Month: February 2023

Used Clothing Trade Debate Continues in Kenya

A new study by the Changing Markets Foundation suggests severe negative environmental and social, economic impacts of used clothing exports to Kenya. However, the Textile Recycling Association, based in the UK, argues strongly in favor of the benefits of the used clothing trade.

Concerns about the used clothing exports to Kenya (viewpoints from the Changing Markets Foundation)

  • Data from the United Nations (UNComtrade) shows that Kenya’s used clothing imports surged by over 500% from 2005 ($27 million) to 2021 ($172 million).
  • An overwhelming volume of used clothing shipped to Kenya is waste synthetic clothing, a toxic influx creating devastating consequences for the environment and communities. It is estimated that over 300 million items of damaged or unsellable clothing made of synthetic or plastic fibers are exported to Kenya each year, where they end up dumped, landfilled, or burned, exacerbating the plastic pollution crisis.
  • Interviews with used clothing traders in Kenya show that 20–50% of the used clothing in bales they purchased was unsellable due to being damaged, too small, unfit for the climate or local styles, and sometimes even with clothing that is covered in vomit, stains or otherwise damaged beyond repair.
  • European sorting companies often skimmed off high-quality used clothing for resale in the local EU market. They exported the lower-quality and lower-graded ones to developing countries like Kenya.
  • It remains challenging to recycle synthetic clothing as it often contains harmful additives or other materials that make the recycling process difficult or impossible. Additionally, the quality of the recycled synthetic fibers is typically lower than that of the original fabric (i.e., using virgin fiber).

Defend the used clothing exports to Kenya (viewpoints from the Textile Recycling Association, TRA)

  • Sorting, trading and selling used clothing “directly employs two million people in Kenya alone , with tens of millions employed globally and supporting many more employment positions in ancillary sectors.”
  • “Used clothing and textiles collected in the UK, should go through a detailed sorting process and can be sorted typically into 130 plus re-use and recycling grades and sometimes this can be more than 200 grades. In the sorting process each garment is picked up and individually assessed by highly trained experts*.  The good quality re-useable products are segregated from the recycling grades.” [*According to Changing Markets Foundation’s report, about 36 million pieces of used clothing were exported from the UK to Kenya in 2021; All EU countries exported about 112 million pieces to Kenya]
  • “It is the buyers in these countries (note: countries like Kenya) that dictate the flows of (used clothing) textiles and which import the goods into their countries.”
  • “TRA members are required to ensure that only good quality re-usable clothing products are sold onto countries in Africa and other non-OECD countries.   Recycling grades and other non-textile/clothing items have to be removed… However, the majority of countries are not subject to the same tight restrictions on trading as the UK..  This is to the extent that some countries allow unsorted used textiles containing a complete mix of re-usable items, recycling grades, and waste to be sold into African countries as a product.” “The qualities of (used clothing) items originating from different countries is likely to vary significantly.”
  • “Kenyan’s buy more than 10 times as much used clothing from China than they do from the UK.”

Discussion questions for FASH455:

  • What is your stance on the used clothing trade? Should the government impose more export or import trade restrictions on used clothing?
  • After considering both sides of the debate, what is your decision regarding donating used clothing? What factors influenced your choice?
  • Any other thoughts or comments on the used clothing trade debate?

Additional reading:

FASH455 Debate: Is the U.S. Textile Manufacturing Sector a Winner or Loser of Globalization and International Trade?

(note: the following comments are from students in FASH455 based on the video “Textile Manufacturing in America, post-globalisation”

Argument: The U.S. textile manufacturing industry has been a winner of globalization

Comment #1: The video highlighted some of the few remaining textile plants and the cotton refinery’s in the U.S. and how they are taking risks daily to stay afloat with risks of inflation and climate change. However, for these American companies to stay afloat, they must participate in globalization themselves. The video mentioned how these factories were using Swiss and German dying machines to make production more efficient. For these onshore jobs to stay alive, they have to now utilize globalized information and technology to stay successful. 

