AAMA’S LARRY MARTIN
FACING A NEW ERA MINUS MFA
Byline: Jim Ostroff
WASHINGTON — U.S. apparel manufacturers will be able to thrive even without the quota protections of the Multi-Fiber Arrangement, which begins its 10-year phaseout this year. However, the industry is keeping its options open when it comes to possibly seeking an extension of the phaseout, according to Larry K. Martin, the new president of the American Apparel Manufacturers Association.
Martin, 56, moved into the AAMA’s head slot on Jan. 1, after serving as its top lobbyist for 10 years. As president, he succeeded G. Stewart Boswell, who has retired.
Martin discussed the MFA phaseout along with other key issues in a wide-ranging interview at the association’s Arlington, Va., headquarters last week.
Reviewing the AAMA agenda, Martin also cited these key points:
A push to get trade parity for the Caribbean Basin Initiative countries matching Mexico’s advantages under the North American Free Trade Agreement.
A growing emphasis on Quick Response.
Greater cooperation with retailers when it comes to dealing with governmental matters of common interest.
Martin acknowledged that he is aware of concerns voiced by retailers and importers that domestic interests would attempt to short-circuit the GATT agreement that ends 30 years of apparel and textile import protections by 2005 by seeking to prolong the MFA phaseout.
“Yes, we’ve heard this, but the last thing we’re going to do is foreclose any options. We have no plans now to try to do anything to lengthen it, but I can’t say that we won’t,” he said.
The GATT accord went into effect Sunday, capping seven years of arduous negotiations among over 100 nations and another year of debate within the U.S. to win Congressional approval only last month. It provides that import quotas on 49 percent of textiles and apparel traded worldwide are to be eliminated in three stages over 10 years.
During this period, quotas on goods still under control will nearly double, and import duties will be reduced. On Jan. 1, 2005, quotas on the remaining 51 percent of these products are to be ended.
Martin said U.S. apparel firms are not overly worried about what is termed the “51 percent cliff.” He noted that by March the apparel and textile products that will be involved in each stage of the integration will be known, under a schedule to be worked out by the U.S. government. “This will enable the industry to plan, so while there may be a cliff, the accelerated quota growth rates will reduce the effects of the cliff… and there will be time to prepare for it,” he said.
Given this, Martin was asked why the industry would even consider pushing for an extension of the MFA phaseout.
Said Martin: “We worked very hard [in the final GATT negotiations] to have an MFA phaseout longer than 10 years, and we didn’t get it.
“There’s going to be a lot of things occurring in the next five, seven and eight years,” he added, “so no one can sit here today and predict what the situation will be in 2004 and what approach the association might take.”
Several trade analysts here last week speculated U.S. apparel and textile interests would pick up support for an MFA phaseout extension from European and Western Hemisphere nations — especially those in the Caribbean Basin — who have expressed the fear that come 2005, their markets would be swamped by Far Eastern clothing and fabrics.
Meanwhile, Martin said he believes U.S. apparel firms can remain economically viable even without the MFA, which began in 1974, succeeding a Kennedy-era cotton apparel and textile import protection program.
“First and foremost, we must take advantage of our biggest advantage, which is our proximity to our market,” he said. In addition, he said it is vital to “improve communications throughout the chain, from textile mills to apparel manufacturers to the retailers, so we can get the goods to consumers at the shortest possible moment, maintaining their choice in style, color, etc.”
A key element in achieving this goal, he said, is the implementation of Quick Response programs. AAMA, he noted, has formed a new committee, headed by Ralph Briskin, director of Levilink, a marketing arm of Levi Strauss & Co., that will help more apparel companies utilize QR.
The association’s most immediate goal, though, is to persuade Congress to grant the Caribbean Basin nations parity with Mexico under NAFTA for apparel production. Apparel companies that have invested in CBI assembly facilities with U.S. encouragement contend that apparel produced there — even under 807 programs whose tariffs represent only value added when assembled in the Caribbean with fabrics cut in the U.S. — is at an 8 to 10 percent price disadvantage with Mexico.
“The combination of CBI parity, NAFTA and QR are going to make us competitive in the world and enable us to maintain a very large domestic industry,” Martin averred.
The new AAMA president conceded that CBI parity and expanded U.S.-backed production there could produce “shifts in production” from the U.S. “But if that’s going to occur,” he said, “we would rather it be in the CBI or Mexico, where American companies participate, than to have those jobs disappear form the U.S. and have the goods come from the Far East with no U.S. apparel company participation.”
Martin conceded U.S. apparel firms and retailers often have disagreed on import policies, but asserted both industries need to work together.
“In the long term, we have to build a strong, friendly relationship with retailers, as we have much in common with them that has nothing to do with trade policy,” he said.
Asked whether the two are co-dependent, Martin said, “Yes, we are and we can’t get by without them and they can’t get by without us, so I’d hope this is a relationship that can be expanded.”
The new AAMA president noted that “in the past there were a number of things we could have worked on together [but did not], such as minimum wage legislation, OSHA reform and labor-related issues where we probably see eye to eye…since we’re both large employers of people.”
Martin said the AAMA “will be looking for opportunities to work together” with retailers, suggesting one area for action in the near future is QR.
“We are hopeful that with improvements in Quick Response technology, retailers will have on the shelves what people want when they walk in the stores, which will produce more rapid turnover of products.
“If QR enables the retail industry to carry less inventory, then we’ve made them more competitive,” he said. QR, he said, “could make frequent sales less necessary” and presumably boost retailers’ profits.
Turning to the association itself, Martin said the AAMA is planning to step up its activities to help member firms export more, such as preparing detailed foreign market analyses.
This year it also will develop plans to recruit new members. The association does not reveal its member count, but Martin noted that its membership accounts for 70 percent of U.S. apparel production.
Still, he said, “there are companies that ought to belong that don’t.”
Nonetheless, Martin noted the AAMA grew substantially during the past decade, to the point that it now represents companies in every facet of apparel production.
“We’ve had the tremendous benefit of having Stewart Boswell as the AAMA’s president for the last 10 1/2 years. He has presided over some very difficult times and maintained the cohesion of this industry inside the association.”
— Fairchild News Service