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Articles Of Interest

PNTR Extended to Vietnam
Page 1

Guatemala Officially Entered CAFTA-DR
Page 1

Century Textiles To Cut 5,000 Employees
Page 1

Factory Fire Kills 13 
Page 1

CATECO Accused of Slave-Like Conditions
Page 2

Retail Sectors Hurt by Job Cuts
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New Jersey Shut Down Hurts Local Business
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Fast Retailing Up 32%
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2005 Chinese Exports Hit $48.3 Billion
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Inditex to Add 250 Jobs
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Organic Jeans
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The American Red Cross

July 15, 2006                                                 Issue #173


24/24

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PNTR Extended to Vietnam
The US Senate Finance Committee met on July 12,to discuss controversial plans to extend Permanent Normal Trade Relations (PNTR) status to Vietnam – a move that also paves the way for the South East Asian nation to join the World Trade Organization.
But the talks have yet again provoked fierce argument between US textile groups who want to see continued restrictions on Vietnam’s exports, and apparel retailers and importers who believe a predictable trade environment will bolster business between the two countries. 
Legislation to grant PNTR to Vietnam was introduced in the House and Senate in June, and their committees are now seeking testimonials from parties who both support and oppose the accord.
PNTR status is needed if the US is to take advantage of reductions in trade barriers provided under a new US/Vietnam trade agreement signed on May 13.
Under this bilateral trade pact, Vietnam must eliminate all WTO-prohibited subsidies to its textile and apparel industries, and the US must agree to lift all existing textile and apparel quotas on Vietnam as soon as Vietnam’s WTO membership becomes official.
As an enforcement mechanism, the US would be allowed to impose temporary quotas on imports from Vietnam for up to a year if violations of the subsidy prohibition were proven.
Matters are complicated by the fact Congress cannot vote directly on the bilateral. Instead it must extend PNTR to Vietnam if the country is to receive full access to the US market as a WTO member. So the vote on PNTR is effectively the legal vehicle for Congress to approve or disapprove the bilateral admission agreement. 
Opinion on the pact angrily debated by organizations with interests in the US textile and clothing sector. 
US textile industry groups oppose the pact and want to see continued quotas on imports from Vietnam. 
AMTAC figures show that since granting Vietnam normal trade relations in late 2001, the US trade balance in manufactured goods with Vietnam has turned from a US$142m surplus to a $4bn deficit. Sectors bearing the brunt of the deficit include textiles, apparel and footwear it says.
However, other industry bodies such as the National Retail Federation are actively urging Congress to approve PNTR as soon as possible, arguing that it will provide the “business predictability” necessary for retailers to expand commerce ties and investment in Vietnam. 
Steve Pfister, NRF senior vice president called the enforcement mechanism “appropriate and effective.” 
Under the mechanism, Vietnam has “a strong incentive” to comply with the bilateral agreement because “Vietnamese apparel exporters know their orders for shipments to the United States would cease immediately” if the agreement were violated, he said. 
As far as approval of PNTR for Vietnam is concerned, some politicians are still hoping to get the go-ahead by August. Others, though, say there has been no decision yet on timing and it may not get voted on until after November’s congressional election. 


13/24  

Guatemala Officially Entered
    CAFTA-DR on July 1
On July 1, 2006 Guatemala officially entered into the US-Central America Free Trade Agreement (CAFTA-DR), becoming the fourth country to implement the trade deal after El Salvador, Honduras and Nicaragua.
The United States Association of Importers of Textiles and Apparel said it is “enthusiastic about new commercial opportunities with the expanded participation of four Central American countries in the CAFTA agreement.”
Carla Caballeros, executive director of Vestex, Guatemala’s Commission of the Textile and Apparel Industry, said: “By expanding the range of products and inputs eligible for duty-free access to the US market, CAFTA will provide fresh incentives for Guatemala and the region to develop a first-rate, fully integrated supply chain, ready to compete with highly sophisticated suppliers elsewhere in the world.” 
Under the current Caribbean Basin Trade Partnership Act, only 37% of Guatemala’s apparel exports qualified for duty-free treatment by using the required US yarns and fabrics. 
With CAFTA’s more liberal rule of origin which permits the use of Guatemalan or regional yarns and fabrics, the industry expects the volume of duty-free shipments to surge, providing a jump-start to sustained growth in the years to come. 
Because the Guatemalan industry also produces textiles and home furnishing products, which are newly eligible for duty-free access to the US market, representatives from US buyers lauded the agreement too.

                
A model displays lingerie of the 'Made in Colombia' collection 
at the 'Colombia Moda' fashion show in Medellin, Colombia


20/24   
Chinese Government Warns  
          Companies 
  Over Illegal Practices
Chinese textile companies could face stiff penalties if they are found to be giving their products fake certificates of origin to avoid European and US export quotas.
China’s Ministry of Commerce warns that under last year’s Sino-US and Sino-EU memorandum on textile trade, agreed trade volumes for 2007 could be slashed if such illegal practices are carried out.
China’s textile exports to the US and the EU have slowed since the announcement of quotas, while similar exports from Hong Kong and Korea have soared by 234% and 150% respectively in the first five months of the year.
At the same time, a number of Chinese provinces have increased their exports to countries like Korea, Vietnam, Thailand, Russia and Pakistan.
Some EU Customs authorities have voiced concern at this, warning that such rapid growth could be a sign of "malpractice".
Now China’s Ministry of Commerce is to inspect companies and submit reports, with harsh punishments threatened against those found to have transgressed.
               