Comment #2: Deeper down, the US textile sector seems to be winning in the long run. The squeeze that globalization has placed on them has allowed for innovation within the industry as they fight to stay relevant and compete with overseas goods. Operational slack such as high turnover jobs have been eliminated with automation, and US manufacturers gained a new branding niche that overseas companies do not: a US “personal touch.” Consumers may now be more willing to pay more for a garment just because it says it is made in the USA. USA-made clothing may now be perceived as higher quality and more scarce. The sentiment towards US-made goods and their quality could enact change to reduce overseas reliance, which is a win for US manufacturing in the long run. Additionally, globalization expands the export market for the US textile manufacturing sector.

Argument: the U.S. textile manufacturing industry has been a loser of globalization

Comment #3: According to the video, the U.S. textile manufacturing sector is a loser in globalization and international trade.  Robert Lighthizer, a former U.S. trade representative, believes the drive to globalization saw the United States effectively giving away its own prosperity and success.  He explains the effects of trade deals on jobs, illustrating how the U.S. would place most of its focus on service sector jobs and outsource its industrial base.  However, this resulted in the loss of roughly 6 million jobs and 60,000 factories, destroying many communities all across the country and causing a lack of diversity in the job economy. 

Comment #4: I think the US is a loser of globalization and international trade because they rely on other countries for their cheap goods and services. When I look at clothing tags, I rarely see them made in the US nowadays. Again, this is because the US being dependent on other countries due to unbeatable costs. I also think since we rely so heavily on other countries, it has contributed to job displacement.

Comment #5: The US textile manufacturing sector is a loser of globalization and international trade. Cotton production in the US is beneficial to the communities it exists in. However, these companies must fight against a strong dollar, competitors in China who do not always abide by the same regulations as US companies, and use cheap labor. When China entered the WTO, the US suffered greatly. Many textile factories in the US have closed, disrupting the entire community.

Comment #6: Overall, I believe that the U.S. textile manufacturing industry is a loser of globalization and international trade, mostly due to the competition from overseas. This competition includes more manufacturers from other countries, but also the competition of pricing since other oversea manufacturers are able to sell their cotton/textile materials at a lower price. Since the U.S. struggles to compete with these lower prices, they are forced to look for another way to have a competitive advantage in the textile manufacturing sector, such as lean manufacturing and technology improvements. At Carolina Cotton Works, Bryan Ashby shares how they have increased efficiency and use high-quality machines (note: imported) for their products. Although this sounds great, this also means that there are fewer workers.  

Comment #7: I think the US textile manufacturing sector was a loser of globalization and international trade because big companies were using other countries for their sourcing and manufacturing. This was because it was much cheaper compared to the United States. In doing this, it declined the need for textile manufacturing jobs in the United States.

Comment #8: Globalization creates a trade dependence on imports. It’s important we don’t depend on things for when things happen that we can’t predict like the pandemic where we can’t import anymore. Since there was a lack of local textile manufacturing and sourcing in the United States compared to what was being imported, there was less of a chance for technological advances and improvement in the United States textile manufacturing sector. Post Globalization however may be the chance for the United States to bring back the textile manufacturing sector momentum. I think this because the United States has seen the result of heavily relying on other countries for their cheap labor/sources and this could add extra motivation for companies to want to figure out better alternatives in manufacturing in their own country.

Comment #9: I think currently the US is a loser to globalization only because brands want to get the product for cheap. I think brands think that would create more profit that way. However, I do believe we could get to a future where more things would be created in the US and wouldn’t have to pay that much in tariffs and other external prices. I think it would help boost people to work more. I think people are worried about making things in our country because of the relations we have with other countries.

Comment #10: U.S. Businesses are now focusing on the cheapest way to do everything instead of thinking about creating good jobs for their working community with fair pay. The U.S. is losing jobs, factories, communities, etc. in efforts to help other countries build themselves up through globalization. It is time for the U.S. to make some changes and look out for our own country and people.

