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US President Trump has thoroughly revamped the country’s trade policies. Josh Teitelbaum, Counsel for international law firm Akin Gump Strauss Hauer & Feld, explained during a panel discussion at Sourcing at Magic, the key indicator for what’s working or not in a trade deal, is the trade deficit. In this case, the losers are those on the negative end of a trade deficit, and the winners are those reaping the benefits. President Trump has been trumpeting the most when it comes to his reasoning for reworking a trade deal. He is very clear that the US will not be on the losing end of anything.

Trump has walked out of the TPP deal, threatened to pull out of NAFTA and checkmated talks on the Transatlantic Trade and Investment Partnership (TTIP), among other things. The US has also proposed eliminating the agreement’s tariff preference levels which provide duty free access for certain raw materials that Canada or Mexico source outside of the NAFTA nations for their apparel exports. “The initial US proposal was for the US to eliminate all 24 tariff preference levels,” Teitelbaum said. The move did not go down well in the talks as it would hurt Mexico’s and Canada’s competitiveness and may see US consumers spending more for goods with higher-priced inputs.

Teitelbaum explains, what’s at stake, if NAFTA goes belly up, is $682 million worth of apparel imports from Canada and $3.13 billion from Mexico as well as US manufacturing for brands like Levi’s. Anna Walker, global policy and advocacy at Levi Strauss & Co, said during a separate panel on trade, “We’ve been using NAFTA since day one and we designed our sourcing model to really capitalise on what NAFTA has to offer. We know that with NAFTA—that should the President follow through on some of his threats, we’ll continue to make those products, we just won’t do it using US inputs. Those products will move to countries that have their own supply chains.”

VF Corp. the parent company of Timberland, The North Face, Wrangler etc. is in discussions to sell its apparel brand Nautica as it continues to focus on best-performing brand. The sell out is due to the company’s sale of its Licensed Sports Group business to Fanatics in April 2017 and the divestiture of its contemporary brands businesses which included 7 For All Mankind and Splendid, to Delta Galil Industries in August 2016. This was announced by the company in its Q4 earnings statement. Steve Rendle, Chairman and CEO, VF Corp, told investors during the company’s quarterly conference call, “While we do not yet have a definitive agreement, we are actively engaged with several parties, and we’ll update you as conditions warrant.”

VF’s revenues went up by 20 per cent to $3.62 billion for Q4, below forecasts of $3.7 billion. It reported $247 million in revenue from its Williamson-Dickie subsidiary which it acquired in October. Earnings per share on an adjusted basis came in at $1.01, a penny below forecasts. For the full year, revenues went up by 7 per cent to $11.8 billion. Earnings per share on a reported basis dropped 30 per cent to $1.79, including a negative impact from recent U.S. tax legislation. Adjusted earnings per share increased 4 per cent to $2.98.

Uzbekistan and Hungary plan a joint venture for production of finished textile products and its export to EU markets. This issue was brought up during past negotiations of the association's leadership with the Ambassador of Hungary to Uzbekistan, Peter Santo. Both sides discussed issues of further expansion of cooperation in the textile, sewing and knitting industry by supplying the products of Uzbek producers to the Hungarian market.

The Uzbek Association also invited foreign partners to cooperate in attracting specialists to the joint development of innovative activities in the industry. The expansion of trade and economic cooperation is another area of interest of both sides. The meeting addressed the unused potential in this segment. Last year, export of Uzbek textiles to Hungary amounted to $33,800 although this figure could be much higher. Both have decided to strengthen cooperation and actively participate in international exhibitions and fairs held in both countries.

Hungary is looking at the possibility of organising a national stand of their country at the forthcoming exhibition CAITME 2018 and Textile Expo Uzbekistan, which will be held in autumn in Tashkent.

Rwanda, Tanzania and Uganda have been given an ultimatum by the US to reverse their ban on used clothes imports or face trade sanctions. The three East African countries have been given a week’s ultimatum. The acting head of economic and regional affairs at the Africa Bureau of the US State Department, Harry Sullivan issued the ultimatum ahead of the East African Community (EAC) Heads of State Summit in Kampala, Uganda next week. “I believe the results of the meeting next week will determine how we proceed. While we understand the East African Community’s desire to build a domestic textile sector, we firmly believe the EAC ban on imports of used clothing will not achieve that.”

