Issue 480| August 3, 2018
Upcoming Training

September 13
Factory Fire Safety
Dhaka, Bangladesh

October 9-10
Internal Auditor Course
Shenzhen, China

October 11
Factory Fire Safety
Shenzhen, China


Welcome to The WRAP Weekly newsletter.  Feel free to look around and thank you for being a loyal reader.


The WRAP Up
This week, we certified 70 factories in 
18  countries:

 Bangladesh, Cambodia, China, Dominican Republic, Egypt, Guatemala, Haiti, India, Jordan, Kenya, Mexico, Pakistan, Peru, Philippines, Sri Lanka, Taiwan, Thailand, and Vietnam.
Upcoming Events

August 12-15, 2018  
Sourcing@MAGIC 
Las Vegas, Nevada

August 20-22, 2018
Toronto, Ontario

The WRAP Blog
By:
Seth Lennon

    

This Week's Headlines


Bangladesh
Despite previous refusals by the government, The Accord on Fire and Building Safety in Bangladesh (Accord) has once again requested that it be allowed to remain in force past December 2018 when the Remediation Coordination Cell (RCC) is due to take on monitoring workplace safety in garment factories. While the Accord is adamant about remaining in Bangladesh past the deadline, the  Alliance for Bangladesh Worker Safety has already stated that it will withdraw at the end of December. ( The Daily Star)

AccordThe Bangladeshi government is looking to bring their own factory safety watchdog, the Remediation Coordination Cell (RCC) online by the end of 2018. However, brands are warning that if The Accord on Fire and Building Safety in Bangladesh is terminated prematurely before the RCC is ready to take on the responsibility for monitoring, they could look elsewhere to source apparel. Representatives from brands and the U.S. government point to the fact that the RCC has only been in existence for one year, along with insufficient staffing, as the basis for their concerns. ( Just Style )
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Garment workers in Bangladesh continue to be at odds with factory owners and the government about the level of compensation. Garment factory owners proposed raising the minimum wage by 20 percent during discussions with workers organizations. However, the representatives for the workers counter that this raise does not consider inflation and therefore is not sufficient to make wages comparable to other markets. ( The Daily Star)

Despite previous refusals by the government, the Accord has once again requested that it be allowed to remain in force past December 2018 when the Remediation Coordination Cell (RCC) is due to take on monitoring workplace safety in garment factories. While the Accord is adamant about remaining in Bangladesh past the deadline, the Alliance has already stated that it will withdraw at the end of December. ( The Daily Star)

On Friday, Andolanrata Garment Sramik Sangathan Samuha, a coalition of more than 40 garment workers' organizations, began a hunger strike in front of the wage board. The protesters demanded a raise in the minimum monthly wage to Tk 16,000 (U.S. $189.08) for garment workers across Bangladesh. In addition, the body also demanded a 10 percent annual raise for the workforce, an increase from the current 5 percent level. ( New Age)

Cambodia 
Exports of garment and footwear products grew during the first half of the year by 9.3 percent, growth valued  at U.S. $3.7 billion.  The expansion in export activity was achieved despite recent warnings from the European Union and the U.S. that they would annul Cambodia's preferential trade status if the human rights situation in the country fails to improve. (Khmer Times)

China
Chinese consumers are excited about the lowering of import tariffs on European apparel and luxury goods, mainly due to the corresponding price decrease for these goods when they reach shelves. But the impact of these cuts goes beyond reducing prices for consumers, there are concerns about how these price changes could impact the overall market, with potential market saturation being the chief concern.  ( Business of Fashion )

China-based manufacturers were already in the process of moving to lower-cost Southeast Asia. Now that trade tariffs have been enacted on at least U.S. $50 billion worth of goods, and another U.S. $200 billion likely by summer's end, they are shifting their supply chain with an additional sense of urgency. Meanwhile, neighboring countries such as Cambodia and Vietnam appear ready to welcome the new business. ( Forbes)

One of the largest criticisms of Chinese trade policy has been the massive imbalance between imports and exports with its trading partners. Now, the deficit is beginning to shrink with China buying more goods from abroad and leaders in Beijing are being adamant that they are no longer pursuing mercantilist trade policies. However, other world leaders are not totally convinced as of yet. ( Wall Street Journal)

Chinese regulators announced an investigation into widespread reports of counterfeits sold through  Pinduoduo,  Inc. just a week after the e-commerce operator's high-profile U.S. initial public offering. On Wednesday, the Chinese State Administration for Market Regulation ordered Shanghai authorities to investigate reports and vowed "serious" punishment if it uncovers violations. (Sourcing Journal)
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China has warned that it will impose U.S. $60 billion in retaliatory tariffs against imports from the United States should the Trump Administration elect to proceed with the imposition of U.S. $200 billion worth of duties against Chinese goods. In a statement released on Friday, the Chinese Commerce Ministry announced that tariffs of varying degrees could be placed on 5,207 different types of U.S. imports should the United States elect to further escalate the trade war.  ( The Washington Post )

Jordan
Jordan's garment sector recorded a 35 percent decline since January as the demand for apparel within the country continues a precipitous drop. Leaders are blaming Jordan's sluggish economy as the root cause behind the slowdown as Jordanians are having to put clothing purchases on hold as other needs are taking precedence. The expected consequence of the apparel sector's slowdown is a record number of apparel retailers having to close due to poor sales.