Discussion questions:

Do you agree or disagree with any particular argument above? Any follow-up comments on the impact of globalization on the US textile manufacturing sector? What should government do with trade given the debates? Please feel free to share any additional thoughts.

Is Free Trade Worth the Cost? (Video discussion)

For FASH455 students: Please share your reflections on the video regarding the free trade debate. You can focus on analyzing 1-2 specific debates raised in the video (e.g., comparing the arguments from both sides) and then share your thoughts. Please do not simply state your “opinion,” but use examples, statistics, or trade theories we learned to support your viewpoint.

Further reading: Is Free Trade Worth the Cost?

US Apparel Import and Sourcing Trends: Asia vs. Near-shoring from the Western Hemisphere (Updated February 2023)

Trend 1: US fashion companies continue to diversify their sourcing base in 2022

Numerous studies suggest that US fashion companies leverage sourcing diversification and sourcing from countries with large-scale production capacity in response to the shifting business environment. For example, according to the 2022 fashion industry benchmarking study from the US Fashion Industry Association (USFIA), more than half of surveyed US fashion brands and retailers (53%) reported sourcing apparel from over ten countries in 2022, compared with only 37% in 2021. Nearly 40% of respondents plan to source from even more countries and work with more suppliers over the next two years, up from only 17% in 2021.

Trade data confirms the trend. For example, the Herfindahl–Hirschman index (HHI), a commonly-used measurement of market concentration, went down from 0.110 in 2021 to 0.105 in 2022, suggesting that US apparel imports came from even more diverse sources.

Trend 2: Asia as a whole will remain the dominant source of imports

Measured in value, about 73.5% of US apparel imports came from Asia in 2022, up from 72.8% in 2021. Likewise, the CR5 index, measuring the total market shares of the top five suppliers—all Asia-based, i.e., China, Vietnam, Bangladesh, Indonesia, and India, went up from 60.6% in 2021 to 61.1% in 2022. Notably, the CR5 index without China (i.e., the total market shares of Vietnam, Bangladesh, Indonesia, India, and Cambodia) enjoyed even faster growth, from 40.7% in 2021 to 43.7% in 2022.

Additionally, facing growing market uncertainties and weakened consumer demand amid high inflation pressure, US fashion companies may continue to prioritize costs and flexibility in their vendor selection. Studies consistently show that Asia countries still enjoy notable advantages in both areas thanks to their highly integrated regional supply chain, production scale, and efficiency. Thus, US fashion companies are unlikely to reduce their exposure to Asia in the short to medium term despite some worries about the rising geopolitical risks.

Trend 3: US fashion companies’ China sourcing strategy continues to evolve

Several factors affected US apparel sourcing from China negatively in 2022:

  • One was China’s stringent zero-COVID policy, which led to severe supply chain disruptions, particularly during the fall. As a result, China’s market shares from September to November 2022 declined by 7-9 percentage points compared to the previous year over the same period.
  • The second factor was the implementation of the Uyghur Forced Labor Prevention Act (UFLPA) in June 2022, which discouraged US fashion companies from sourcing cotton products from China. For example, only about 10% of US cotton apparel came from China in the fourth quarter of 2022, down from 17% at the beginning of the year and much lower than nearly 27% back in 2018.
  • The third contributing factor was the US-China trade tensions, including the continuation of Section 301 punitive tariffs. Industry sources indicate that US fashion companies increasingly source from China for relatively higher-value-added items targeting the premium or luxury market segments to offset the additional sourcing costs.

