luxury menswear sector. Tailors need to opt for more technically advanced fabrics, be this more active or waterproof cloths, etc adds Lamb.
Bangladesh Textile Mills Association opines current insufficient budgetary measures proposed for the next fiscal might hamper the country’s textile and garment exports. While it hailed other proposals in the budget, BTMA urged the government to reduce source tax to 0.25 per cent, re-fix fabrics tariff value, and 1.0 per cent import duty on all types of spare parts of textile machinery.
Mohammad Ali Khokon, President, BTMA also urged the government to fix VAT on all kinds of yan to Tk 3, withdraw VAT on fabrics made from MMF and allow duty-free import of all types of fibers. Khokon also wants encouragement for product diversification and discouraging large import of artificial yarn. He believes, though the budget priorities RMG exports, it does not encourage entire development of the sector.
Bangladesh Textile Mills Association or BTMA is the national trade body for textile mills, manufacturers, and mills in Bangladesh and is located in Dhaka, Bangladesh. It carries out research on the Textile Industry in Bangladesh. Tapan Chowdhury, the Chairman of Square Group, is the president of the trade association.
A group of wool producers – The Galway Wool Co-op has sold its entire Galway stock to Donegal Yarn. As per Agriland reports, the Galway is Ireland’s native breed of sheep. From its wool the Irish Aran sweater was created. Donegal Yarn recognized the superior quality of this crisp white wool, its importance and agreed to purchase at a rewarding price this year.
The Galway wool co-op will prepare its first order for 5,000 kg of clean rolled Galway fleece for supply to Donegal Yarn. Every bag and fleece of this wool will be inspected by a group of volunteers to ensure the wool is clean, dry-rolled Galway wool. After inspection, the wool will be weighed and the farmer issued with a voucher. This voucher indicates the weight of the wool and will be exchanged for payment,” says Blatnaid Gallagher of the group.
The group has received funding from Leader and will begin construction of its virtual Galway wool co-op. The Galway wool co-op will seek the support of the Irish consumer in asking for Irish wool instead of imported merino wool in their home interiors and lifestyle products. It will also provide a platform for home interiors, lifestyle designers and makers, to partner with it and showcase the products they have produced from Galway wool.
Bangladesh garment exporters have urged the government to maintain source tax at 0.5 per cent for the next five years. Faruque Hassan, President, BGMEA, warned, changing source tax rate would hamper the countries’ garment sector. He also urged the government to provide a 10 per cent cash incentive on exports of manmade garments. He said, the global fashion industry has been increasingly adopting garments made from manmade fibers due to their eco-friendliness, functionality and durability. However, Bangladesh has not yet warmed up to manmade fiber that make up 78 per cent of global apparel market while cotton made garments occupy the remaining 22 per cent.
Around 74.14 per cent of Bangladesh's garment export earnings still come from cotton made garment items, Hassan added. A nationwide trade organization of garment manufacturers in Bangladesh, the Bangladesh Garment Manufacturers and Exporters Association or BGMEA is located in Dhaka and plays a pivotal role in the country's earning sector of foreign trades.
Stefan Larsson, CEO, PVH Corp projects the company to continue to exceed pre-pandemic levels throughout the remainder of 2021. As per Sourcing Journal, the company projects to grow by approximately 26 per cent full year and 23 per cent on a constant currency basis compared to 2020. Despite pandemic-related supply chain issues, the company’s first quarter results exceeded expectation with revenues increasing by 55 per cent to $2.08 during the first quarter compared to $1.35 billion in the prior-year period.
The denim category experienced one of the fastest sell-outs within the Calvin Klein brand, demonstrating its potential as a multi-category lifestyle brand, says Larsson. The brand’s recent collaboration with designer Heron Preston and its new campaign featuring models Ashley Graham and Kaia Gerber, rappers Nas and Lil Uzi Vert, skater Stevie Williams, helped it tap into a younger demographic, adds Larsson. The collaboration also yielded some of the highest average unit retail (AUR) and average order retail the brand has ever seen. Larsson says, Calvin Klein will continue to launch creative collaborations and campaigns to increase its brand’s relevance,
PVH’s other brand Tommy Hilfiger also benefitted from an increased demand for denims. The brand’s revenues increased 63 per cent increase due in part to a spring collaboration with Amsterdam-based streetwear brand Patla, adds Larsson. The brand recently also launched a limited-edition three-part collection of upcycled Tommy Hilfiger and Tommy Jeans products. Part of the Tommy for Life program, the Reloved collection featured previously owned products traded in by consumers. The Refreshed collection offers repaired garments from the store and e-commerce returns. In the Remixed collection, items damaged beyond repair are broken down to the fiber level and reimagined into new garments or used for insulation.
The brand also launched the third installment of Tommy’s Drop Shop co-designed with London-based creative, Stevie Gee, featuring limited-edition hoodies and T-shirts exclusively sold in Europe.
