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February 1, 2008
Women's Wear Journal
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Sri Lanka Prepares For
The Sri Lankan government is putting its weight behind an appeal to extend the EU GSP+ trade concession for another three years. But, faced with increasing allegations of human rights violations and rising civilian casualties of war, there are concerns that the country - and its garment makers - will lose out.
The GSP+ is a unilateral trade concession scheme from the European Union (EU) to Sri Lanka that allows Sri Lanka to export around 7,200 items to the EU, duty free.
Its most outstanding benefit has been to the local garment industry. The scheme allows Sri Lankan garment manufacturers to remain cost competitive in European markets because of the zero duty export facility.
In 2007 the GSP+ is given most of the credit for the impressive 22% growth in exports of clothing from Sri Lanka to the EU.
The entire GSP scheme (including the GSP+ scheme), extended by the EU to developing countries, is reviewed every three years and 2008 is the review year.
However, there is concern in Sri Lanka that the scheme may not be extended beyond 2008.
This is because the GSP+ was given to Sri Lanka as a reward for impressive
labor, environmental and human rights standards, for a developing country.
So the worry is that the increasing international publicity on human rights violations could convince the EU to stop extending the GSP+ for Sri Lanka.
If the EU decides not to extend the GSP+ the loss would be felt across the economy - particularly as the US economy, the next biggest buyer of Sri Lankan goods, is showing signs of slowing.
So the government of Sri Lanka is taking the GSP+ review very seriously.
In January the President appointed a four minister contingent to defend the GSP+.
This includes the Minister of Export Promotion and International Trade, Minister GL Peiris, the Minister of Enterprise Development and Investment Promotion, Sarath Amunugama, Minister of Foreign Affairs, Rohitha Bogollagama and Minister of Disaster Management and Human Rights, Mahinda Samarasinghe.
Minister GL Peiris also said the government had "started dialogue" with individual member countries of the EU to drum up support to extend the GSP+ for Sri Lanka beyond 2008.
The Secretary to the Ministry of Foreign Affairs, Palitha Kohona, said the dates for the GSP+ review would be fixed within the year.
"The dates for the review would be fixed on mutual convenience sometime this year. There would be an exchange of calls and letters and both sides would agree on a convenient date," said Kohona.
Kohona dismissed fears of the GSP+ not being continued after 2008 because of allegations of human rights violations.
"That is a very superficial argument, because there is no country in the world where all these standards (human right,
labor, etc) are implemented meticulously. Not even the European countries have implemented these standards to the dot."
Kohona said that violations of international standards have occurred in Europe and have been reported to the Human Right Committee in Geneva (now defunct) and the European Council of Human Rights.
Therefore, said Kohona, to expect Sri Lanka to implement all ratified international standards to the letter would be unreasonable.
To keep the GSP+ with Sri Lanka, the government would argue that extending the GSP+ is in the best interest of European liberal policy.
"The GSP+ concessions were given to Sri Lanka following the tsunami. The major objective was to facilitate speedy recovery.
"So our argument is that the GSP+ has achieved this objective and has benefited Sri Lanka enormously, and not just by benefiting big businesses but also small businesses and workers.
"If you go into European supermarkets today you will find many items from Sri Lanka that were not there a few years ago. Much of this can be attributed to the GSP+," said Kohona.
"So we will try to convince the Europeans that the benefits extended have achieved their objectives and therefore, it is the interest of European liberal policy to continue the GSP+ for Sri Lanka."
Even local trade unions are backing the GSP+ extension, despite earlier arguments that both the government and employers violate
labor rights and therefore should not be given the GSP+.
"They don't comply by the labor standards but if Sri Lanka loses the GSP+ the impact will be on the workers," said general secretary of the Free Trade Zones and General Services Employees' Union, Anton Marcus.
"So we do not want to see the GSP+ being taken away. But we want some indication that core
labor standards will be adhered to."
Nordstrom to Open Hawaii
Clothing retailer Nordstrom is recruiting 500 local employees to staff the company's first stand-alone store in Hawaii, which is due to open on March 7.
The company said it was looking for staff for all areas of the new operation, including men's, women's and children's clothing sales positions, plus similar roles for designer clothing, shoes, accessories and cosmetics, as well as various support positions.
"Nordstrom is looking for people who love to sell and are passionate about fashion and giving great service to our customers," said Brian Tatsumura, manager of the new store at Ala Moana Center.
"The best way to learn and understand the needs of the customer is by working on the sales floor. As our company grows, this philosophy offers our employees a wealth of opportunities for advancement."
by Lawrence O. Brown
Pakistan Is Back To Work
The assassination of the Pakistani opposition leader Benazir Bhutto at the end of last month provoked outrage across the country. Textile and garment makers got caught up in the crossfire, with forced power cuts shuttering firms for five hours each day. Here, Ahmed Abdullah reports on the aftermath of the attacks.
Violence erupted across Pakistan following the assassination of former Prime Minister Benazir Bhutto on December 27, disrupting industrial activities in the country in general and Karachi in particular.
The hostilities spilled over into the textile and clothing sector, with at least eight garment factory workers being burnt to death and a number of others injured.
Around two dozen garment factories and five textile mills, 2500 bales of cotton, and many other small textile and garment units in the Kotri and Karachi industrial areas were set ablaze during the unrest - causing estimated losses of US$9m in textile machinery and equipment.
