Issue 472 | June 8, 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 71 factories in 16 countries:

 Bangladesh, Cambodia, China, El Salvador, Guatemala, Haiti, Honduras, India, Indonesia, Kenya, Laos, Madagascar, Malaysia, Pakistan, Philippines, and Vietnam. 
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The WRAP Blog
Seth Lennon

This Week's Headlines

Bangladesh 1 75 out of 220 companies who signed on to the original Accord have agreed to sign on to the latest version, but some notable brands have not signed on to the new agreement, which took effect Friday. The new version of the Accord is open to non-garment companies as well. The reasons for non-renewal by certain brands vary. Some companies are using their own internal policing methods instead of using the process outlined within the Accord, while others are still in the process of reviewing the Accord and how it will impact their business.   ( Reuters )

A report in Newsweek discusses how the Rana Plaza disaster brought the topics of sustainability and worker safety front and center to many within the fashion industry. Five years after the collapse of the complex and after the subsequent unrest and protests within Bangladesh, non-profits from across the fashion industry continue to push the need for ongoing progress by brands regarding worker safety and for enhanced awareness of their supply chains. ( Newsweek)

The Balkans have long been a haven for the production of affordable clothing, but now luxury brands from places like Paris and Milan find themselves moving into countries like Bulgaria and Romania. Brands are making this change due to the need to move small batches of work quickly. This can pose a challenge for the brands main production facilities, which are focused on apparel destined for the runway. As a result of this shift, the factories themselves are having to compete for the top talent, offering perks such as new dining and fitness facilities so they can retain those workers. (Reuters)

CamboidaFollowing the release of a report by trade unions and labor-rights groups regarding gender based violence in factories located in Cambodia, along with others Bangladesh, India and Indonesia, Gap and H&M announced that they would conduct an investigation into these allegations. These reports come ahead of the annual International Labour Organization conference in Geneva, where the focus will be on drafting a new international treaty to protect workers from harassment and violence.  ( Sourcing Journal )
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With trade tensions between the two nations continuing to escalate, China's exports to the U.S. of textiles and apparel plummeted 10.9 percent to 2 billion square meter equivalents (SME) in April, maintaining its top spot of major suppliers, but losing market share to its Asian rivals, and even to Mexico and Canada. In monetary terms, China's imports to the U.S. in April fell 12 percent to U.S. $2.3 billion, as industry imports overall rose 3.9 percent to U.S. $8.02 billion.  ( Sourcing Journal )
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China is cutting it's import tariff on clothing to 7.1 percent, effective on July 1, down from the current 15.9 percent with indications existing that further cuts are on the horizon. Chinese Premier Li Keqiang stated that this was an indication of the country's desire to open China up to more foreign goods and counter the rise of protectionism in other markets. (Fibre2Fashion)

The International Cotton Advisory Council (ICAC) is warning that a continued decrease in world cotton production, combined with poor weather conditions in the U.S. and China, could lead to "quality gaps" in next season's cotton supply. ICAC noted that this marks the fourth year of dwindling global cotton reserves, with much of the loss occurring in China, where projections have the country producing only eight million tons at the end of the 2017-18 season.
(Sourcing Journal
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China2Trade talks between China and the United States ended on Sunday with no progress towards a deal to head off a trade war between the two nations. There was no progress in terms of securing concessions which would have resulted in China potentially buying more American goods and the United States withholding additional tariffs on Chinese goods.

El Salvador 
Clothing manufacturers in El Salvador, which has become one of the most dangerous countries in the world due to the rise of gang violence, are employing former gang members in even higher numbers than ever before. Factories will partner with local religious organizations to provide job training and aid in the process of helping individuals sever ties with gangs like MS-13. Manufacturers will hire individuals and give them employment in the hope of rehabilitating them along with using the lure of full-time work to keep them from returning to criminal life. (The Guardian

European Union
ECThe European Commission's College of Commissioners endorsed the decision to impose additional duties on the full list of U.S. products provided to the World Trade Organisation (WTO), as part of the EU's response to the US tariffs on steel and aluminium products. The list of U.S. products includes t-shirts, trousers, shorts and cotton bed linen. The expectation is that the duties will come into effect in July. (Fibre2Fashion)

Hong Kong
At the Sourcing Journal summit in Hong Kong, a panel discussion was held regarding the direction of the apparel industry and how to learn from the mistakes brands have made in managing their supply chains. E-commerce has caused a great disruption in how consumers are buying and those retailers who are not modernizing their supply chain to meet the rise of e-commerce are finding themselves drifting into irrelevance and even extinction. ( Sourcing Journal )
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Arvind, the maker of of Arrow and U.S. Polo Association apparel in India, is seeking to dramatically increase its garment making capacity within the country in the coming months. The company's goal is to increase production six-fold with the intention of creating 40,000 new jobs in the country in order to facilitate the increased output. Arvind is making this move in order to respond to the growing trend of selling garments directly to a brand rather than going through a third-party intermediary.  (The Economic Times)

