OTEXA Released the 2013 Going Global Report

 

global

The Office of Textiles and Apparel (OTEXA) under the U.S. Department of Commerce recently released the 2013 version of the Going Global Report, which identifies both the largest and the fastest growing export markets for U.S.-made textiles and apparel (T&A) products from 2006 to 2012. Among the 15 largest export markets, six are based in America, five are located in Asia and the rest are from Europe.  

What should be particularly noted is that Vietnam is identified as the top fastest growing export market for U.S. made textiles by the report. In 2012, the U.S. textile exports to Vietnam increased 54.3% from 2011, totaling $66.2 million. However, according to the statistics from the U.N. Comtrade, by 2011,  only 0.6% of Vietnam’s textile imports came from the United States, whereas the leading textile suppliers to Vietnam, including China, Japan and South Korea, are all based in Asia. This raises the question as to whether the Trans-Pacific Partnership (TPP), if concluded, is able to “break” the current regional production & trade pattern in Asia and positively promote the vertical collaboration between Vietnam and the United States for T&A production and trade.

234

211

The on-going restructuring of the U.S. textile and apparel industry in response to the changing nature of today’s global economy has resulted in a significant shift in the U.S. T&A trade policy in the past few years, moving away from restricting imports to promoting exports in the global marketplace. As the report puts it:

“The growth of the global economy provides U.S. firms with greater opportunities to seek out new markets and customers and to expand their businesses. Moreover, with increased competition from overseas, companies are looking to diversify their client base and find new ways to grow. The supply chain for textiles and apparel has become increasingly global, to include North America, Latin America, Europe, Africa and the Asia Pacific region. Customers, suppliers, manufacturers, and assemblers are located throughout the world, and represent new potential partners for U.S. firms looking to expand abroad. “

Is clothing “made in USA” more ethical? How “ethical” should be defined?

It has become a commonly held view that apparel workers in many developing countries are unfairly treated because they are much lower paid compared with their counterparts in the developed countries.  For example, American Apparel, a company that insists all of its products made in USA, claims itself to be sweatshop-free on the basis that it pays workers an hourly wage of $12.  However, does an hourly wage of $12 in the USA necessarily mean more “ethical” than an hourly wage of several cents in a poor developing country like Bangladesh?  

An often ignored fact is that in many developing countries, jobs in the apparel sector are better paid than positions in other sectors. For example, according to a recent study conducted by the World Bank, in Bangladesh, wage level in its apparel sector is 17.7% higher than the average level of all sectors, 72.2% higher than the wage level in the agriculture sector and 4.5% higher than the wage level in the service sector. This is not surprising, because in many developing countries, “moving from agriculture and low-end services into apparel jobs is a channel for social upgrading” (Lopez-Acevedo & Robertson, 2012).

Then, what does an hourly wage of $12 mean in a developed country like the United States? Data from the Bureau of Labor Statistics show that, in 2012, average wage level in the U.S. apparel manufacturing sector (NAICS 315) is 26.2% below the average wage level of all sectors. More specifically, the average wage level for the production occupations is 47.3% below the national average level and 53.6% below the national average level for sewing machine operators, the exact type of job that the hourly wage of $12 refers to. 

The point to make here after the comparison is that it is misleading to define “ethical” or comment on “corporate social responsibility” without putting the matter in the context of the stage of development and the nature of the economy.  Wage level is not determined by good will, but by the principle of economics 101.

By Sheng Lu

apparel payment

Untitled

A Global View in Mind Means More Job and Career Oppertunities in the Fashion Apparel Industry

(Note: the functions & jobs below the U.S. flag mean they are based in the United States;  Remember, apparel are “made in the world”–just like iphone and ipad. Even imports contain U.S. added value.)

021313_Moongate_Assoc_Global_Value_Chain_Report

Source: Moongate Association (2012). Analyzing the Value Chain for Apparel Designed in the United States and Manufactured Overseas

Impact of the Trans-Pacific Partnership on Textile and Apparel Trade in the Pacific Rim

TPP on T&A trade in the pacific rim

Citation: Lu, S. (2013). Impact of the Trans-Pacific Partnership on textile and apparel trade in the Pacific Rim. World Trade Organization Focus, 20(5), 67-77.

