WASHINGTON — Apparel imports from Cambodia, Bangladesh and Indonesia, three countries beset by labor issues over the past several months, posted significant declines in shipments to the U.S. in July, the Commerce Department’s trade report showed Thursday.
The three countries are among the top 10 apparel suppliers to the U.S.
Apparel imports from Cambodia, impacted by months of strikes over wages, fell 12 percent to 77.8 million square meter equivalents in July compared with July 2013, while apparel imports from Bangladesh, confronted with the challenges of improving safety in its garment sector following two tragedies that claimed the lives of more than 1,240 workers, fell 5.7 percent to 158 million SME.
Indonesia, another country struggling with worker protests over minimum wage, also saw its apparel imports to the U.S. decline 10 percent to 110 million SME.
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Total apparel and textile imports to the U.S. from the world rose 2.5 percent to 5.4 billion SME in July compared with a year ago.
Cambodia’s wage issues, which are still unresolved, have led to a pullback in orders in the country, according to industry officials. Levi Strauss & Co. said earlier this year it would pull back on orders over concerns of workers’ rights, and the Cambodian Commerce Minister recently stated that Target Corp. has also said it was pulling back on business there.
“People are concerned about the situation in Cambodia,” said Nate Herman, vice president of international trade at the American Apparel & Footwear Association. “The underlying problems that led to those concerns have not been resolved in any way and so the concern remains, and the import numbers are reflective of that. Nothing has moved at all on the minimum wage.”
Herman said he had expected apparel imports from Bangladesh to level off by now, but he noted the continued decline suggests that companies not part of two separate industry initiatives aimed at improving fire, electrical and building safety have continued to pull business out of Bangladesh.
“Companies that were on the sidelines in Bangladesh — that were sourcing from only a couple of factories and had a small percentage of production there — are pulling out,” Herman said.
It appears that China and Vietnam are gaining some of the business as apparel sourcing executives shift business out of Bangladesh, Cambodia and Indonesia. Apparel imports from China, the top supplier to the U.S., rose 2.2 percent to 1.1 billion SME in July, while apparel imports from Vietnam, the second-largest apparel supplier to the U.S., rose 3.1 percent to 239 million SME.
“I think it is a reflection of people becoming concerned,” Herman said.
The overall trade deficit narrowed in July to $40.5 billion from $41.5 billion in June.
“The trade deficit zigzags from month to month — in the past 12 months it has been as high as $45 billion and as low as $36 billion,” said Patrick Newport and Michael Montgomery, two U.S. economists at IHS Global Insight, in a joint analysis. “Until recently, it had also been shrinking because of declining imports of petroleum products. Now it appears to be stabilizing — and it will likely get wider soon as the pickup in U.S. growth brings in more imports.”
The IHS economists said most economists consider an increase in both exports and imports a “good sign for the world economy.”
“Imports got ahead of exports early in 2014 and exports came back in the second quarter,” Newport and Montgomery said. “Decent final sales and inventory swings should put imports back on top in the second half of 2014, but there are no signs of a gross imbalance building.”