Blog: Leonie BarrieTrade talks scuppered again

Leonie Barrie | 30 September 2005

An air of uncertainty continues to hang over US-China apparel trade after yet another round of talks aimed at slowing surging imports of Chinese-made clothes onto the US market broke down this week. A deal – any deal – would surely be better than none at all. It would put an end to the insecurity plaguing both buyers and suppliers who are currently unable to make any concrete long-term sourcing plans out of fear that they may have to reallocate or cancel orders at the last minute on the whims of government officials and lobby groups. Just look at the fallout that continues in Europe after officials capped imports from China without really understanding the implications of imposing new quotas in the middle of a production cycle.

Liz Claiborne is the latest to admit it will limit its opportunities in China in the face of the ongoing trade dispute which makes it impossible to plan ahead. The New York-based company, which owns brands such as Liz Claiborne, Ellen Tracy and Dana Buchman, was in the process of reducing its global suppliers from 35 countries to just 10-15, including a focus on China sourcing. Now it says ongoing trade wrangles mean the company will maintain China sourcing levels at around 30 per cent.

But of course it won’t be US producers who benefit from this change of plans – despite what the lobbyists might hope. Production will instead be boosted in countries such as Thailand or there’ll be a return to outward processing arrangements (OPA) under which part of a Chinese-made garment is processed in Hong Kong so that it qualifies for a ‘made in Hong Kong’ label and avoids quota restrictions.

Either way, China will continue to be the most important country in any sourcing strategy. It’s there for the long term, and of course it’s not going to go away. And without a doubt, when the quota system finishes in 2008 and there really is free trade companies will pick up the China focus where they’ve been forced to leave it for now.


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