MEXICO: Central American Threat 'Worse' Than China
Mexico's apparel leaders are urging the industry to streamline production and boost fashion design to overcome a growing competitive threat from its Central American neighbours.
The US is expected to sign the highly-controversial Central American Free Trade Agreement (CAFTA) within weeks.
The accord will enable Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and the Dominican Republic to export their textiles freely to the world's biggest market. Without trade barriers, export volumes should surge.
This worries Mexico, the Latin American region's leading apparel exporter to the US with annual trade worth over $10 billion.
"More than China, we are worried about Central America because they are just as close to the US as we are, at least by ship," comments Antonio Kuri, President of
Mexico's Cámara Nacional de la Industria del Vestido (CNIV), a state-wide apparel lobby.
Proximity apart, Kuri explained that the region's labour costs are also less than half of Mexico's, and that companies' social-benefits (such as social security) expense hovers about 10 per cent per check compared to over 60 per cent for Mexico.
To compete, Mexican apparel must streamline production, hasten delivery turn-around and improve suppliers' final product to "be more fashionable and
Raw-material procurement and processing must also be improved, he said.
Kuri said that Mexico needs to re-negotiate its North American Free Trade Agreement (NAFTA) pact with the US to "change and modernise" some of the original accords.
For instance, under the original pact, Mexico can only export apparel made with region-wide fabrics and not from other countries.
"We need to be able to export wears that are made from fabrics where they can be obtained cheaper," he pointed out.
Mexico's textiles output is worth over $12bn.
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