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US & Malaysia FTA Talks
Page 1

Brazil Considers Pushing Sanctions on 
US Imports
Page 1

EU Trademark Warning
Page 1

Mothers Work's 60% Jump 
In Sales
Page 1

Retail Sales Hurt by Increased Interest Rates & Fuel Costs
Page 2

Sales Tax Holiday
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Buyers' Best Sellers
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Ask Andy
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Calida's Net Profit Doubles
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Agent Provocateur Fined
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Jos A Bank Accused of Violating Federal Securities Laws
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August 1, 2006                                                 Issue #174


             McPete -Sez, 
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US & Malaysia FTA Talks
The United States and Malaysia made what they described as “solid progress” in the second round of Free Trade Agreement (FTA) negotiations in Washington in mid July, and said talks will resume in Malaysia in September.
The two sides hope to conclude the trade talks by the end of the year, and say they are optimistic of reaching “a strong agreement that achieves a balance of interests and benefits businesses, farmers, ranchers and workers in both the United States and Malaysia.” 
During last week’s negotiations, 22 groups met to thrash out a range of issues, including textiles, which will be included in the trade pact. 
The American Apparel & Footwear Association (AAFA) and the Malaysian Textile Manufacturers Association both are urging their respective governments to focus on the trade relationship between the two countries and not to negotiate from a template in the US-Malaysia Free Trade Agreement talks. 
US textile and apparel exports to Malaysia totaled over $56m in 2005 while Malaysian exports to the United States totaled over $677m.
“The FTA must be beneficial to both the US and Malaysian textile and apparel industries with sufficient flexibility built into the agreement to maintain a viable partnership between Malaysia and the United States,” said AAFA president and CEO Kevin M Burke.
MTMA president YH Tan also called for mechanisms “that will create a dynamic, and not stagnant, agreement to reflect the industries as they change over the coming years.”


Brazil Considers Pushing Sanctions on US Imports
Brazil is to decide by the beginning of August whether or not to push for sanctions on US imports, a senior Brazilian trade official said.
Brazil is considering asking the World Trade Organization for sanctions of up to US$1bn on US imports, arguing the US has not adequately cut cotton subsidies.
The WTO already agreed last year that some US payments to cotton farmers and exporters were illicit.
"We will assess our next move very soon and make a decision probably next week," Roberto Azevedo, head of the economic department at Brazil's foreign ministry, was reported as saying.

A model presents lingerie by designer label Nina von C.
 during the Trend Show Bodywear, part of the Creation 
Premieres Duesseldorf fashion fair in Duesseldorf, Germany

Kmart Pays $13m Settlement
A federal judge has accepted a US$13m settlement between retailer Kmart and disabled shoppers.
The agreement allows Kmart seven and a half years to adapt its stores to meet federal standards on disabled access for merchandise, counters, restrooms, fitting rooms and parking lots.
$5m in gift cards and $8m in cash will be distributed to class-action plaintiffs in California, Colorado, Hawaii, Massachusetts, New York, Oregon and Texas.
The settlement class consists of individuals who used or use a wheelchair or scooter and shopped or shop at Kmart, or allege that they would shop or would have shopped at Kmart but for access problems, between 6 May 2003 and the end of the settlement term.


 Wal-Mart to Sell German 
          Retail Business 
Wal-Mart revealed plans to sell its German retail business to Metro AG – a move that will cost it around US$1bn.
The decision to retreat from one of its markets comes just two months after Wal-Mart withdrew from South Korea after agreeing to sell its business to retailer Shinsegae for US$882m.
Wal-Mart moved into the German market eight years ago when it bought the Wertkauf and Interspar hypermarket chains and currently operates 85 Supercenters in the country employing 11,000 people.
The sale to Metro, Germany’s leading retail chain, is subject to approval by the anti-trust authorities. Wal-Mart says it expects to incur a pre-tax loss of US$1bn on the deal in its second quarter of fiscal 2007.
Wal-Mart’s international operations comprise 2,700 stores in 14 countries outside the United States. 
In the past year, the company became majority owner of Seiyu in Japan, completed its acquisition of Sonae in Brazil, and expanded into six new markets including Northern Ireland, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. 
Combined with its US and Sam’s Club divisions, Wal-Mart operates more than 6,600 retail outlets globally with sales of US$312bn last year.

Chinese Garment & Textile Profits Continue to Increase
China’s textile and garment sector rose above trade disputes to report a 38.3% increase in textile manufacturing profits and 31.9% in garment manufacturing profits between January and May.
The Economic Forecast Department of the State Information Center reported 20% increase in the industrial output and sales revenue.
The textile sector took profits of CNY16.56bn (US$2.08bn) during the first five months of the year, while the garment sector made profits of CNY8.48bn, the report said. These represent year-on-year increases of 38.3% and 31.9% respectively.
In addition, total export value of textiles and garments grew 24.55%, making up 14.6% of the country’s total exports. Imports grew 6.47%, making up 2.3% of China’s total.
It was reported that China’s top three export destinations during the five months were Japan, the US and Hong Kong.

Thai Manufacturers Set Up Operations in Vietnam
Thai textile and clothing makers are considering setting up operations in Vietnam to help them break into the US market.
Thailand has been struggling to come to a free-trade deal with the US, the Vietnamese trade office in Thailand was cited as saying, and so is considering exploiting Vietnam’s imminent entry into the World Trade Organization.
According to Yotsuton Kijkusol - Thai Textile and Garment Producers Association deputy chairman – Thai manufacturers could also benefit from Vietnam’s low labor costs, which are said to be 20%-30% lower than Thailand’s.
Hua Thai Manufacturing Pic and the Thai Garment Group have already set up factories in Vietnam, while Thai Trax Intertrade is another planning to establish itself there.
China and India are other potential locations for production, the trade office said.

Mothers Work Reports 
60% Sales Jump in Q3
Maternity wear company Mothers Work said better sales pushed up third-quarter profit to US$8.8m from $5.5m the same time last year.
Quarterly net sales rose 7.3% to $163.9m from $152.7m a year ago, mainly driven by higher same-store sales, which were up 6.4%. The company also enjoyed better internet sales and sales growth from its licensing deal with Kohl’s.
President and COO Rebecca Matthias said: "We believe that the oversupply conditions that plagued the maternity apparel business during our fiscal 2004 and 2005 have eased, and we believe that our strong sales trend during fiscal 2006 reflects this. 
"We are optimistic about delivering significantly improved financial results for fiscal 2006, as we expect to see a continuation of our improved sales and gross margin trends and expect to realize increased earnings contribution from our new strategic initiatives, including increased contribution from our marketing partnerships, a full year contribution from our Sears and Kohl's initiatives, and the continued rollout of our multi-brand stores."

EU Trademark Warning
A European Court of Justice (ECJ) advocate general has suggested clothing manufacturers without trademark rights to a brand in a particular European Union (EU) country cannot rely on such rights in another EU state to prevent a rival transporting goods carrying this mark across its territory. 
The legal principle has been recommended for adoption by the ECJ by the advocate, who has said that "in the absence of uncertainty" that the rival manufacturer has no plans to sell such branded clothing in the transit country, EU law does not allow an original manufacturer to use local trademark rights to block such transports. 
The case relates to apparel brand Diesel trying to block Polish manufacturer Montex from exporting Diesel-branded jeans via Germany to Ireland. Diesel has trademark rights in Germany, but not Ireland. 

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