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The International Islamic Trade Finance Corporation (ITFC) and the United Nations Industrial Development Organization (UNIDO) have partnered to develop new projects in the industry. One of these projects has been initiated by the Better Cotton Initiative. It aims to revive the Egyptian cotton industry by supporting growers to cultivate sustainable cotton. ITFC and UNIDO will undertake this project to ensure that Egyptian cotton sector remains resilient with increased production, easier access to finance and an enhanced safe operating environment for workers.
Through its strategic partnership with ITFC, UNIDO will also promote industrialization, trade, and sustainable development for common member countries towards achieving the Sustainable Development Goals in general and SDG 9, in particular, says Li Yong, Director General, UNIDO.
UNIDO will also participate in the development of the second phase of Aid-for-Trade Initiative for Arab States (AfTIAS 2.0). The initiative aims to enhance the environment for international trade in the Arab region by making it more efficient and inclusive, thereby creating opportunities for employment and contributing to sustainable development.
India and Australia plan to resume negotiations to renew the Comprehensive Economic Cooperative Agreement (CECA). As per Apparel Resources, the agreement will boost India’s apparel exports to Australia by $500 million. Besides having preferential agreements with China and Vietnam, Australia also gives GSP benefits to Bangladesh, resulting in a 5 per cent duty advantage for these countries vis-à-vis India.
In fiscal 2021, India’s exports to Australia had been priced at $4.04 billion, while imports were priced at 8.24 billion. Australia imports around $6.6 billion worth of apparels from across the globe. However, India’s share in these imports is just 1.2 per cent. The resumption of trade talks is likely to boost these figures. .
Last month, EU and India had agreed to restart the free trade agreement to strengthen the economic cooperation especially amidst the fast growing influence of China. On India’s production-linked incentive scheme geared towards strengthening manufacturing within the nation, Tim White, Commerce and Funding Commissioner, Australia, said the deal might boost India’s infrastructure sector.
As per a report by Fash465, more US apparel companies are consolidating their existing sourcing base more than they did during the pandemic. Nearly half of the top 30 US apparel companies have either sourced from fewer countries or worked with fewer vendors in 2020 than 2017-2019 before the pandemic. In comparison, only about one-third of respondents sourced from more countries in 2020 than two years.
As per the report, the consolidation strategy of these US apparel companies focus on forming a closer relationship with key vendors and ensuring social and environmental compliance. Apparel companies are leaning more heavily on suppliers that have proven to be reliable, capable, and flexible. They are working closely with these suppliers to build an efficient and trust-based supply chain, the report adds.
Companies are also cutting ties with vendors not adhering to government mandates and proprietary codes of conduct. They are also diversifying away from China to its competitors in Asia. In response to COVID-19 and the new business environments, US brands and retailers are also committing to innovations in sourcing and supply chains.
A recent ranking of UK's 18 most influential high street and online fashion retailers by the Alva Group portrays a sad picture of the labor practices and supply chain worker conditions across brands with half of them generating a negative impact. It states, the ranking contains an overall ESG score for each company based on information across 10 metrics. It covers issues such as diversity and inclusion, community relations, labor practices, product safety and quality and environmental impacts. The ranking derives the data for performance on these metrics rom a range of sources, including brands’ own reports, investor relations, government inquiries and NGOs.
As per these rankings, while brands have made strong progress on employee engagement, diversity and inclusion and community relations in recent months, most of them lag on labor practices and safety. According to the rankings reports, Primark and Boohoo Group are the worst performers with Boohoo Group being at the centre of a worker rights scandal in recent months.
Other brands scoring below the league table’s average were H&M Group, Next and TK Maxx’s parent firm TJX Companies. These firms, along with Boohoo Group and Primark, were deemed by Alva to have a net negative impact on ESG issues. Brands that failed to meet the sector average but recorded a positive score were New Look, ASOS and Frasers Group, the parent company for Sports Direct.
In the report, Alva warns that issues regarding labor practices and product quality and safety are becoming more visible to investors and consumers in the current context.
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.
