RIO DE JANEIRO — Brazilian apparel and textile executives, unlike their counterparts in countries ranging from Bangladesh to the U.S., are confident their sectors will stay competitive after quotas are lifted Jan. 1.
That stance comes as apparel makers in both developed and developing countries have warned that China will be in a position to dominate the supply chain of the 148 World Trade Organization nations because of its low-cost labor and huge production capacity. In the U.S., for instance, the government is reviewing a flurry of safeguard petitions seeking to extend restraints on China past the 2005 deadline in the Agreement on Textiles & Clothing.
“I don’t believe Brazil will impose ATC-type quotas against Chinese textile and garment imports beginning in 2005 because this country is already quite price-competitive with China in the textile and garment industries,” said Domingos Mosca, international area coordinator of the Brazilian Association of Textile & Apparel Producers, the country’s largest such trade group. “Perhaps the one exception could be quotas on some synthetic textiles, which China produces at very competitive costs.”
Mosca said the Brazilian textile and garment industries began making hefty investments in the mid-1990s to position their operations to better deal with rivals.
“Brazilian textile and clothing makers are competitive with their foreign counterparts because these two sectors have, for the last eight years, each invested around $1 billion [per year] to modernize their industrial parks and plan to continue making such investments” through 2008, Mosca said, noting that Brazilian manufacturers have invested in new, more efficient equipment and in training workers. “This modernization has made it possible not to worry much about Chinese imports beginning in 2005.”
Last year, Brazil imported $915.6 million worth of textiles and apparel, and exported $1.4 billion of those products, according to WTO statistics. Mosca said he expects Brazil’s exports of textiles and apparel to reach $2 billion next year.
Some garment makers said that Brazil might not need to impose safeguard quotas on Chinese imports because local textile and clothing makers are already protected by import tariffs. Cotton yarn entering Brazil faces a 14 percent tariff, filament yarn carries a 16 percent tariff, textiles tariffs run to 18 percent and foreign-made apparel pays a 20 percent tariff. Overall applied tariffs on apparel and textiles average 17.2 percent, compared with 10.4 percent for all classes of merchandise.
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