Further, three trends are worth watching regarding China’s future as an apparel sourcing base for US fashion companies:

  • One is the emergence of the “Made in China for China” strategy, particularly for those companies that view China as a lucrative sales market. Recent studies show that many US fashion companies aim to tailor their product offerings further to meet Chinese consumers’ needs and preferences.
  • Second is Chinese textile and apparel companies’ growing efforts to invest and build factories overseas. As a result, more and more clothing labeled “Made in Bangladesh” and “Made in Vietnam” could be produced by factories owned by Chinese investors.
  • Third, China could accelerate its transition from exporting apparel to providing more textile raw materials to other apparel-exporting countries in Asia. Notably, over the past decade, most Asian apparel-exporting countries have become increasingly dependent on China’s textile raw material supply, from yarns and fabrics to various accessories. Moreover, recent regional trade agreements, particularly the Regional Comprehensive Economic Partnership (RCEP), provide new opportunities for supply chain integration in Asia.

Trend 4: US fashion companies demonstrate a new interest in expanding sourcing from the Western Hemisphere, but key bottlenecks need to be solved

Trade data suggests a mixed picture of near-shoring in 2022. For example, members of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) and US-Mexico-Canada Trade Agreement (USMCA) accounted for a declining share of US apparel imports in 2022, measured in quantity and value. While CAFTA-DR and USMCA members showed an increase in their market share of US apparel imports in the fourth quarter of 2022, reaching 10.7% and 3.1%, respectively, this growth was not accompanied by an increase in trade volume. Instead, US apparel imports from these countries decreased by 11% and 15%, respectively, compared to the previous year. CAFTA-DR and USMCA members’ gain in market share was mainly due to a sharper decline in US apparel imports from the rest of the world (i.e., decreased by over 25% in the fourth quarter of 2022).

Trade data also suggests two other bottlenecks preventing more US apparel sourcing from CAFTA-DR and USMCA members. One is the lack of product diversity. For example, the product diversification index consistently shows that US apparel imports from CAFTA-DR members and Mexico concentrated on only a limited category of products, and the problem worsened in 2022. The result explained why US fashion companies often couldn’t move souring orders from Asia to CAFTA-DR and USMCA members.

Another problem is the underutilization of the trade agreement. For example, CAFTA-DR’s utilization rate for US apparel imports consistently went down from its peak of 87% in 2011 to only 74% in 2021. The utilization rate fell to 66.6% in 2022, the lowest since CAFTA-DR fully came into force in 2007. This means that as much as one-third of US apparel imports from CAFTA-DR did NOT claim the agreement’s preferential duty benefits. Thus, regarding how to practically grow US fashion companies’ near-shoring, we could expect more public discussions and debates in the new year.

by Sheng Lu

Further reading: Lu, Sheng (2023). Key trends to watch as US apparel imports hit record high in 2022 but slow in 2023. Just-Style.

Online event: Achieve More Sustainable and Socially Responsible Apparel Sourcing in the Post-Covid World: Fashion Companies’ Perspectives

Registration (Free)

February 14, 2023 (Tuesday), 12:00pm—1:00pm EST

Panelists:

  • Julia Hughes, President, United States Fashion Industry Association (USFIA)
  • Laurie Rando, Senior Director of Sustainable Products & Human Rights, Macy’s Inc.
  • Dr. Sheng Lu, Associate Professor of Fashion and Apparel Studies, University of Delaware

About the session:

This event, hosted by the United States Fashion Industry Association, is an official side session of the 2023 OECD Forum on Due Diligence in the Garment and Footwear Sector.

The session intends to facilitate constructive dialogue regarding the latest progress, challenges, and opportunities for achieving more sustainable and socially responsible apparel sourcing in the Post-COVID world. The session will offer a unique opportunity to hear directly from leading fashion brands and retailers regarding 1) fashion companies’ latest sourcing practices against the evolving business environment and their impacts on due diligence; 2) fashion companies’ new efforts and innovative projects to achieve more sustainable and socially responsible apparel sourcing; 3) opportunities and challenges to further improve sustainability and social responsibility in apparel sourcing in the post-COVID world. In addition, the session will be highly relevant and informative to all stakeholders in the fashion apparel business community, civil society, international organizations, academia, and policymakers.

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