Duty-free fabric sourcing through U.S. “preference programs” has spurred substantial growth for countries abroad and in the developing world. Programs such as the African Growth and Opportunity Act (AGOA), Haiti Hope/Help and the Qualifying Industrial Zones (QIZ) grant countries enhanced access to the U.S. textile and apparel markets, which is encouraging trade and manufacturing opportunities overseas.
At the recent summer edition of Texworld, The Lenzing Group presented its lecture, “Sourcing in Preference Program Countries,” which featured a panel discussion with Tarek Kabil, Egyptian Ministry of Trade and Industry; Ashraf Rabiey, QIZ minister of Egypt; Gabi Bar, QIZ minister of Israel; Mark D’Sa, special project director for Haiti; and, as moderator, Gail Strickler of Brookfield Associates LLC.
Preference programs enable participating countries to save as much as 32 percent in duties, which has helped open the U.S. market to nations such as Egypt, Israel, Haiti and regions of Africa. Average duty rates for most U.S. goods are under 4 percent, while textiles and apparel can demand as much as 16 percent. The duty-free benefits via preference programs allow trade partners to conserve up to a third of their costs and create “skill up” job opportunities internationally, which gives employees the opportunity to start with a minimum-wage job and progress on an ascending career path. The textile and garment industry is valued at almost $3 trillion and employs more than 100 million people worldwide throughout the global supply chain.
Through AGOA, sub-Saharan African countries gain greater access to the U.S. market. To qualify for the program, a country must be actively working toward its improvement of human rights, rule of law and respect for labor standards, according to the AGOA. Ethiopia has seen substantial growth and investments from involvement with AGOA, as well as a number of countries in West Africa, which includes production in Ghana and Senegal, according to Strickler.
QIZs, which increase bilateral trade, are a “win win win” for participating nations Israel, Egypt and the U.S., according to Bar. Via the program, the U.S. receives duty-free exports; Israel gains access to new markets; and Egypt becomes an industrial competitor for U.S. exports. “For the U.S. it’s an unlimited term of agreement,” Bar said. “It allows unlimited textile and apparel exports to the United States, duty-free,” and “gives access to the skills and labor of Egyptian suppliers. For American buyers, it diversifies their sources,” he added. Widely known as a nation that pioneers the latest technologies, Israel also manufactures fabrics, yarns, zippers, threads, elastics and packages, among other materials and apparel-related innovations.
Haiti, too, has experienced a surge in its apparel and textile manufacturing capabilities through its Hope/Help and Caribbean Basin Trade Partnership Act (CBTPA) preference programs. D’Sa said, “If you’re not looking at Haiti, you’re missing opportunities.” He added, “Capacity is growing tremendously and exponentially.” D’Sa highlighted the growth of Asian suppliers that have invested in Haiti, namely from Korea, Taiwan, Hong Kong, Sri Lanka and Bangladesh. Hope/Help and CBTPA garnered $848 million in total U.S. imports in 2016, D’Sa said.
While Haiti is typically associated with T-shirt manufacturing, the country is also recognized for its production of industrial workwear, basic knits, athletic wear, performance knits and even tuxedos, D’Sa explained. The activewear market is particularly strong in Haiti: Brands such as Under Armour and Lululemon have expressed interest in or already committed to programs with Haitian suppliers that are still in the midst of training employees and have yet to make a single shipment. The incentive to work with Haitian manufacturers is based on the aforementioned 32 percent of savings through duty-free initiatives.
D’Sa also attributes Haiti’s attraction and growth to its proximity to the U.S., which enables prompt deliveries at an average of 3.5 days. Manufacturers such as Reliable Source Industrial (RSI) and Everest Textiles are building a stronger presence in Haiti while technology brands are following suit, as the second annual Haiti Tech Summit held this year included representatives from Google, Uber, Lyft and Facebook, as well as Steve Wozniak, cofounder of Apple, in attendance.
Today in Haiti there are 41,000 workers in the industry, and by the end of 2017 there will be approximately 43,000. By the end of 2018, that number is estimated to reach over 50,000, according to D’Sa. “Last year the exports were $848 million. I won’t be surprised if they cross $1 billion by next year,” D’Sa added.
“Haiti can be your case study,” he said. “If you can find your solution in Haiti, you can apply that solution anywhere in the world,” D’Sa concluded.
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