The EAC comprising Kenya, Uganda, Rwanda, Burundi, Tanzania and South Sudan had come to a decision to ban imported second-hand clothes and shoes by 2019, arguing it would help member countries enhance domestic manufacturing of clothes. As signatories to the AGOA trade programme which offers them duty-free access to the US, their decision violates the conditions including eliminating barriers to US trade and investment, among others.

The US was petitioned by the Secondary Materials and Recycled Textiles Association (SMART) which complained that the ban “imposed significant hardship” on the US used-clothing industry and violated AGOA rules. Rwandan President Paul Kagame stated his country will proceed with the ban on used clothes and will choose to grow its local textile industry at the expense of being a member of the AGOA.

Uganda and Rwanda have already raised taxes for used clothes and offered incentives to manufacturers to invest in their local textile industry. US imports from Rwanda, Tanzania, and Uganda was around $43 million in 2016, up from $33 million in 2015 while exports were $281 million in 2016, up from $257 million in 2015.

India’s textiles exports dropped by 13 per cent year-on-year (y-o-y) to Rs 9,704 crore in January following a sharp fall in cotton textile exports. Cumulative exports of textile and apparel products dropped by 4 per cent y-o-y to Rs 1.87 lakh crore in April-January 2018. Data from the Confederation of Indian Textile Industry (CITI) recorded, while cotton textile exports fell by 1 per cent y-o-y to Rs 53,818 crore during the above period, apparel exports dropped by 5 per cent y-o-y to Rs 88,709 crore.

Sanjay Jain, chairman, CITI says, “The share of textile and apparel exports (overall exports) has also declined from 14 to 12 per cent in January 2018 as compared to the corresponding period the previous year. “One of the key factors for decline in exports is embedded duties, which are more than 5 per cent and the same is not getting refunded at any stage.” The slide in exports comes at a time when there has been a rise in imports of textile products post GST. Import of textile yarn, fabric and made-ups has increased by 15 per cent y-o-y to Rs 9,914 crore during April-January 2018.

“This is posing a big threat to the Indian textile industry as post-GST the effective import duties have come down sharply, thus, making imports cheaper for the domestic industry by 15 - 20 per cent,” Jain added. He requested the government to provide export incentives for cotton yarn as it is the most vulnerable sector. Cotton yarn exports dropped over 26 per cent between 2013-14 and 2016-17 in spite of the textile industry adding over 3 million spindles and 62,000 rotors in spinning capacity during the period under review. Jain noted that the country can retain its competitiveness in the international markets by including cotton yarn under the merchandise exports from India scheme (MEIS ) and providing RoSL for fabric and cotton yarn.

South Korea’s Hyosung Corporation, the world’s largest spandex manufacturer, is looking at investing around Rs 3,000 crore in a manufacturing facility in Maharashtra. The project will be set up in Aurangabad Industrial City (AURIC), a greenfield smart industrial city that is being developed within 10,000 acres, as part of the Delhi-Mumbai Industrial Corridor (DMIC). The official further disclosed, "Hyosung Corporation is likely to invest around Rs 3,000 crore in a manufacturing facility in Maharashtra. In the first phase of the project, the company will invest Rs 1,250 crore and the state government will soon take a decision on its request to allot 100 acres land near Aurangabad. Work on the project will begin in April this year and the production is expected to start in May next year."

The cost of the land would be around Rs 120 crore and the company has paid about five per cent of the cost. Nearly 1,000 jobs are expected to be generated in the first phase of the project. During his visit to South Korea in September 2017, Maharashtra chief minister Devendra Fadnavis had met Hyosung Corporation president H S Cho. Hyosung Chairman and CEO Cho Hyun-joon will be attending the 'Magnetic Maharashtra' investor summit in Mumbai next week. Hyosung, a leading chemical and technological textile company, had shown keen interest in the deal as the company is of the view that India is a key focus market for the company, which is working with several leading Indian players in the textile segment. The market size for spandex yarn in India is forecast to be over 1,500 metric tonnes this year and the growth of Indian spandex market has been over 10 per cent between 2014 and 2015.

E-commerce is the bad boy for turning traditional retail inside out so says everybody, but the harsh reality is that the new kid on the block is only a part of the problem. XCEL Brands chairman and CEO Robert D’Loren assessed during a Sourcing at Magic panel , “Disruptive forces are impacting all sectors, the way people shop will continue to change and companies must move toward where things are going. E-commerce is only 20 per cent of the problem. At the root of the problem is consumer behaviour.”

