The Impact of the Andean Trade Preference Act Twelfth ... - USITC

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cotton, wool and man-made fiber garments, speed to market, and quality goods 216 haveattracted U.S. apparel and textile companies seeking alternative suppliers and rapidreplenishment. 217 Colombia’s integrated mills produce an estimated 850 million squaremeters of cotton-based fabrics, yarn, and synthetic and wool materials. 218 Since ATPDEA,Colombia’s garment producers have increasingly shifted from apparel assembly to fullpackageservices and have focused on new product development and fashion niches toincrease their competitiveness vis-à-vis lower-cost Asian producers. 219Colombia has about 10,000 textile and apparel firms, of which more than half are small ormid-sized companies. 220 Textile manufacturing is concentrated in a few large firms, whereasclothing production is shared among hundreds of small and mid-sized companies. 221Industry sources estimate that Medellin and the surrounding area of the state of Antioquiaaccount for 40 percent to 50 percent of Colombia’s fibers, fabrics, and apparel production.An estimated 100,000 direct operators generate much of Colombia’s $50 million monthlytextile and apparel exports to the United States. 222ATPDEA has prompted much of the growth in Colombia’s textile and apparel exports to theUnited States since 2002 and has boosted the country’s cotton consumption. 223 With cottondemand greatly outstripping supply, Colombian firms depend heavily on imported cotton,96 percent of which came from the United States in 2005. 224 In 2005, U.S. exports of textilesand apparel to Colombia rose 4 percent over the 2004 level to $150 million, led by a 13percent increase in U.S. exports of fabric. 225216 Josef de Coster, “Colombia’s Textile Market: Trapped by Global Change,” International Market News,Oct. 10, 2005, found at http://www.tdctrade.com/imn/05101002/clothing182.htm, retrieved May 30, 2006;Arturo Rodríguez, “Colombiatex de las Americas 2006,” found athttp://www.tc2.com/newsletter/arc/020806.html, retrieved May 30, 2006; and Maria Clara Munera Velez(Market Access Representative, Confecciones Colombia, S.A.), e-mail message to Commission staff, June 5,2006.217Both U.S. apparel and textile producers have production in Colombia. Invista (formerly part of theDupont Corporation), a producer of Lycra, established operations in Colombia 25 years ago because ofColombia’s vertically integrated textile and apparel sector and its proximity to the United States. Invistaspins Lycra yarn in the United States and ships it to Colombia, where it is wrapped on beams and used inwarp knitting to produce apparel that is exported to the United States. Mary K. Vane (Director, Invista),telephone interview by Commission staff, Washington, DC, June 1, 2006.218 Arturo Rodríguez, “Colombiatex 2005,” found athttp://www.colombiatex.com/2005/ingles/industry.htm, retrieved May 30, 2006.219Josef de Coster, “Colombia’s Textile Market: Trapped by Global Change,” International Market News,Oct. 10, 2005, found at http://www.tdctrade.com/imn/05101002/clothing182.htm, retrieved May 30, 2006.Current brands made in Colombia include Ralph Lauren, Oscar de la Renta, Liz Claiborne, Nine West,Nautica, Tommy Hilfiger, DKNY, and others. See “ColombiaModa 2005,” found athttp://www.colombianmoda.com/ingles/medellin.htm, retrieved May 30, 2006.220Arturo Rodríguez, “Colombiatex de las Americas 2006,” found athttp://www.tc2.com/newsletter/arc/020806.html, retrieved May 30, 2006.221EIU, “Country Profile Colombia - Main Report: September 1, 2005 - EconomicSectors: Manufacturing,” found at http://portal.eiu.com/report_dl.asp?issue_id=1479433533&mode=pdf,retrieved May 31, 2006.222 Arturo Rodríguez, “Colombiatex de las Americas 2006,” found athttp://www.tc2.com/newsletter/arc/020806.html. retrieved May 30, 2006.223 USDA, Foreign Agricultural Service, “Colombia Cotton and Products Annual 2006,” GAIN Report#CO6005, May 1, 2006.224Ibid. The United States is expected to continue to be the principal supplier of cotton for Colombia’stextile and apparel industry as cotton consumption is expected to grow 3.3 percent annually in 2005-06because of the growth of textile and garment exports.225 Based on official statistics compiled by the U.S. Department of Commerce.3-24
Industry sources attribute the slowdown in Colombia’s textile and apparel production anddecline in exports in 2005 to numerous challenges that emerged in that year. Chief amongthese was increased competition from China and other lower-cost Asian suppliers, promptedby the elimination of quotas on January 1, 2005. 226 According to a leading Colombianexporter of men’s wear to the United States, Colombian firms are not cost competitive withChinese apparel producers. 227 Some Colombian producers state that they need productionflexibility beyond what the ATPDEA provides, especially in the use of third-country fabrics,in order to compete with low-cost Asian suppliers. 228 Appreciation of the Colombian pesoagainst the U.S. dollar (from 2,412 per dollar at year-end 2004 to 2,284 per dollar at yearend2005) 229 reportedly hurt the sales of Colombian textile and apparel products 230 andfurthermore led to a 6-percent decline in the overall number of Colombia’s textile andapparel workers, from 128,141 in 2004 to 120,150 in 2005. 231 CL Nicole, a garmentassembly unit of Colombia’s Crystal Group and a contract supplier of cotton pants forwomen to U.S. retailers such as Liz Claiborne and the Jones Apparel Group, had to lay off650 workers because of increased price competition from China. 