Issue 474 | June 22, 2018
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Welcome to The WRAP Weekly newsletter.  Feel free to look around and thank you for being a loyal reader.

This week, we certified 62 factories in 16 countries:

 Bangladesh, Cambodia, China, Egypt, El Salvador, India, Jordan, Kenya, Lesotho, Mexico, Myanmar, Pakistan, Peru, Sri Lanka, United States and Vietnam.
The WRAP Blog
Seth Lennon

This Week's Headlines

The Alliance for Bangladesh Worker Safety has received a renewed mandate to carry on with its work until at least December 2018. The Alliance continues to work with partners within Bangladesh to establish a Safety Monitoring Organization (SMO) to oversee the monitoring of factories throughout the country. ( Just Style)
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Garrett Brown, founder of the OHS initiative for Workers and Community, penned an op-ed in The Daily Star about how progress regarding worker safety in Bangladesh was being stunted due to what he called "savage global capitalism."  Brown cited a study by the Pennsylvania State University which found declines in per-unit prices and factory margins within Bangladeshi factories while the volume of exported apparel from the country grew. ( The Daily Star)

During the fourth quarter of 2017, global yarn production declined 23 percent when compared to the third quarter. In addition, fabric output declined 2 percent over the same period. Some of the largest declines were seen in Brazil,  which witnessed a 23 percent decline, along with Asia which suffered a 14 percent decline. The International Textile Manufacturers Federation (ITMF) also noted that on average, fabric orders declined by 23 percent between the third and fourth quarters in the countries under review. ( Sourcing Journal
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Cotton industry analysts believe that the market should not overreact to any hike in Chinese cotton futures purchases even though prices are rising due to growing uncertainty within the global marketplace. This statement stems from recent contracts where Chinese firms purchased 361,000 bales of U.S. cotton for the 2019-2020 period, the largest such futures order on record. ( Just Style
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Apparel from China appears to have been spared from the first round of tariffs announced by the United States. A list containing 1,102 Chinese products was released, and only a very limited amount of apparel related machine parts was included. However, fears persist that the apparel industry could be harmed should tensions escalate into a full-scale trade war. ( Bloomberg)

European Union
EUThe  European Union has officially put into place retaliatory tariff measures against the United States, and as early as this Friday, apparel companies could potentially be paying tariffs as high as 50 percent on goods entering the EU.  The European Commission stated it will target for additional duties, a list of American products worth 2.8 billion euro (U.S. $3.25 billion) in retaliation for U.S. tariffs on EU aluminum and steel. (Sourcing Journal)
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The European Union launched negotiations with Australia on a new free trade agreement this week. The impetus for this deal was to counteract the United States' perceived turn towards protectionist trade policies. The talks with Australia are  the latest move in the bloc expanding its trade partnerships with allies around the world. Last year, the EU enacted a free-trade deal with Canada, and recently closed tariff-slashing agreements with Japan and Mexico. 

Ecovadis, a French firm that provides business sustainability ratings, released a report that evaluated how effective Corporate Social Responsibility (CSR) contracts were in promoting sustainability performance in the global supply chain. In the report, Ecovadis concluded that firms needed to improve their internal practices to achieve the goals laid out in CSRs. The report cited that 50 percent of suppliers said they have come across CSR requirements they couldn't achieve given the price and quantity of the product required. In addition, the study found most CSR clauses don't have sufficient detail, with 75 percent referencing generic regulations. (Sourcing Journal)
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Hong Kong
During the recently completed Sourcing Journal Summit, apparel industry consultants were asked to express their thoughts on the next steps for the global supply chain. Discussions revolved around multiple factors, including ongoing consolidation within the industry, how to react to China's continued dominance and the growing decline in the number of skilled workers worldwide.  ( Sourcing Journal
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The organization Fashion Law conducted a study that examined how much more American consumers would have to pay for apparel sourced from India, in order to close that nation's living wage gap. The report concluded that consumers would have to pay on average U.S. $ 0.20 per garment to achieve a 225 percent raise in wages for Indian laborers involved in the apparel supply chain. ( The Loop)

The Federation of Retail Traders Welfare Association threatened to go on strike over the soon-to-be-implemented plastic ban in Maharashtra. The association, whose membership consists of 1.3 million shops and retail stores in the state, is frustrated at the absence of sufficient clarity from the government on some aspects of the ban. Concerns center around the transport of apparel from factory to retailer, and that a lack of plastic shipping containers could result in damage to products. ( The Times of India)

The Economic Times published a geographical review of where certain industries reside within India, along with facts about each region including the volume and monetary value of goods produced. Ludhiana, Kanpur, Varanasi and Tirupur, regions where textile and clothing manufacturing makes up a significant portion of the local economy, were among those discussed. ( The Economic Times)