For questions, please contact the author: shenglu@mail.uri.edu

Patterns of World Textile Trade:2000-2010

The following findings are from:

Lu, S. (2013). Impacts of quota elimination on world textile trade: A reality check from 2000 to 2010, Journal of the Textile Institut, 104(3), 239–250.

         “Findings of this study challenge the practices of previous studies that evaluated the impacts of quota elimination mostly by focusing on the performances of developing countries in the U.S. and EU markets (Nordas, 2004; Curran, 2008). Although such strategy may work for clothing trade, its appropriateness for scrutinizing world textile trade is evidenced to be questionable. Particularly, to manufacture textiles, it places higher requirements on a country’s technology advancement level and capital abundance than clothing production which is more labor intensive in nature and with lower business entry threshold (Dickerson, 1999). Therefore, as shown in the study, it was the developed countries rather than the developing countries that remain dominant and competitive textile exporters in the world today (WTO, 2011).  On the other hand, the developed countries are no longer leading textile importers either because of their dramatic shrinkage of domestic clothing manufacturing capacity (Dicken, 2003). To certain extent, missing such distinct patterns of textile trade may be one reason why findings of many previous studies turned out to be inconsistent with the reality (Ahmad & Diaz, 2008).

       Second, findings of this study call for attention to the new round of structural change of world textile trade that may have unfolded since the outbreak of the world financial crisis in 2008. This is particularly the case for the high-income countries which suddenly saw sharper decline of their textile export from 2008 through 2010 compared with earlier years in the post-quota era. It is unclear whether such phenomenon is a temporary market fluctuation in nature or reflects a more permanent adjustment of economic structure that is undergoing in the developed countries. Whether and how the financial crisis has structurally affected the world textile trade can be further explored in future studies.

       Third, findings of this study reflect the difficulty of achieving upgrading of the textile and clothing sector in the less-developed countries.  Although the development theory proposed by Toyne (1984) and Dickerson (1999) optimistically predicted the gradual evolution of a country’s textile and clothing sector over time, results of this study indicated that this upgrading process turned out to be very slow in progress for the developing world. Particularly, in today’s globalized economy, the division of labor between the developed countries and the less-developed ones is largely value-chain based and different from the case of inter-industry division of labor when the development theory was introduced (Toyne, 1984; Gereffi, 1999).  It seems there lacks a clear mechanism for the less-developed countries to gradually move up their position in the clothing value chain and have the chance to build on capacity of manufacturing and exporting textiles.  However, chances may occur if the high-income countries proactively “give up” textile manufacturing and instead prioritize the development of other emerging sectors regarded as more strategically important in the post-crisis recovery. “

 

China and the US Economy: Advancing a Winning Trade Agenda

figure 1figure 2figure 4figure 5

Last week in class, we discussed what globalization means and why international trade happens. This latest research report released by the U.S.-China Business Council (USCBC) on the U.S.-China commercial relationships provides latest evidence showing how the world two largest economies are interdependent with each other and mutually benefit from such a close trade partnership.  The report also highlights several key facts about the U.S.-China trade relationship, which often time is misunderstood by the general public.

Full text of the report is available at:

https://www.uschina.org/info/trade-agenda/2013/uscbc-trade-agenda-report.pdf

Is Textile and Apparel Manufacturing Coming back to the U.S.?

output

output growth rate

employment

employment growth rate

Preliminary Findings:

1. As suggested by numerous studies, the U.S. manufacturing sector as a whole demonstrated a robust V-shaped recovery from the 2008 financial crisis in terms of industry output.   Growth rate of the industry output from 2010-2011 was also among the highest in the past 10 years.

2. There is no sign yet that textile and apparel (T&A) manufacturing is coming back to the U.S, despite suggested popularity of “insourcing” as result of rising labor cost in China. However, the decline rate of apparel manufacturing in the U.S. seemed to be slowing down.

3. Jobless recovery happened both in the U.S. manufacturing sector as a whole and in the T&A manufacturing sectors. Particularly, the U.S. T&A industry respectively lost 21.0% and 25.6% of its manufacturing jobs from 2008-2012 compared with only 10.8% decline of employment in the manufacturing sector over the same period.  Based on the current data, it can be concluded that a sizable return of manufacturing jobs in the U.S. T&A industry would hardly occur at least in the near future.

Sheng Lu