About Beth Hughes
Beth Hughes serves as the Vice President of the American Apparel and Footwear Association (AAFA), responsible for supporting the association’s efforts on international trade and customs issues. Beth oversees AAFA’s Trade Policy Committee, as well as AAFA’s Customs Group. Beth is also the spokesperson of the Coalition for Economic Partnership in the Americas (CEPA), a group of prominent American companies, and manufacturers committed to advancing regional trade and employment opportunities in the Western Hemisphere.
Before joining AAFA, Beth served for six years as senior director of international affairs at the International Dairy Foods Association. Beth earned a Bachelor of Arts degree in political science at George Washington University and received a Master of Arts in international affairs from Florida State University.
The interview was conducted by Leah Marsh, a graduate student in the Department of Fashion and Apparel Studies at the University of Delaware. Leah’s research focused on exploring EU retailers’ sourcing strategies for clothing made from recycled textile materials and fashion companies’ supply chain and sourcing strategies.
The interview is part of the 2023 Cotton in the Curriculum program, supported by Cotton Incorporated, to develop open educational resources (OER) for global apparel sourcing classes.
FASH455 Global Apparel & Textile Trade and Sourcing 
The discussion with Beth Hughes was for insightful for me to understand the benefits of CAFTA-DR as well as the drawbacks, and potential changes that could shape the future for a more successful trade agreement. As of now, CAFTA-DR is not being used to its full potential by US companies. This mostly is due to the fact that companies make more and different products these days than the cotton basics like t-shirts, socks, and underwear that the Central American region specializes in. Without the resources these companies need to make a whole range of products, not just bulk orders, and follow consumer trends, they have to rely on Asian suppliers still. The yarn forward rule of origin is restrictive, but in place to keep and grow the supply chain in cotton and US textiles. The issue is that cotton is not the only resource companies need. A current trend for stretchy leggings and activewear has been a big challenge for companies to source in the region because there are not these inputs, specifically spandex, to the scale and size they need. Getting spandex is really difficult because there is only one supplier. Strict rules of origin inhibits companies from taking advantage of the benefits the trade agreement should provide for US companies, and this should be changed. Beth mentions some of the efforts being made by CEPA to open more opportunities for CAFTA-DR and make it more accessible that I really liked.
One of which is looking at what yarns or fabrics are missing from the region and procuring some of those resources form outside of the region for a short period of time. This would allow manufacturers in the region to see the demand and need for these resources. Manufacturers won’t invest until they know companies and buyers will buy that fabric or yarn because we are talking about large investments in capital and infrastructure. These changes won’t happen over night, but are necessary for all companies to utilize the free trade agreement. CAFTA-DR has many positive outcomes such as protecting the US textile and apparel industry and proximity to the US market. Proximity is important because in comparison to Asian suppliers, the CAFTA-DR region is much closer and this increases the speed to market. It is also a more sustainable practice to trade with countries who are closer in distance because sending products across the globe is not the good for the environment. In terms of sustainability, CAFTA-DR lowers the textile and apparel industries impact on the environment and climate change. Investing in the future of CAFTA-DR also means investing in the future of the environment and the US textile and apparel industry.
Great observations! You mentioned several critical areas that we can improve CAFTA-DR sourcing and achieve its potentials (e.g., improve utilization) You can also see that the changes need to be made are subtle (e.g., have to be legally authorized)and they require balancing competing interests. I hope the interview brings in real world perspectives on the complexities of making near shoring happen.
