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government-trade

Canada to Drop LDC Apparel Duties

WASHINGTON -- Canadian apparel manufacturers are up in arms over Prime Minister Jean Chretien's announcement last week that Canada will drop duties and quotas on apparel products from 48 least developed countries starting Jan. 1.<P>Chretien, in a...

WASHINGTON — Canadian apparel manufacturers are up in arms over Prime Minister Jean Chretien’s announcement last week that Canada will drop duties and quotas on apparel products from 48 least developed countries starting Jan. 1.

Chretien, in a move toward more liberalization, announced the initiative at the G8 summit in Kananaskis in Alberta, Canada, on June 27. The Canadian apparel industry had been lobbying the government to offer a limited trade package to the 34 LDCs of sub-Saharan Africa.

“We were quite surprised after months of lobbying our government that our interests would be forgotten,” said Eve Grenier, president of C.J. Grenier, a 130-year-old, family-owned intimate apparel company based in Montreal. “We made representation to the importance of minimizing the impact of opening the Canadian market to LDC exports.”

According to the Canadian government, apparel imports to Canada from the LDCs were less than $200 million in 2000, accounting for just 4 percent of all Canadian imports. About 75 percent of that total came from Bangladesh.

“The government is cutting 19 percent [the average duty on apparel] off the top, not only for African nations, but also for countries like Bangladesh and Cambodia,” said Bob Kirke, executive director of the Canadian Apparel Federation, which has about 650 apparel manufacturing and supplier members. “That is unconscionable because they didn’t phase it in, they didn’t debate it on the floor of the House of Commons and they are trapping apparel companies in midstream.”

The Canadian apparel manufacturing industry, which employs some 100,000 workers and generates $7 billion in annual sales, could stand to lose anywhere from 10,000 to 15,000 jobs, Kirke claimed. He said 40 percent of all clothing purchased in Canada at retail is supplied by domestic manufacturers, while 60 percent of all Canadian production is for the domestic market.

Transshipments are another concern, though the Canadian government has said it will enhance verification, monitoring and enforcement of transshipments.

Kirke said the Federation was lobbying for provisions similar to those in the U.S.’ African Growth & Opportunity Act. Under AGOA, LDCs that qualify are allowed to use third-country fabric for a set period of time and receive duty- and quota-free access to the U.S. More developed African nations, however, must use regional fabric or U.S. fabric and yarn to qualify for AGOA benefits.

According to the Canadian rules of origin, all 48 LDCs can source fabric from almost any third country, including China, but the cutting and/or knitting must be done in the country and 25 percent of the value must be added there.

“If the Canadian federal government had really wanted to do the right thing for Africa, which was the whole issue of the G8 summit, they should have limited the benefits to least developed countries in Africa,” said Elliot Lifson, president of the Apparel Federation and vice chairman of Peerless Clothing, a manufacturer of men’s tailored clothing that employs 3,100 Canadian workers.

“Anyone sourcing overseas will go to countries with an infrastructure like Bangladesh, so that defeats the whole purpose of helping Africa.””