Blog: Leonie BarrieBorder adjustment tax is dead

Leonie Barrie | 31 July 2017

The Trump administration has decided to drop the Border Adjustment Tax (or BAT) from tax reform discussions in a move that has been welcomed by US retail and apparel groups.

The plan would have altered domestic tax laws so that imported products would be subject to a new tax, while exempting exported products from the tax. Ahead of last week’s move we took a look at why it was such a bad policy.

Executives within Sri Lanka's apparel sector predict exporters can generate an additional US$400m to US$500m in annual sales thanks to the country regaining the Generalised Scheme of Preferences Plus (GSP+) trade concession with the European Union (EU).

And as political chaos continues to engulf crisis-stricken Venezuela, the country's textile and apparel industry is on the verge of collapse – with both sales and exports expected to plummet this year.

El Salvador, meanwhile, has launched a plan to boost worker training and streamline customs to accelerate apparel exports to the US and improve its competitiveness against increasingly nimble players like Honduras.

And a plan is underway to digitally map all Bangladesh apparel factories as part of a new initiative aimed at offering more transparency into the country's garment industry. The map is due to go live by the middle of next year.

However, the Customs House at Bangladesh's main Chittagong port has had to open around the clock in a bid to ease increasing congestion that is understood to be hurting the country's garment export businesses.

And in Ethiopia, the UN Industrial Development Organization (UNIDO) has signed a three-year, EUR2.5m (US$2.9m) project to boost textile and clothing sector jobs in migration prone areas.

The momentum for corporate transparency on social issues has taken a step forward after a group of 79 global investors managing funds worth a combined US$7.9 trillion joined forces to encourage companies to provide more information about how they manage their direct workforce and supply chain workers.

And the British Government is to crack down on exploitation in the supply chains of large firms, with fashion retail one of the main industries being targeted.

For apparel and footwear companies, product quality is critical. When managed well, it can improve brand image, strengthen consumer relationships, and reduce operational and financial costs. Conversely, poor product quality can obstruct long-term growth. Here we set out five key costs linked to poor product quality.

The use of digital tools can help sourcing teams reduce sampling time, costs and the time to market – but a new survey suggests retailers still have a long way to go to better streamline communication and simplify their supply chain operations.

Among the findings, supply chain executives still rely on outdated tools and processes such as spreadsheets and manual processes (like email and JPGs) to manage complicated retail sourcing operations; and most fail to share information with their suppliers daily.

Meanwhile, in other news, Adidas has unveiled its first laceless high-performance running shoe; luxury footwear brand Jimmy Choo has been bought by Michael Kors in a US$1.2bn deal; and VF Corp CEO Steven Rendle will add the role of chairman when Eric Wiseman retires later this year.


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