Mexico
The Mexican textile and apparel industry believes that with the election of President Andrés Manuel López Obrador, a spike in jobs and textile exports could be on the horizon. Part of the excitement originates from a job training program that has been proposed by the incoming president, with the intent of building up the textile industry to the point where it can successfully combat imports from Asia that have flooded the Mexican market. ( Just Style)
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Many in Mexico, including newly elected President Andrés Manuel López Obrador, are hoping that the recently concluded U.S.-EU agreement which averted an escalated trade war between the European Union and the United States will serve as the model for a revised version of the North American Free Trade Agreement. ( Marketwatch)

North Korea
NKThe U.S. government has warned American apparel makers that they could face stiff criminal penalties if they source any products, even inadvertently, from North Korea. Included in the notice from the State Department, which was squarely directed at U.S. brands, was a warning against using North Korean workers in any part of the supply chain. ( Just Style)
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Rwanda 
RwandaThe U.S. has suspended  Rwanda's duty-free status for apparel imports under the African Growth and Opportunity Act ( AGOA) over the country's proposed ban of used clothing and footwear imports.  The issue over Rwanda's AGOA eligibility began in 2015 when the East African Community (EAC) drew up a proposal to restrict clothing and footwear imports into the region in an effort to improve domestic manufacturing.  The United States Trade Representative  increased engagement on the issue in 2016 when the EAC said the ban would be phased in by 2019. (Sourcing Journal)
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Switzerland
The Better Cotton Initiative (BCI) recently reported that over 350 brands are now members of the program, which is focused on supporting more sustainable practices for the growth and harvesting of cotton. In 2017, BCI reported that it provided sustainability training to over 1.6 million farmers in 23 different countries. ( Just Style
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United Kingdom
The staff at the BBC pursued an investigation into the sustainability practices of apparel brands throughout Europe, especially as fast fashion becomes more prevalent not only for its impact on the fashion world but its recognized adverse impact on the environment. ( BBC)

United States
China2The United States Trade Representative has been instructed to begin preparations to levy an additional 25 percent in tariffs on $200 billion of Chinese imports. The new round of tariffs would cover items such as apparel, bedsheets, furniture and toilet paper. The tariffs will not go into effect until the conclusion of a comment period, but many within the Trump Administration believe it is necessary to correct what it believes is unfavorable Chinese behavior on trade.

Levi Strauss & Co.  laid out a new "climate action strategy" which it calls "science-based," a standard that aims to keep global warming to an increase of fewer than two degrees Celsius compared with pre-industrial temperatures. That is in line with the broad goals of the United Nations accord hammered out in 2015 in Paris. (Women's Wear Daily)
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The United States footwear industry has always paid high duties for the shoes it sources from abroad. Now with trade tensions higher than they ever been, the cost of production could be set to rise to unparalleled levels. With imports accounting for 98 percent of retail footwear sales, the ramifications for the sector would be inescapable. 
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Stakeholders in the apparel sector discussed the pros and cons of Made in America at a seminar during Texworld USA in New York last week. Moderator Christine Daal, who runs consultancy Fashion Angel Warrior, said quality control, small minimums, speed to market and a more compliant system are all advantages of manufacturing in the U.S. While costs are higher, the U.S. is also known for energy efficiency, which can help contain some of those costs. ( Sourcing Journal )
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Sourcing at Magic, which will be held from August 12 to 15, 2018, in Las Vegas will focus on sustainability and how to use innovation to accelerate sustainability in apparel production. Sourcing at Magic will show how to close the loop on production, processing, and recycling by bringing environmentally-friendly practices to the forefront. Avedis Seferian, President and CEO, WRAP, will speak on the topic "Responsible Business Practices Are Paramount: Why Sustainability And Ethical Sourcing Are A Must At All Levels Of The Market." ( Fibre2Fashion)

Uzbekistan
UzbekThe U.S. Department of Labor is looking to possibly remove Uzbek cotton from the list of products sourced through forced labor and therefore subject to sanctions, including but not limited to being denied entry into the United States. At this time, the potential revision of Uzbekistan's status is in a public comment period. The reconsideration stems from the belief by many in the U.S. government that Uzbekistan has taken tangible steps to reduce illicitly sourced cotton.
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About WRAP
Headquartered in Arlington, Virginia, USA, with regional offices in Hong Kong, SAR, and Dhaka, Bangladesh, full-time staff in Europe, India and Southeast Asia (Thailand, Vietnam, and Indonesia), and for Latin America, WRAP is an independent, objective, non-profit team of global social compliance experts dedicated to promoting safe, lawful, humane, and ethical manufacturing around the world through certification and education. To learn more about WRAP, please visit  www.wrapcompliance.org .

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