Blog: Leonie BarrieApparel sourcing rules under NAFTA 2.0

Leonie Barrie | 15 October 2018

The new United States-Mexico-Canada Agreement (USMCA) – also dubbed NAFTA 2.0 – has finally been agreed, but what does it mean for apparel sourcing? Here we take a close look at the new apparel-specific rules of origin.

Apparel imports into the US rose month-on-month in August as retailers remained focused on the back-to-school season and started to bring in their autumn ranges. But first signs of a sourcing shift away from China may be on the horizon as trade tensions with the US intensify.

As Asia's manufacturing hubs are ramping up production for the upcoming holiday season, new data on factory inspections, audits and lab testing points to a slow pace of improvement in the state of factory safety.

And a phenomenon is exciting and confusing the fashion world in equal measures: 'See now, buy now'. But is it a mould-breaking departure for the industry or a bit of marketing publicity? And what does it mean for the supply chain?

A new global survey has highlighted an "unprecedented" skills crisis in the fashion industry, creating a 'war for talent' across the supply chain. It also suggests the industry is not only dissatisfied with the current training being provided, but that it is also failing to address the need for new competencies heading into the future.

The price of dyes and chemicals is rising – bringing with it worry and uncertainty for the textile industry. One solution is to move to digital colour measurement technology – which can help counteract the cost.

Specialty apparel retailer Gap Inc has set out some of the ways its brands are able to significantly cut down on lead times – with some as quick as eight weeks.

The impending expiry of the Dominican Republic Earned Import Allowance Program has been met with equanimity by the Caribbean country and its manufacturers, who hope the trading relationships created by the system can expand.

And Pakistan labour groups are urging brands to support the formation of a body similar to that of the Bangladesh Accord, for the country's garment and textile industry.

The Bangladesh experience represents a model for what factory safety reform might look like in other low-resource contexts. But now is a critical time to ensure there is no backsliding that could threaten the incredible progress made so far.

Meanwhile, Cambodia's Prime Minister has taken a defensive stance after the European Commission launched a procedure to withdraw the country's preferential access to duty-free trade benefits over human and labour rights violations.

But garment and footwear workers in Cambodia will see monthly wages increase by 7% to US$182 from the beginning of next year, according to an announcement from the Ministry of Labour and Vocational Training.

And in other news, Fast Retailing faces ongoing allegations of failing to compensate workers at a shuttered Indonesian factory; reports suggest three more apparel parks are to open in Ethiopia; L Brands is weighing up options for its La Senza business; Sears Holdings edged closer to bankruptcy; and the Coast fashion business fell into administration.

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