After watching this interview with Beth Hughes, I had a lot of important takeaways. I thought it was especially interesting to learn how more and more U.S. fashion companies want to diversify their supply chain. From the perspective of CAFTA-DR, ideally, fashion companies source exclusively from the CAFTA-DR region in order to experience tariff-free benefits as well as enjoy the close proximity to the U.S. from Central America. However, in actuality, as Hughes discussed, this is not always the case due to the restrictions and limitations in supply options offered within the region. Therefore, I think these conflicting ideas are interesting to consider and arguably spark the question: what does diversification mean? Perhaps for some fashion companies that specialize in basic clothing, “diversifying” their supply chain translates to exploring the various supply options that are available directly within the CAFTA-DR region. On the other hand, for companies that desire more technical and innovative textiles, “diversifying” might translate to relying on Asia, China, or even the U.S. with near-shoring opportunities in order to satisfy their desires. All this to say, this proves that as of now, CAFTA-DR does not have the capability to please all fashion companies. Despite possible compromises, such as the short supply list or the ability for certain products to be eligible for duty-free treatment for a certain period, this does not fully answer the core question at hand: how can CAFTA-DR/Central America improve to fulfill the needs of a larger variety of fashion companies. I thought it was inspiring to hear Hughes’ stance on this and how, with time, Central America can have the capability to diversify its yarns and fabrics and truly “move the needle” in order to benefit all stakeholders at hand (the U.S. textile industry, cotton industry, etc). Overall, this leaves me intrigued and excited to experience the future of the industry and how trade rules will continue to evolve.
The U.S. textile industry and fashion brands share the same goal of expanding apparel sourcing from CAFTA-DR. However, the two parties have different views on how to make it happen. For example, the U.S. textile industry insists that only the restrictive yarn forward rule can incentivize more textile investment in the region (I.e., avoid competition from Asia). however, US fashion brands and retailers argue that only liberal rules of origin can encourage more apparel sourcing from the region effectively, given the fabric shortage. And the expanded trade flow will bring in more textile investments as a result ( as you heard from the video) It’s hard to say which side is right or wrong, but maybe each idea deserves a chance to be tested 🙂
The interview with Beth Hughes, the Vice President of the American Apparel and Footwear Association (AAFA) was very insightful on CAFTA-DR. CAFTA-DR is a trade policy that helps bring more apparel sourcing to the Western Hemisphere and help take it out of China. Many US companies should take advantage of CAFTA-DR because it is duty free while when sourcing in China, US companies have to pay tariffs. As Hughes stated in the interview, it is not as straight forward as just moving to sourcing in just the CAFTA-DR region. China is able to provide US companies with unique fabrics such as spandex. Spandex is a popular fabric at the moment due to the rise in athleisure. This means that many US companies are looking to use this fabric in their garments. The CAFTA-DR region does not have the ability to produce spandex, so US companies have to go to China in order to source these spandex products. This is important because it shows why China is the leading sourcing destination. Even though the CAFTA-DR region is closer to America and more inexpensive than China, companies have to source from China in order to get the products they want. This is why it is important to help CAFTA-DR region gain the technology in order to be able to compete with China. Many US fashion companies want to move away from sourcing in China, but feel like they cannot. With developing the technology in CAFTA-DR, it will help US companies move towards sourcing in the Western Hemisphere. This will give these companies the products they want for a cheaper price.
I enjoyed watching the interview between Leah Marsh and Beth Hughes. I thought it was a well rounded interview that explained sourcing and trade agreements with Central American countries. It gave an insightful overview of what CAFTA-DR is, as well as some of the benefits and challenges with the agreement and sourcing from CAFTA-DR countries. The biggest benefit of this trade agreement is duty-free access. By not having to pay tariffs or import taxes, fashion companies can reduce their overall manufacturing costs. However, some challenges of the CAFTA-DR trade agreement are the Rules of Origin which is then broken up into more restrictive rules such as yarn-forward or fabric-forward. One big thing that Beth highlights is how US companies are not fully utilizing CAFTA-DR and, despite its benefits, still looking to countries in Asia for sourcing. This is mainly due to the fact that Central American countries are limited as to what they can produce. For the most part, Central American countries specialize in making cotton basics, this includes basic t-shirts, socks, undergarments, etc.. This poses a challenge as brands that want more technical products are not able to source here, and are forced to turn to other regions. These countries are not able to produce more technical garments with a diverse fabric selection due to lack of machinery and skill. Factory owners are hesitant to invest in this machinery because there is currently no demand. This is a hard challenge to overcome. It relies on trust between retailers and factory owners. Factory owners will not invest the necessary money into there factories, unless there is a demand, and fashion retailers do not want to source technical garments from these factories due to a lack of skill and experience. It is intriguing to see how this relationship will grow as the world, and fashion industry, becomes more technologically advanced.