The country has also faced a serious energy crisis after a blast at a main electricity transmission tower on December 30 disrupted power supplies to the city of Karachi, and transport problems led to fuel shortages at upcountry power plants - creating a 4000 megawatt shortfall in electricity.
The whole of Karachi city remained completely shut for three-days between December 28 and 30 for a period of national mourning announced by President Pervez Musharraf.
And export shipments were held up due to the closure of banks and customs offices. It is estimated that textile and garment exports worth around US$95m were delayed during the shutdown.
Tanvir Ahmad Sheikh, president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), said that during the unrest, losses amounted to 8% of gross domestic product (GDP).
Pakistan's textile and garment exports have been hit particularly hard, registering a decline of 25% during December compared with the same month of the previous year.
During the first half of the current fiscal year, from July to December 2007, textile and garment exports have remained static at US$5.3bn. And the trade deficit has reached $8.2bn during the period.
The country is hoping to meet a textile and garment export target of US$12.2bn for its current fiscal year, but this now looks unlikely as export growth remained sluggish so far.
In a press statement, Syed Hassan Masood Zaidi, the vice chairman of the Pakistan Hosiery Manufacturers Association (PHMA), said the knitwear industry had been crippled by the power shutdown and gas supply cut-off.
Sheikh Mukhtar Ahmed, chairman of the Faisalabad Garment city said that the unrest was mostly confined to the southern part of the country.
The northern part, especially Punjab, which has a major share in exports, was only partially affected during the unrest but the overall situation remained peaceful he said, adding that the industry is now running at full capacity again.
Mr Sheikh noted that although the industry in Pakistan is currently facing power cuts and high prices of gas and other utilities, it has backups and still pays higher wages to workers compared with some of its competitors.
He also stressed that Pakistan is a peaceful country, and has the capacity to supply garments at cheaper rates than China, India and Bangladesh.
Talking about the latest industry orders he said that although huge orders are being handled, stable government policies are required to
fulfill the customers' demands.
Sources in Karachi said that the stricken garment factories have resumed their operations.
Italian garment manufacturing company, Maxco Pvt Limited, which was gutted by rioters where eight workers were burnt to death, has partially re-started it operations.
Prime Minister Mohammad Mian Soomro has pledged help from the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan to help companies rebuild their enterprises.
He said the estimated loss to public and private property was around INR187bn and the government is working to
finalize the method of compensation payment after final assessment of the damages and losses.
On the issue of power, the Prime Minister said a fixed schedule of power cuts would be observed during the shortage.
Pakistani textile mills had been asked to close their operations for five hours a day in an attempt to save electricity - but supplies of electricity to the industry and domestic consumers are due to be back to normal by the end of January.
Textile Customs Online
The National Council of Textile Organizations (NCTO) has set up an online reporting system so that companies and individuals can alert officials to customs fraud in textiles and apparel.
The initiative has been launched after increasing reports of fraud being reported by NCTO member companies in the CAFTA/NAFTA region.
The new tools, which are being distributed to NCTO members and the public at large, include a one page form that can be filed out online and sent electronically to NCTO on a confidential basis.
NCTO will then forward the information to US Customs.
The forms have been developed in consultation with the US Customs and Border Protection and are designed to streamline the reporting process and provide more detailed information customs officials.
Mike Hubbard, NCTO vice president, said: "Customs fraud has risen to become the number one issue we get calls about from our member companies.
"Our members are extremely frustrated because they see high levels of fraud without a corresponding increase in Customs activity."
NCTO alleges the sharp drop-off in seizure and detentions and in special operations has coincided with the textile division was being moved out of the Operations Division last year and into a policy branch.
Customs enforcement became a key issue for the industry during the CAFTA debate after the industry learned that Customs had not hired new textile enforcement personnel as mandated by Congress in 2002.
Bangladesh Textile Workers
At least 50 people have been hurt after thousands of textile workers clashed with police in the Bangladesh capital Dhaka on January 15 in a protest over pay and overtime.
On its second day the authorities were forced to call in paramilitary troops to help restore order.
The country's military-backed government banned all demonstrations in the textile sector, after a series of protests over low wages and poor working conditions in the past two years.
Factory owners and trade union leaders agreed a new monthly minimum wage for garment workers of 1,662 takas (US$25.4) in October 2006, but the unions claim just 20% of factories have implemented the pay rise.
Frederick's & Movie Star
The merger between intimate apparel maker Movie Star Inc and Frederick's of Hollywood has been completed, with the combined
company now called Frederick's of Hollywood Group Inc.
Peter Cole has become executive chairman and will lead the company's post-merger operations integration and strategic planning initiatives.
Both companies will retain their leadership teams, with Linda LoRe, president and CEO of Frederick's, and Melvyn Knigin, president and CEO of Movie Star, continuing to head their respective businesses.
In addition, Thomas Rende, CFO of Movie Star, has become CFO of the combined company.
The combined company generates over $200m in annual sales and is well positioned to capitalize on significant growth opportunities in the intimate apparel market.
An extra 40 to 50 Frederick's of Hollywood store locations are due to be opened or renovated within the next 36 months, adding to the 135 specialty retail stores already in operation.
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