10/12 
      PPR To Sell Orcanta 
        to Chantelle
Currently finalizing the sale of the Printemps department stores chain, PPR is poised to sell its Orcanta lingerie brand to French group Chantelle. 
Set up a decade ago, Orcanta's chain of 64 shops, all are located in France, generated a turnover of EUR49m (US$62.44m) in 2005. The sale price is estimated at EUR 42.5 million. The sale of Orcanta is seen as a further step in PPR's withdrawal from the multi-brand garments sector.
With its products marketed in close to 100 countries, Chantelle has an annual turnover in excess of EUR 300 million, 60% of which is earned abroad. Its three brands are: Chantelle, which is sold in department stores, Passionata, which is sold in hypermarkets, and Darjeerling, a chain of more than 100 boutiques.
The group, which claims to be France's leading lingerie manufacturer, also has subsidiaries in the US, Mexico, Europe, the UAE and Taiwan.


            
24/24
VF Closes Facility in Kansas 
Branded apparel business VF has confirmed it is shutting down its distribution facility in Lenexa, Kansas, toward the end of July.
The business, a part of VF Corporation, said work previously undertaken at the facility will move to the new distribution center in Visalia, California.
The 100 affected workers can continue to work during a phase-out period, and those continuing through the period will be offered a package that will include some combination of severance pay, educational assistance for retraining, outplacement assistance, and other benefits.  


17/24
   Century Textiles to Cut 
        5,000 Employees
Century Textiles and Industries will lay off 5,000 workers from its payroll.
Director Kumar Birla said the job losses, which will - it hopes - come through a voluntary retirement scheme, are to prevent its mill in Worli from becoming inoperative. The workforce will be reduced from 7,000 to 2,000 employees.
He reassured shareholders that the company had no plans to redevelop or sell its Worli land, however or any of its business.
It is, however, planning to cut the number of looms in its textile facility in Mumbai as part of efforts to downsize.
Birla also threw off suggestions of a takeover and denied any dispute over Worli land with Bombay Dyeing.

              
9/12
Kingmaker to Build New   
    Factory in Cambodia
Kingmaker Footwear Holdings is to build a new US$30m factory in Cambodia in an attempt to offset anti-dumping duties imposed by the EU and US on shoe exports from China and Vietnam.
The new factory is due to start operations in December and will operate six production lines, each with an annual production capacity of 450,000 to 500,000 pairs of adults’ shoes. 
Kingmaker this week saw profits drop by 32% in the year to March. It blamed uncertainties over the anti-dumping investigations and the loss of a lucrative contract to supply US shoe brand Timberland.

                   

15/24
Factory Fire in Kenya Kills 13
The death toll from a fire tragedy at Barot Agencies chemicals and 
textile factory in Nairobi on Saturday has risen to 13 after three 
more bodies were recovered from the wreckage.
A Kenyan newspaper stated that police were holding two company 
directors at the Embakasi station for questioning in connection with 
the tragedy, but that they might be released to attend the burial 
some of their relatives who died in the fire. 


1/24
FTA Negotiations Between 
   South Korea and US
During the second round of Free Trade Agreement (FTA) negotiations which ended July 14 in Seoul, South Korea and the US just scratched the surface of the timetable for the removal of US tariffs on South Korean textiles and textile products.
The two sides, however, agreed to exchange tariff concessions on textiles in the middle of August ahead of a planned third round of talks in September in the US. 
Assistant US Trade Representative Wendy Cutler and South Korea chief negotiator Kim Jong-hoon led the talks.
"Both nations agreed to simultaneously exchange concessions on textiles and agriculture during the first half of August," Jong-hoon said in a press briefing. "In case of textiles, we demand that the US should abolish all tariffs within five years (after the deal is adopted)."
The US is imposing 55-30% tariffs on South Korean textiles and textile products, according to the Korea Federation of Textile Industries. Of the total US$13.9bn textiles and textile products South Korea exported last year, exports to the US reached $2.3bn.
A free-trade agreement between the two countries is expected to boost US exports to South Korea by $19bn and South Korean sales in the US by $10bn, including at least $200m consisting of more sales of textiles and textile products. 
The US hopes to wrap up the FTA negotiations by the end of this year, but South Korean officials said they would not be pressed by the US deadline.
Although many US lawmakers oppose any dealing with North Korea because of its nuclear weapons program, South Korea is demanding that items including textile products made in an industrial park in North Korea should be included in the FTA pact with the US.
Seoul sees the Gaesung industrial park, located in North Korea near the border, as a model for the reunification with communist North Korea. Thousands of North Koreans are employed in about 15 South Korean companies including textile product and footwear makers.


 
                             
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