The Iranian government has started to allocate loans designed to stimulate the apparel production sector in rural parts of the country. Phase one of the plan is to target provinces with high rates of  unemployment, specifically the provinces of Ardabil, Chaharmahal-Bakhtiari, Gilan, Hamedan and Kermanshah. According to the government, each province will receive loans totaling 680 billion rials (U.S. $16.19 million) to finance the construction of new factories and associated infrastructure. ( Financial Tribune)

Kenya's Treasury Secretary Henry Rotich recently raised the duty on imported second-hand clothes and shoes, known as mitumba, from previous $0.2 per kilogram to $5 per kilogram or 35 per cent, whichever is higher, to protect local textile companies and create jobs within Kenya's apparel industry. Kenya's actions are only the latest development in the ongoing struggle between African nations looking to grow their own domestic apparel industry and foreign entities looking to continue exporting cheap secondhand clothes to the continent.  ( Fibre2Fashion )

During the 2018 pro:Americas NYC Regional Summit, several brand executives were asked why they believe that Central America has not been the target of the same scrutiny applied by the Trump Administration towards Canada and Mexico. Those polled during the conference believe that since U.S. trade with Central America is currently operating at a surplus, the Administration is content with the status quo at this present moment. ( Sourcing Journal)
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South Africa 
Department of Trade and Industry Deputy Director-General Lionel October discussed the revival of South Africa's clothing and textile sector during his remarks at the  Manufacturing  Indaba. October revealed how a government assistance package implemented in 2011, along with industry-wide upgrades in manufacturing techniques have revitalized an industry that found itself failing to compete against cheaper imported goods. ( Engineering News )

South African textile producers were voicing frustration about the fact that a t-shirt celebrating the 100th birthday of Nelson Mandela was not manufactured in South Africa, but in the neighboring state of Mauritius. Cotton for the shirts was indeed harvested in South Africa, but then was shipped over to Mauritius for production. Workers in Mauritius are paid less than their South African counterparts and are compensated on a per-item basis rather than hourly. ( Business Live)

Turkey witnessed a massive increase in orders from global apparel brands, with the prospect of additional growth on the horizon. During the Turkish Clothing Manufacturers' Association's (TSGD) Procurement Strategies and Prospects Panel, it was projected that Turkish clothing exports will total U.S. $18 billion in 2018, up from U.S. $17 billion in 2017. In addition, brands in attendance announced that they will increase their orders from Turkey by 20 percent in the coming months. ( Daily Sabah)

United Kingdom
According to Christopher Nieper, managing director of women's fashion manufacturer David Nieper, the U.K. workforce lacks the skills needed to efficiently manufacture apparel on a large scale. Nieper believes that a lot of the skill loss occurred after apparel manufacturing for the most part left the U.K decades ago. This exodus resulted in a sharp decline in the number of workers who were taught the skills necessary to manufacture apparel. In addition, those laborers who do possess the required skill set find themselves being rapidly aged out of the industry. ( Just Style )
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UK The House of Commons announced that it will investigate the environmental impact of the growing "fast fashion" phenomenon in the United Kingdom. The Environmental Audit Committee will look at the practices of the industry, specifically the alleged release of toxic chemicals during manufacturing, and examine if there is a way for the industry to become more sustainable, especially during the production process. ( BBC)

United States
Retailers With additional tariffs on Chinese imports becoming a real possibility, American retailers are seeking to educate consumers on what to expect. The most noticeable impact will be higher prices for American consumers, especially considering that a great deal of American retail inventory is sourced from China. Retailers and brands are hoping that Congress will intervene and curtail the brewing trade war between the two countries before the American economy is adversely impacted.  ( Sourcing Journal
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More brands than ever are using their products as a vehicle to advocate for the rights of the LGBT community, especially considering that June is Pride Month in the United States. However, an issue of growing concern is the sourcing of these goods, specifically the countries of origin and their domestic policies when it comes to the LGBT community. 

For the first time since March of 2012, cotton reached U.S. $1.00 a pound according to Cotton Incorporated. The all-time high for cotton prices remains U.S. $2.00 per pound, a record set back in 2008. However, ongoing trade tensions, along with lower than average production forecasts, and uncertainty about Chinese policies have many in the industry concerned that prices will continue to soar. ( Sourcing Journal)
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VietnamVietnam has witnessed spectacular growth driven by increasing foreign direct investment and a transition away from an agriculturally driven economy. However, in its latest economic update for Vietnam, the World Bank warned that several external factors could curtail this growth. These include protectionist trade policies being implemented throughout the world, increasing tensions in Southeast Asia and more restrictive global monetary policy. 
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Cotton industry advocates in Zambia are concerned that more Zambian cotton is being exported abroad rather than consumed domestically. According to the Cotton Association of Zambia, over 90 percent of cotton produced in Zambia is exported, leading to concerns that the industry could be harmed if there is any kind of large-scale disruption in the global supply chain. ( Zambia Business Times
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 .

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