A report issued by the United States International Trade Commission (USITC) show that apparel was one of the fastest growing imports from sub-Saharan Africa into the United States from 2010 to 2016. This growth is at least partially attributed to the long-term renewal of the African Growth and Opportunity Act (AGOA) through 2025, creating needed certainty in the marketplace. Madagascar, along with Kenya, Lesotho and Mauritius make up 90% of apparel products from sub-Saharan Africa.  ( Just Style)
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The Trump Administration is considering scrapping the North American Free Trade Agreement (NAFTA) in favor of separate trade deals with Mexico and Canada. With little to no progress made on negotiations regarding NAFTA and the increasing trade tensions resulting from the United States imposing steel and aluminum tariffs on its North American neighbors, the future of NAFTA is in doubt. ( Sourcing Journal)
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NorthKoreaNorth Korea
There is growing excitement in China and North Korea that the previously gray-market trading between the two countries could be become legitimate as a result of the upcoming summit between North Korea and the United States. Small scale trading and smuggling, in defiance of U.N. imposed sanctions, has been occuring between China and North Korea. In addition, there has been a renewed focus by Pyongyang to loosen some economic controls within the
country and enable at least a small scale free market. ( The New York Times)

Singapore Trade and Industry Minister Chan Chun Sing voiced his apprehension regarding protectionist trade policies and expressed concerns that the entire global economy could be destabilized as other countries respond to measures such as tariffs being imposed. These remarks come as the United States contemplates levying tariffs on imports from Canada, China, Mexico and the European Union, sparking fears of a global trade war. ( CNBC)

Sri Lanka
Sri Lanka recently lobbied India to discard its current quota system and to negotiate a more open trade deal that could be valued at U.S. $500 million. The current system, the Economic and Technological Cooperation Agreement (ETCA), limits imports to eight million apparel pieces. Sri Lanka cites that is has already passed the quota for 2018 and would like to continue expanding its presence. (Fibre2Fashion)

After Customs and Border Protection placed a detention order on Turkmen cotton after the discovery of state-orchestrated forced labor, an effortto urge retailers to eliminate Turkmen cotton from supply chains has been renewed. The Responsible Sourcing Network is working to create a pledge for brands to refuse to use cotton sourced from Turkmenistan, an effort similar to one where over 300 labels agreed to stop using cotton from Uzbekistan after forced labor was discovered in the country. (Supply Chain Dive

United States
Officials within the New York City government have reached a deal to adjust zoning laws within the city's Garment District so that more of the industry can remain in the city. The plan would preserve a garment-industry presence in Midtown partly by using up to U.S. $20 million in city funds to acquire a building dedicated to manufacturers. The plan also includes a tax abatement for Garment District landlords who set aside at least 25,000 square feet in their buildings for manufacturers. This plan was in response to production rapidly leaving the city and heading overseas due to lower overhead. (The Wall Street Journal)

Rick Helfenbein, president and CEO of the American Apparel & Footwear Association (AAFA), criticized the tariffs imposed by the United States on steel and aluminum from Canada, Mexico and the European Union. Helfenbein's concerns centered around the fact that these tariffs are targeted at some of the strongest allies of the United States and that the American apparel and textile industry could be harmed by any retaliatory measures. ( Fibre2Fashion)

WRAP joined presenters from 41 countries at the first annual Apparel Textile Sourcing Miami on May 21. WRAP discussed topics on such as social compliance and how it impacts the marketplace and how sustainability and design can  successfully co-exist. Jason Prescott, CEO of the Apparel Textile Sourcing Show,  lauded the event as a success stating that "there was a true need to create a comprehensive sourcing platform in the Miami marketplace." 

In his commentary in Sourcing Journal, Ed Gribbin, President of the retail fashion consulting group Alvanon, discussed the impacts of imposing tariffs on apparel. Gribbin detailed the broad opposition to tariffs from within the industry, citing the perils of a trade war along with the questionable effectiveness of tariffs historically achieving their objectives. Gribbin believes that while China's unfair trade practices need to be dealt with, most of the harm will be felt by American consumers instead. ( Sourcing Journal)
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AKR Textiles, a clothing manufacturing firm from Tirupur, India purchased a minority share of U.S. clothing manufacturer Good Clothing with the intention of beginning manufacturing in the American firm's hometown of Fall River, Massachusetts. Good Clothing cited the fact that the cost of manufacturing overseas is closer to being even with costs in the United States and that the competitive advantage of quicker delivery to retailers offsets any remaining difference in labor costs.  ( The Herald News )

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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