MEXICO CITY — Mexico’s textiles and apparel industry expects its 2012 World Trade Organization case against China’s unfair subsidies to importers to be settled by September, industry leaders said.
They also expect a Mexican-Chinese working group, set up to improve the countries’ Customs cooperation and knowledge to counter a flood of undervalued Chinese imports to Mexico, to announce a series of actions by then.
“We are looking for a very clear definition of the trade rules affecting our industries so the triangulation of subvalued products [sent from China but often with Malaysia or Vietnam origination certificates] stops,” Sergio López de la Cerda, president of apparel industry group Canaive, told WWD.
His comments came after Mexican and Chinese presidents Enrique Peña Nieto and Xi Jinping signed several strategic agreements last month to bolster the nation’s trade relations. One of the agreements involved a working group comprised of Mexico and China’s economic and foreign ministries tasked to come up with a series of rules and guidelines to curtail China’s subvalued imports and widen Mexico’s access to China’s market.
Experts feel Mexico has the potential to export as much as $500 million to China as a string of new value-added textile producers and fashion brands gear up to enter the Chinese market. López de la Cerda said the working group’s expected agreements and recommendations, when they are developed, should help even out the countries’ trade imbalance. In 2012, China exported $2.2 billion worth of textiles and apparel to Mexico, while Mexico exported just $150 million to China. The group’s results could come in parallel with a settlement to Mexico’s WTO dispute or without it.
“If we reach an agreement before then, that would be great, but if not, the WTO suit will continue its process,” López de la Cerda said.
Moisés Kalach, president of textiles lobby Canaintex, noted that the presidents charged their ministries to work to settle the WTO suit in three months.
“This is a presidential mandate,” Kalach said. “We hope this will be resolved as soon as possible. Mexico is not trying to be protectionist. We just want fair commerce with China.”
Meanwhile, a pact Canaive signed last fall with new Mexican President Peña Nieto to create a four-pronged strategy to improve the textile and apparel industry’s fortunes remains in place, López de la Cerda said. Two of the agreement’s goals aim to combat Mexico’s unrelenting counterfeit and contraband trade, and create a more fashion-centric country to boost domestic apparel sales and exports.
Last year, López de la Cerda said a new prevalidation system that checked subvalued merchandise against a slew of reference prices was working well. That, in addition to the Peña Nieto accord, would help slash illegal clothing sales to 40 percent from 60 percent of the market by 2016, López de la Cerda predicted.
However, he conceded things have not gone as well as expected. Customs raids have been weaker than hoped, and new uncertainty about how the fledgling administration will fight contraband has made that goal less realistic.
“The prevalidation system is working, but not with the results we wanted,” López de la Cerda said. “We are advancing, but we are not satisfied.”
As part of a sweeping financial reform due in September to build a more “inclusive Mexico,” Peña Nieto has pledged to create new jobs for informal workers, who account for 60 percent of Mexico’s active population. The World Bank defines such workers as people obtaining wages from “activities and income that are partially or fully outside government regulation, taxation and observation.”
These efforts should help move people out of the illegal groups behind the undervalued Chinese imports, López de la Cerda said.
“Contraband is an issue involving both exporters and importers,” he said. “We hope the government will introduce enough incentives to move people out of these illegal markets. We also hope Customs and law enforcement operations will strengthen.”
Canaive’s plans to create a stronger “Made in Mexico” fashion brand by joining forces with the textile, footwear, leather goods and accessories sectors is also gaining traction, López de la Cerda added. The scheme’s first step, the creation of a fashion council, was completed in January, with López de la Cerda at its helm.
López de la Cerda said the council was about to set up a 20-member technical leadership committee made up of four top fashion designers and 16 industry experts.
“The idea is for top industry executives, experts and designers to manage this committee so that the fashion culture we want to create in Mexico permeates the country as soon as possible,” López de la Cerda said.
He forecast Mexico’s textiles and apparel sector will grow 3 percent this year, driven by strengthening domestic demand and exports that are predicted to climb 3 to 5 percent to $6.5 billion. Meanwhile, the local market should grow as much as 3 percent from nearly 2 percent in 2012 as consumption increases on the back of government spending.
Exports will benefit from U.S. manufacturers’ ongoing production shift to Mexico as Asian manufacturing costs continue to climb.
“We are once again becoming an increasingly desirable destination for U.S. brands,” López de la Cerda added.