232Since ATPDEA was implemented, several textile companies have made significant capitalinvestments in Colombia to take advantage of ATPDEA preferences. 233 Textile producerEnka de Colombia invested $24.2 million during 2002-05 and anticipates investing anadditional $10.2 million in heavy machines and working capital in 2006; textile producerProtela invested $11 million during 2002-05 in the expansion of its textile production; andColtejer, a leading textile producer, invested $32 million in expanding production during2003-05. 234Although anticipation of an FTA with the United States has also led to some investment incotton mill production and in raw materials for textiles and apparel products, 235 industrysources note that foreign investment has fallen short of need. 236 Negative perceptionsstemming from concerns about security risks and resulting higher insurance costs associatedwith doing business in Colombia have apparently discouraged some prospective foreigninvestors. 237226The elimination of quotas prompted customers to shift their bulk production to China. Maria ClaraMunera Velez (Market Access Representative, Confecciones Colombia, S.A.), e-mail message toCommission staff, June 5, 2006.227 Josef de Coster, “Colombia’s Textile Market: Trapped by Global Change,” International Market News,Oct. 10, 2005, found at http://www.tdctrade.com/imn/05101002/clothing182.htm, retrieved May 30, 2006.228Ibid.229International Monetary Fund, International Financial Statistics, Vol. LIX, No. 7, July 2006, pp. 282-283.230 Maria Clara Munera Velez (Market Access Representative, Confecciones Colombia, S.A.), e-mailmessage to Commission staff, June 5, 2006.231U.S. Department of State telegram, “Textile and Apparel Statistics and Projection of FutureCompetitiveness,” message reference No. 9143, prepared by U.S. Embassy, Bogota, Sept. 27, 2005.232Josef de Coster, “Colombia’s Textile Market: Trapped by Global Change,” International Market News,Oct. 10, 2005, found at http://www.tdctrade.com/imn/05101002/clothing182.htm, retrieved May 30, 2006.233 U.S. Department of State telegram, “Colombia ATPDEA-Related Activity 2005,” message referenceNo. 5571, prepared by U.S. Embassy, Bogota, June 21, 2006.234Ibid.235 U.S. Department of State telegram, “Textile and Apparel Statistics and Projection of FutureCompetitiveness,” message reference No. 9143, prepared by U.S. Embassy, Bogota, Sept. 27, 2005.236Ibid.237Josef de Coster, “Colombia’s Textile Market: Trapped by Global Change,” International Market News,Oct. 10, 2005, found at http://www.tdctrade.com/imn/05101002/clothing182.htm, retrieved May 30, 2006;and Mary K. Vane (Director, Invista), phone interview by Commission staff, Washington, DC, June 1, 2006.3-25
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U.S. International Trade Commission
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PREFACEThe submission of this study
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Trade-Related Activities in 2005•
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Organization of the ReportThis chap
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actions to withdraw or suspend coun
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textile and apparel articles made i
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duty-free entry are identical—a C
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analysis assumes that the supply of
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$11.1 billion in 2005 compared with
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Table 2-2 Leading U.S. imports for
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and 9.5 percent in 2004 to 7.7 perc
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Page 38 and 39: 2-10Table 2-6 Leading U.S. imports
Page 42 and 43: Table 2-8 Textiles and apparel: U.S
Page 44 and 45: Virtually all flower imports from t
Page 46 and 47: The 2005 list of leading imports un
Page 48 and 49: Table 2-9 U.S. imports for consumpt
Page 52 and 53: cathodes, four apparel products, on
Page 54 and 55: 2-26Table 2-11 U.S. exports to ATPA
Page 56 and 57: 2-28Table 2-12 Leading U.S. exports
Page 58 and 59: Figure 2-5U.S. exports to ATPA coun
Page 60 and 61: EcuadorThe growth rate of the Ecuad
Page 63 and 64: CHAPTER 3ECONOMIC IMPACT OF ATPA ON
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Page 67 and 68: Several leading imports that were i
Page 69 and 70: Table 3-3 Leading imports that bene
Page 71 and 72: Table 3-5 Estimated displacement ef
Page 73 and 74: more in 2004. 132 Asparagus and cut
Page 75 and 76: esulted in greater availability of
Page 77 and 78: In recent years, some U.S. growers
Page 79 and 80: U.S. sales of domestically produced
Page 81 and 82: Table 3-6 Foreign direct investment
Page 83 and 84: product quality at the volumes requ
Page 85: $314 million purchase by Phillip Mo
Page 89 and 90: place will have a devastating effec
Page 91 and 92: textile and apparel machinery and t
Page 93 and 94: Textile and Apparel SectorPeru has
Page 95: could begin producing the high-end
Page 98 and 99: Role of ATPA in Counternarcotics Ef
Page 100 and 101: (table 4-1, figure 4-1). 306 Net co
Page 102 and 103: Figure 4-1Net Coca Cultivation in t
Page 104 and 105: to other forms of legal justice. Th
Page 106 and 107: ulk of funding for the plan between
Page 108 and 109: Alternative DevelopmentThe USAID al
Page 111: APPENDIX AFederal Register NoticeA-
Page 114 and 115: 27278 Federal Register / Vol. 71, N
Page 117 and 118: American Chamber of Commerce of Per
Page 119 and 120: Government of Colombia—Colombian
Page 121: Peruvian Asparagus Importers Associ
Page 125: Technical Notes to Chapter 3:Partia
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