Today consumer is king he/she decides trends, timing and what they’re willing to pay. Robert prophecises, “The only way you can win in bricks today is by bringing something new to the store every single week. And luring consumers can’t be about adding an experience just for experience’s sake. How many Zara stores have a Starbucks in them? How many salons have you seen in a TJX? The reason they’re winning is newness.” However, constant newness means much tighter supply chains, enhanced decision making and far more local for local production.

All things Sourcing Journal president Edward Hertzman says, “It’s really difficult for people to change. From a supply chain perspective [companies] know what they need to do, but they’re just not doing it.” Panelists were unanimous “It’s paralysis…”

Edward’s analyses of Zara is the store has been successful in selling fast fashion despite the fact that the retailer doesn’t trumpet a particularly special in-store experience, there’s nothing much that adds convenience and even online, there’s little by way of differentiation at zara.com, but ‘52 weeks of fashion’. “It’s the same thing that TJ Maxx does. They’ve created an environment that if I go in there, I have to buy now because it won’t be there the next time I go back. At Macy’s, it’ll still be there and if I wait long enough, they might give it to me for free with enough coupons.” Edward said it upfront. At both the above stores, the price marked is the price you pay. The obnoxious markdown is absent there.

HKL Magu, Chairman Apparel Export Promotion Council (Sponsored by: Ministry of Textiles, Govt. of India) will be having their 40th Foundation Day celebration of AEPC on 22nd February at Auditorium, Apparel House, Gurugram.

Amitabh Kant, IAS, CEO, Niti Aayog will be the chief guest for the Foundation Day.

The Micro, Small and Medium Enterprises (MSMEs) are apprehensive as exports of readymade garments fell by 8.4 per cent post GST. Data reveals exports of readymade garments dropped by 8.4 per cent to $1.39 billion, also Cotton yarn and fabric exports fell by 9.6 per cent to $0.84 billion. Animesh Saxena, an MSME garment exporter explained issues faced by MSMEs during the early GST days continue to trouble the sector. The GST is yet to become a Good and Simple Tax for the country, the low trade figures explains that quite well. Profitability is badly hit as Indian garments are not able to withstand global competition. Duty drawback rate as well as the ‘not very smooth’ GST refund mechanism is leading to a lot of complication.

The Federation of Indian Exporters (FIEO) in a statement said labour intensive sector including garments could not perform well in exports due to the continuing effects of the new taxation in the country. FIEO said, ‘A slowdown in exports from labour-intensive sectors like garments, carpets, handicrafts and man-made textiles was largely due to liquidity crunch as tax refunds have been getting blocked since the introduction of goods and services tax. Exporters have been asking the government to look into the refund issue “seriously” by undertaking a drive so as to clear all cases by March 31, 2018.

Marimekko and Uniqlo, the Japanese global apparel retailer, announced their partnership on a special edition collaboration collection which will be available for a limited time only. The new collection for women will comprise a complete line of items that brighten lifestyles by combining the timelessly bold and vibrant print designs of Marimekko with the quality and comfort of Uniqlo’s casual street style. .

It’s a balance both labels emphasised as they presented the collection, on which they worked in unison for the last five years. The partnership was initiated by Yukihiro Katsuta, Vice-President of Uniqlo owner Fast Retailing and Director of Research and Design for the Japanese brand. According to Yukihiro Katsuta and Tiina Alahuhta-Kasko, CEO of Marimekko, the collection, available only at Uniqlo stores and on the retailer's website, is not aimed at a specific target. Both labels claim they share a similar approach to fashion, expressed by timeless, quality clothes which last, and put a premium on comfort, and both labels also overlap in terms of clientele.

To create the collection, Marimekko designers suggested dozens of motifs to the Uniqlo creative team. The latter eventually chose six of them, of which five come from Marimekko's archives and one, 'Kukkia rakkalle', was created by young designer Maija Louekari. All of them were designed using the printing techniques of Marimekko's Helsinki factory for inspiration. The intention of Uniqlo and Marimekko was to "allow everyone to express their own style, cheerfully and boldly." And while nothing has been decided yet, Uniqlo is accustomed to serial partnerships.

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