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Bangladesh, Cambodia Imports Hit by Unrest

The countries are beginning to feel the bite from the upheavals taking place in their apparel-manufacturing industries.

WASHINGTON — Cambodia and Bangladesh are beginning to feel the bite from the upheavals taking place in their apparel-manufacturing industries.

On Wednesday, U.S. Labor Department officials held a conference call with fashion industry trade groups about instability in Cambodia’s garment industry, according to industry sources. At the same time, the Commerce Department released its monthly trade report, showing that apparel imports from Cambodia and Bangladesh tumbled in April.

The heightened scrutiny follows months of protests and strikes by Cambodian garment workers and union leaders who have been calling for an increase in the country’s minimum wage to $160 a month from the current rate of $100 a month.

A nationwide strike in Cambodia turned deadly on Jan. 3, when Cambodian security forces opened fire on thousands of workers, leaving five dead and injuring more than 40 people.

Nate Herman, vice president of international trade at the American Apparel & Footwear Association, said Obama administration officials have been in conversations with the Cambodian government to address the issues.

“A lot of the focus has been on labor laws in Cambodia and the treatment of unions…and moving industrial relations forward to try to improve labor laws,” Herman said.

A series of meetings in Cambodia last week and a court’s decision to convict — then free — 23 people arrested after the demonstration left brands and retailers uncertain and without a path forward, he said.

“Most Western buyers were hoping one of the events last week would set the stage on how to move forward on the wage issue and other outstanding issues in Cambodia,” Herman said. “But it just created a lot more uncertainty than they already had and didn’t seem to resolve anything.”

Apparel imports from Cambodia to the U.S. fell 7.9 percent to 88 million square meter equivalents in April compared with April 2013, largely a result of the disruptions caused by factory shutdowns in January, industry officials said.

For the year-to-date through April, apparel imports from Cambodia were down 0.2 percent to 370 million SME.

While the recent announcement of a pullback in Cambodia by Levi Strauss & Co. will not hit import data for several months, industry officials said they expect a decline in apparel imports in the near term.

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Herman said he does not expect a “massive pullout” from companies, but noted that several firms have said they are going to pull back from placing new business in Cambodia in the short term. By the same token, Herman said another company, which he declined to name, plans to open up three new factories in the country.

Julia Hughes, president of the U.S. Fashion Industry Association, said, “As long as we are continuing to see the protests and the dispute between the government and unions and workers, it is not a surprise that imports are down.”

Hughes said she expects the disruption to continue at least in the short term.

While two major industry-backed initiatives aimed at improving fire and building safety in Bangladesh in the wake of fatalities there have helped lead to some stability in the country, apparel imports fell in April, compared with a year earlier. Apparel imports from Bangladesh to the U.S. fell 5.3 percent to 131 million SME. For the year-to-date through April, apparel imports from Bangladesh declined 3.5 percent.

“While there are still concerns about Bangladesh, we are getting very positive feedback for the long run and companies expect Bangladesh will deal with these problems,” Hughes said. “I don’t think we will see a crash in imports from Bangladesh, although we are seeing this dip.…What we are seeing now are orders that would have been placed potentially a year ago or nine months ago after Rana Plaza happened, so it is not a surprise to see a bit of a dip for some companies that were uncertain and diversified their sourcing beyond Bangladesh.”

Bangladesh garment industry trade groups, government officials and representatives from the industry initiatives are poised to visit Boston, New York and Washington next week. The delegation is planning to meet with administration officials and U.S. lawmakers here to discuss improving working conditions in the hopes of restoring trade benefits the U.S. rescinded last year, as well as attend a conference at Harvard University on globalization and sustainability in Bangladesh’s garment industry on June 14, according to industry officials.

Vietnam, the second-largest apparel supplier to the U.S., has also just been through a period of turmoil, in which anti-Chinese protesters set fire to factories in mid-May, causing some major apparel and footwear companies to temporarily halt production there.

While apparel imports from Vietnam in April rose 13 percent to 217 million SME, some expect to see a downturn in future imports, reflecting the instability there.

Herman said the widespread unrest reportedly left a dozen apparel and footwear factories burned down and another dozen damaged.

“I think you could see a little slowdown in imports from Vietnam, which have consistently seen double-digit growth,” Herman said. “There is at least a hesitation now [in placing new orders there].”