MEXICO CITY — Mexico won’t phase out its average 25 percent duty on key apparel imports until 16 years after the Trans-Pacific Partnership (TPP) takes effect, said top industry lobby Canaive’s president Samuel Gershevich.
“There is a list of 80 tariff categories including women’s wear, pants, dresses and coats and all that’s needed to dress a human being,” Gershevich said, adding Mexico negotiated the concessions as part of the landmark agreement reached between the 12 Pacific-nation members of TPP on Oct. 5. “Peña Nieto [Mexico’s President] is due to sign the agreement in February to make it legal.”
The long phase-out, which will see duties fall by some 1.5 percent annually, will help Mexico fend off the risk of imports from TPP members Vietnam and Malaysia soaring and putting further pressure on the domestic industry in the wake of rising imports from China, Gershevich noted.
“From one day to the other, we are going to compete with very subsidized countries like Vietnam and Malaysia that receive illegal government subsidies,” he said. “We have to be able to fight against them.”
TPP will be an opportunity for Mexico and the region, said Gershevich, who took over Canaive in March. Gershevich owns women’s wear brand Arush and engages in third-party manufacturing for the likes of Pierre Cardin.
Apart from improved near-sourcing opportunities to the U.S., Mexico could more easily bolster exports to Chile, Peru and even New Zealand while teaming with the two South American nations could help create a stronger export supply-chain north of the border.
“We have to get together and form alliances to improve our access to the world’s largest consumer,” the U.S., Gershevich said.
TPP faces considerable challenges, including winning approval of the U.S. Congress and members’ final ratification, something Gershevich estimated could take another two years.
But not everyone was optimistic, even within Canaive itself.
“We are not happy,” said Gustavo Bojalil, a textile executive and president of the lobby’s Puebla State division. “Vietnam and Malaysia have much cheaper labor. Mexico will be hit and competition will be tougher.”
Despite the import restrictions, “we are worried there will be triangulation from China and hope the government will work to prevent this risk,” Bojalil said, adding Mexico does not have a free-trade agreement with Panama — the entry point of many smuggled Asian goods — to prevent such activity.
Gershevich conceded there will be challenges, adding the sector must prepare itself and boost investment to modernize manufacturing, among other things.
“Right now, many executives are in Milan for the ITMA fair, looking to buy more modern machines,” Gershevich said.