By  on April 3, 2008

HONG KONG — The Doha trade talks aren't dead yet, World Trade Organization deputy director-general Rufus Yerxa told a gathering here of some of the top decision-makers in global manufacturing.

"It's a daunting exercise to get a format for tariff reduction among 150 countries," said Yerxa, speaking to the Prime Source Forum through a video link from Geneva. "It's not easy to find a way to navigate, but we have made significant progress. It's a complicated negotiating schedule that has so far prevented us from making a breakthrough. We have had so many false dawns."

Differences between rich and developing countries over how to proceed to lower trade barriers for agriculture and industrial goods, including textiles and apparel, have led to several Doha stalemates. The most recent was last summer. At the urging of political leaders, however, discussions resumed this winter in Geneva.

Noting that it was 2 a.m. in Geneva when he was addressing the forum, Yerxa said, "I consider this good practice for the all-night sessions I am anticipating." Yerxa cited areas of the negotiations that he considers especially important to the apparel and textile industry: more tariff reductions, accords on easing trade that encompass the movement of goods through ports and agreement on trade services.

"I follow very closely the developments in [the apparel and textile] industry," he said. "It is one of the engines of international trade and it's especially important to many of the developing countries."

Yerxa encouraged delegates to voice their opinions with their respective governments.

"It's clear we'll see significant tariff reduction, particularly in products in [the apparel] sector," he said. "We could see reduction of 50 percent or more in some tariff lines."

After Yerxa's comments, the second day of Prime Source included discussions on sourcing and logistics and corporate social responsibility.

Felix Chung, chairman of the Hong Kong Apparel Society, described the future for the 30,000 Hong Kong manufacturers based in China's Pearl River Delta, long the production hub of the country.

"The Central Government has made a clear statement to either relocate factories inland or to the western part of China or upgrade production levels," Chung said. "If you want to keep the cost low, go to another area because China has a big surplus and they are discouraging exports and targeting the domestic consumer market."Chung said factories that move will have to consider the substantial increase in logistics costs, including time, while those that don't relocate will be expected to produce high-value-added products or do more in the area of research, design and brand-building.

"There are opportunities because they are opening the consumer market," he said. "For European and U.S. brands, this is a good chance."

Jack Kipling, chairman of the Export Council for the Clothing Industry in sub-Saharan Africa, said his group has taken note of what China has accomplished.

"I think that the Chinese understood way before the rest of us that clothing and textiles is a numbers game — size counts," Kipling said, noting the benefits of centralizing the industry and achieving critical mass.

He explained that lead times aren't quite as long from Africa as some might think, with Ghana just six shipping days from New York, for example, and also expounded on the region's abundance of raw materials.

"South Africa has two million sheep and produces 60 percent of the world's mohair," he said, noting that the availability of oil in Angola is another plus. "Cotton is a staple in sub-Saharan Africa. We have the raw materials."

China has also had to deal with ethical questions. Sun Rai Zhe, vice president of the China National Textile & Apparel Council, said the issue of corporate social responsibility is seen differently in China than in the West.

"People might see the size and the competition, but as an insider I see the pressure," he said, highlighting the country's efforts to instill training programs in its factories.

Ted Sattler, group executive vice president of foreign operations for Phillips-Van Heusen Corp., said although governments differ on some issues, particularly environmental protection, many companies are leading the way.

"No one knows what the future will be like, but I would say it will be significantly different," Sattler said. "We're in chapter two of a 32-chapter book."

Among the 50 largest economies in the world, 13 are corporations, and "with that size comes responsibility," he said.

But China's Sun said, "I don't trust certification. It's like a physical exam. It only shows you how you are at the moment and where you can improve. We're taking the harder road of training" factory owners and workers on proper procedures and following regulations.Maren Böhm, corporate responsibility representative for Asia of OIA Shanghai, part of the Otto Group, said the danger comes when people see corporate social responsibility as "window dressing, politically correct or just a branding or marketing strategy.

"We have to ask ourselves, 'What is the scope and what are the limits?'" she said.

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