PROTECTIONISM BUGS EXPORTERS AT IAF

Byline: Josephine Bow

HONG KONG--Even as the apparel industry becomes increasingly global, exporting countries continue to bristle over what they view as the protectionist policies of the industrialized nations.
That irritation--along with other tensions of global change--was apparent at the annual two-day conference of the International Apparel Federation (IAF) held here in the historic waning days of British Hong Kong.
Several hundred delegates from Asia, Europe and North America gathered to hear presentations from nearly 30 industry figures. Topics ranged from international trade and fashion as "the universal language" to technology and training. Celebrity guests included Nino Cerruti and CNN's fashion commentator Elsa Klensch.
"We want the IAF to represent a true roundtable for the textiles and clothing industry, where people in every sector from all over the world can integrate their experiences," said Gaetano Marzotto, vice chairman of Italian manufacturer Marzotto and first vice president of IAF.
The welcoming address was delivered by Sunjoto Tanudjaja, chief executive officer of P.T. Great River International--Indonesia's largest apparel manufacturer with 12,000 workers--and this year's IAF president. He said one of the key issues today was that despite a professed commitment to free trade, importing countries continued to find new forms of protectionism.
"World trade is a 'win-win' situation," he stressed.
T. Ariwibowo, Indonesian minister of industry and trade, said the World Trade Organization, which began functioning 2 1/2 years ago as mandated by the General Agreement on Tariffs and Trade Uruguay Round, "must create a level playing field between developing and industrialized nations. If developing country consumers could enjoy more textile and apparel jobs, in the long term they will be better customers, buying more products."
Ariwibowo underlined the historical forces currently changing the world, including access to new capital and information technology, which have brought production costs down. This is significant for low-wage countries such as Indonesia, which still rely on the garment industry as a major export earner and jobs provider.
"Competitiveness is no longer determined only by worker productivity, but overall company productivity," he said, adding that both the private sector and government in Indonesia were firmly behind initiatives to introduce more information technology in industry.
"We can expect restructuring within the industry across the board," he said.
Tam Wing-Pong, Hong Kong's deputy secretary for trade and industry, decried the new U.S. rules of origin as a hardship to exporters and an obstruction to free trade.
Under the rules, which were changed a year ago, countries where garments are sewn are designated as countries of origin for U.S. quota purposes.
In the past, the country cutting the fabric was given the origin designation. This has been upsetting to Hong Kong, because much of its sewing production is done in China, where wages are cheaper but quota tighter.
"Although we have seen the light in the tunnel with the signing of the WTO accords to phase out quota [by 2005], the next eight years promise to be a very long road," he said, adding that only rule-based multilateral agreements should govern world trade relations in the future.
"Bilateral trade agreements are affected by too many other factors," he said. "Hong Kong is prepared to abide by the spirit as well as the letter of the ATC [the WTO Agreement on Textiles and Clothing]."
His remarks were echoed by Stanley Ying, deputy director of trade for Hong Kong, who noted the increasing weight of garment exports to China, last year constituting nearly 11 percent of Hong Kong's total. Both reiterated that under SAR [Special Administrative Region] rules, Hong Kong would be governed under the principle of "one country, two systems, for the next 50 years."
"The SAR will continue its free-trade policy and be treated as a separate customs territory," said Ying. "Under SAR regulations, it will not be possible to merge Hong Kong and China quota."
"Transition will change our sovereignty, but not the way we do business," said Tam. "We've had 14 years [since signing of the Joint Declaration between China and Great Britain for reversion of control over Hong Kong] to prepare for the transition."
Richard Hughes, counselor to the WTO, said despite the recent cyclical downturn, overall long-term economic growth in the world was due to the systematic reduction of trade barriers and improved efficiencies in transportation and communication, as finished goods, components, services and technology now move everywhere.
"Global interdependence requires global solutions--global rules consistently applied," he said, warning that although the textile industry was accustomed to change, companies that wished to survive would have to adjust at an ever faster rate.
Etienne Reuter, head of the European Commission in Hong Kong, warned that although the textile industry had declined in many parts of Europe, it still employed some 2 million workers, concentrated in areas where people lack the skills to do any other kind of work.
"The industry has to have time to adjust to the changing scene," he said, explaining why Europe had lodged so many antidumping charges recently. Reuter defended antidumping as a fair and legal redress, not unilaterally imposed.
"But our strategies are not just defensive," he concluded. "We want open trade access to developing country markets. That is more constructive than quotas or import tariffs."
Caroyl Miller, deputy chief textile negotiator for the U.S. Trade Representative, who was scheduled to speak, did not attend. Some delegates speculated it was to avoid having to answer tough questions on U.S. rules of origin and future quota policy after Hong Kong comes under Chinese rule. However, in Washington, Miller's office said she was unable to attend the session because of a medical emergency and had informed the IAF officials.
Meanwhile, proving perhaps that fashion is better seen that spoken about, panelists had a tough time grappling with the topic of fashion as a universal language.
Nino Cerruti made the most cohesive attempt, noting there are many international languages, fashion being the most important silent one. At the same time, he contended, fashion is becoming more varied and individual.
Fashion, he said, has entered an era "where nobody buys by necessity and the object per se is no longer enough," he said. Interestingly enough, he said, even as large towns everywhere were starting to look the same, individual styles were diversifying.
"Media has created communications systems and multiplied sources of fantasy," he continued. "Fashion work is increasingly parallel to journalism or cinema. Our problem now is harmonizing creation with concept."
Gaetano Marzotto emphasized that having a designer label was no longer a guarantee of sales. "People want to be different now and they're willing to pay for that," he said. "They're dressing down during work time and dressing up in their free time."
"The consumer should dictate what is made, not the stylist," he continued. "For manufacturers, that means the retailer is our partner. For access to global markets, we're looking for partnerships."
The session on Asian retailing produced several pithy observations. Guido Schild, managing director of consulting firm Kurt Salmon Hong Kong, spoke of structural changes in Asia's fashion supply chain.
He forecast that China's consumption of higher-end goods would roughly double every decade to 2020. Nevertheless, he cautioned that in absolute terms, the Chinese market should not be overestimated, nor should the Japanese market be underestimated.
Schild predicted that although the number of retail outlets for global players in Asia would expand dramatically, so would those of regional retailers.
"Retail space is growing faster than consumer growth," he said. "Asian retailers are prepared for the onslaught, especially those with systems organization and Western-style management strength."
The globalization of retailing was illustrated by Onden Eren, chairman of Palimar Sportswear, a Turkish company that has been marketing an Australian surfing fashion label in the Middle East and central Asia.
"Even though none of these countries had ever seen surfing, we already have 200 outlets in the region and turnover has increased 13 fold in the past six years," he said. "This shows that if your label has a lifestyle concept and the right price, you can be successful. Young people everywhere are open to outside [foreign] labels."
"We cannot afford to ignore places outside of the economic blocs of Europe, North America and Asia," he said. "By the next millennium, the whole world will be a [potential] consumer market."
A group of 40 left Hong Kong for a three-day visit to Vietnam. Next year's IAF convention will be held May 16-19 in Florence, and will be followed by study tours to Italy's major textiles-producing regions.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus